KCCI "Next Year's Retail Market Expected to Underperform Compared to Pre-COVID Levels"

Survey of 300 Retail Companies
Concerns Over Continued Uncertainty
Retail Market Growth Rate Expected at 1.8%
Lower Than 2.5% Before COVID-19

2023 Retail Market Growth Rate Forecast. Photo by Korea Chamber of Commerce and Industry

[Asia Economy Reporter Choi Seoyoon] There is a forecast that next year's retail market growth may fall below the level before the COVID-19 pandemic due to ongoing domestic and international uncertainties.

The Korea Chamber of Commerce and Industry (KCCI) announced the results of the '2023 Distribution Industry Outlook Survey' on the 11th, conducted on 300 companies across five retail sectors including department stores, large discount stores, and online shopping. The retail market is expected to grow by only 1.8% next year, which is lower than the growth rate of 2.5% in 2019, just before the COVID-19 outbreak.

KCCI analyzed that the relatively low growth forecast is due to "despite expectations of economic recovery from the COVID-19 base effect and endemic transition, negative factors such as high inflation and high interest rates are expected to act as downward pressure on the consumer market, making it difficult to be optimistic about next year's retail economy."

Regarding the outlook for the consumer market next year (multiple responses allowed), 44.7% of respondents viewed it positively, while 55.3% viewed it negatively. Among those with a positive outlook, the reasons cited included the end of COVID-19 (63.4%), recovery of consumer sentiment (50.5%), and the end of the Russia-Ukraine war (34.3%).

On the other hand, respondents with a negative outlook cited reasons such as contraction of consumer sentiment (51.8%), interest rate hikes (47.0%), high inflation (40.4%), global economic recession (26.5%), and income instability (18.7%).

2023 Retail Sector Growth Rate Forecast. Photo by Korea Chamber of Commerce and Industry

By business type, online shopping (4.6%), department stores (4.2%), and convenience stores (2.1%) are expected to continue growing, but large discount stores (-0.8%) and supermarkets (-0.1%) are expected to struggle.

Online shopping, which had shown the highest growth due to the expansion of non-face-to-face consumption after COVID-19, is expected to grow by 4.6% next year.

As a key strategy for next year, the largest number of companies chose cost reduction (31.3%). This was followed by strengthening online business (17.3%), store renewal (16.7%), and enhancing promotions such as price discounts (11.3%).

Jang Geun-moo, Director of the Distribution and Logistics Promotion Institute at KCCI, said, "The distribution industry must quickly respond to changes in technology, society, and consumers to survive," adding, "It is important to continuously develop capabilities to actively cope with the rapidly changing business environment."

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