Gwangju Region Retail and Distribution Industry, 1st Quarter Sentiment Expected to Improve

[Asia Economy Honam Reporting Headquarters Reporter Park Jin-hyung] Retail and distribution companies in the Gwangju area predicted that the perceived economy will improve in the first quarter.

The Gwangju Chamber of Commerce and Industry conducted a survey of 58 retail and distribution companies in the Gwangju area on the 'Retail and Distribution Business Sentiment Index (RBSI) for the First Quarter of This Year.' The result showed a rise of 25 points from 76 in the fourth quarter of last year to 101, exceeding the baseline of 100, indicating an expectation of improved economic sentiment.

This is analyzed to be due to many companies expecting an improvement in economic sentiment as consumer confidence recovers with the gradual easing of social distancing measures and seasonal factors such as holidays and the new school semester.

This index quantifies the on-site economic sentiment of distribution companies; a value above 100 means more companies expect the economy to improve in the next quarter compared to the current quarter, while a value below 100 indicates the opposite.

By management item, sales and profit outlook (76→101) is expected to rise compared to the previous quarter due to improved consumer sentiment from expectations of gradual easing of social distancing and seasonal factors such as the new semester and holiday seasons.

Cost outlook (86→103) is expected to improve with a 17-point increase from the previous quarter due to plans to reduce management costs such as restructuring and advertising expense cuts, whereas employment outlook (91→93) is expected to remain difficult due to reduced working hours, staff cuts, and natural decreases from unfilled retirements.

By business type, department stores (50→125) expect sales to increase compared to the previous quarter, driven by recovering consumer sentiment and revenge consumption trends, with increased demand for high-priced products and golf equipment. Large discount stores (63→100) anticipate improved economic sentiment due to increased sales from newly renovated stores and large-scale discount events.

Convenience stores (86→90) showed continued sales decline due to intensified competition both within and outside the business type and COVID-19 impacts, despite strong sales of collaborative products. Supermarkets (95→95) are expected to remain similar to the previous quarter, as increased home meal consumption and preference for nearby shopping are offset by domestic demand contraction due to infectious disease spread and intensified competition from the increase of medium and large supermarkets.

As the distribution industry shifts online due to the prolonged COVID-19 pandemic, a survey on local retail and distribution companies' response plans showed that 'strengthening the linkage between online and offline channels (25.9%)' was the most common answer.

Following that were 'none (22.4%)', 'strengthening online business (17.2%)', 'enhancing store delivery competitiveness (17.2%)', 'offline store renewal (8.6%)', 'others (5.2%)', and 'store automation (3.5%)' in order.

When asked about the biggest current issues and difficulties due to the prolonged pandemic, 'consumer sentiment contraction (46.6%)' was the highest response, followed by 'cost increase (20.7%)', 'price inflation (15.5%)', 'intensified competition within the same business type (8.6%)', 'intensified competition between business types (5.2%)', and 'distribution regulations (3.4%)'.

Regarding the management capabilities they wish to strengthen in the future, respondents answered 'product competitiveness (39.7%)', 'differentiation competitiveness (37.9%)', 'price competitiveness (24.1%)', 'platform competitiveness (24.1%)', 'digital competitiveness (12.1%)', 'logistics and delivery competitiveness (3.4%)', and 'none (3.4%)' in order.

Choi Jong-man, full-time vice chairman, said, "Expectations for economic improvement continue as the effects of graduation, the new semester, and the holiday season overlap," adding, "We hope for policy efforts and active deregulation to block the spread of infectious diseases for safe consumption activities and to revitalize the distribution industry, which is finally experiencing a favorable breeze."

This content was produced with the assistance of AI translation services.