Online and Home Shopping Also Depressed... Distribution Industry Sees Decline in Business Sentiment Across All Sectors

The domestic distribution industry has issued a gloomy economic outlook for the third consecutive quarter.

On the 14th, the Korea Chamber of Commerce and Industry announced that the '2025 Q1 Retail Business Survey Index (RBSI)' based on a survey of 500 retail distribution companies was recorded at 77, down 3 points from the previous quarter. The RBSI, which reflects companies' sentiment on the economy, indicates that if the index is below the baseline of 100, more companies expect the retail distribution market to worsen in the next quarter compared to the previous one; if above 100, the opposite is true. The RBSI has declined for three consecutive quarters after recording 85 in Q2 last year.

Citizens who visited a convenience store in Seoul during lunchtime are eating lunch boxes and ready-to-eat meals.

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Outlook figures fell across all business types. Department stores, large discount stores, and supermarkets saw significant declines. Even sectors that had been resilient during the recession, such as online shopping and convenience stores, could not avoid a downward trend. The Korea Chamber of Commerce and Industry analyzed, "High inflation and high interest rates have continued, dampening consumer sentiment. Coupled with U.S. trade policies and domestic political uncertainties, competition surrounding the consumer market is expected to intensify, causing the distribution industry's economic sentiment to freeze."

Department stores (91→85) dropped 6 points from the previous quarter. Amid consumer downturn, luxury price hikes raised concerns about performance defense. The polarization between stores in the metropolitan area and non-metropolitan areas due to aging and population decline also had a negative impact.

Large discount stores also forecast difficulties as their outlook (90→85) declined. Despite the Lunar New Year holiday demand, high inflation and competition with online shopping are expected to pose challenges. In response, they are expanding fresh food specialty stores and attempting to strengthen customer attraction by converting to complex malls and shopping malls.

Supermarkets (81→76) also lowered expectations. Corporate supermarkets (SSM) saw sales rise due to increased demand for home-cooked meals, leveraging accessibility and freshness as strengths, but prolonged economic downturn is expected to reduce consumption and cause difficulties.

The online shopping outlook (76→74) also declined. While price competitiveness and strengthening of luxury categories are positive, the economic downturn and ultra-low-price offensives from China commerce negatively affected profitability.

Convenience stores (74→73) also could not avoid a decline in outlook. Convenience stores, which focus on small-quantity purchases, are less sensitive to economic changes, but the off-season in Q1 and intensified competition due to an increase in store numbers lowered sales expectations. The increased labor cost burden due to minimum wage hikes is also a negative factor.

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Professor Seo Yong-gu of Sookmyung Women's University said, "As the saying goes, 'the economy is psychology,' the combination of changes in U.S. trade policies, U.S.-China trade conflicts, export slowdown, and domestic political uncertainties inevitably leads to a significant contraction in the consumer market and consumer sentiment."

In the actual survey, distribution companies cited "consumer sentiment contraction due to continued high inflation and high interest rates (66.6%, multiple responses allowed)," "increased cost burden (42.4%)," "Trump's trade policies (31.2%)," and "intensified market competition (21.0%)" as major factors affecting the domestic consumer market this year. When asked about the impact of the second Trump administration on the domestic distribution market, 83.0% expected a negative impact. More than half, 56.2%, also responded that domestic political uncertainties would have a negative effect.

Jang Geun-mu, Director of the Korea Chamber of Commerce and Industry's Distribution and Logistics Promotion Institute, said, "To thaw consumer sentiment, large-scale discount events and support measures for small business owners are necessary," adding, "The government, companies, and academia must pool their wisdom."

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