Gwangju Region Retail and Distribution Sector Q2 Business Sentiment Expected to Improve

[Asia Economy Honam Reporting Headquarters Reporter Park Jin-hyung] Retail and distribution companies in the Gwangju area forecast that the perceived economy will improve for the second consecutive quarter following the previous quarter.

According to a survey conducted by the Gwangju Chamber of Commerce and Industry on 59 retail and distribution companies in the Gwangju area regarding the ‘2022 2nd Quarter Retail and Distribution Business Survey Index (RBSI),’ the index rose 15 points from 101 in the 1st quarter to 116, exceeding the baseline of 100.

This is analyzed to be due to the government's additional COVID-19 support policies and adjustments to social distancing measures leading to a recovery in consumer sentiment, along with increased sales from spring outdoor activities and the special demand during Family Month.

The Retail Business Survey Index (RBSI) quantifies the on-site perceived business conditions of distribution companies. An index above 100 indicates that more companies expect the economy in the next quarter to improve compared to the current quarter, while below 100 indicates the opposite.

By management item, all categories showed an increase. Sales and profits (116) exceeded the baseline (100) due to eased social distancing and special demand during Family Month, while cost outlook (117) was expected to improve from the previous quarter due to plans to reduce management costs such as restructuring and advertising expense cuts.

The employment outlook (102) was expected to improve as offline stores reopen and commercial districts revitalize following social distancing adjustments.

By business type, department stores (150) anticipated better conditions compared to the previous quarter, driven by increased spring outdoor activities and fashion product purchase trends, leading to higher sales of high-end products and golf equipment. Convenience stores (100) expected an increase in perceived business conditions due to rising demand for ready-to-eat meals and strong sales of collaborative products.

On the other hand, large supermarkets (90) fell below the baseline (100) due to the spread of short-distance, small-quantity purchase trends and intensified competition with e-commerce and large supermarkets. Supermarkets (90) predicted sluggish sales despite increased consumption of home-cooked meals and preference for nearby shopping, due to rising food material prices and intensified competition from the increase of medium to large supermarkets.

Regarding responses of local retail and distribution companies to the spread of COVID-19, 27.1% answered that they are ‘strengthening online business,’ followed by ‘cost reduction (25.4%),’ ‘strengthening promotions such as price discounts (25.4%),’ ‘no special measures (18.6%),’ ‘strengthening delivery competitiveness (13.6%),’ and ‘store renewal (5.1%).’

When asked about the biggest current issues and difficulties faced by local retail and distribution companies in the 2nd quarter, ‘consumption contraction (33.9%)’ was the most common response, followed by ‘price increases (23.7%),’ ‘cost increases (20.3%),’ ‘intensified competition (10.2%),’ ‘response to changes in consumption trends (6.8%),’ and ‘distribution regulations (6.8%).’

Choi Jong-man, Executive Vice Chairman, stated, “The government's additional COVID-19 support measures and easing of social distancing policies coinciding with the Family Month season continue to raise expectations for economic improvement. However, as concerns about the resurgence of infections and the expansion of the online market and intensified competition among distribution channels increase uncertainty in the industry, it seems more important than ever to prepare support measures for the distribution industry and develop response strategies to strengthen competitiveness.”

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