The retail sector is expected to show signs of recovery in the third quarter, particularly in offline formats such as department stores, convenience stores, and hypermarkets. This optimism is attributed to the summer vacation season, the early Chuseok holiday, and an increase in foreign tourists.
According to a survey conducted by the Korea Chamber of Commerce and Industry on 500 retail companies, the Retail Business Sentiment Index (RBSI) for the third quarter is projected to be 92, a 12-point increase from 80 in the previous quarter.
The RBSI is based on a scale of 100; a score above 100 indicates a positive outlook for the upcoming quarter, while a score below 100 suggests a negative outlook.
The Chamber of Commerce noted that the influx of foreign tourists, the seasonal boost from summer vacations, and the anticipated consumer spending during the Chuseok holiday from September 24 to 26 have contributed to this recovery in sentiment.
Among the 178 companies that expect improved conditions in the third quarter, 80.3% cited increased demand due to summer vacations and holidays as the primary reason. Additionally, 57.9% pointed to improved consumer sentiment.
Department stores showed the most optimistic outlook, with an RBSI rising from 115 in the second quarter to 139 in the third quarter, remaining above the benchmark of 100.
The increase in foreign tourists, driven by the global spread of K-culture and a weaker Korean won, is expected to boost shopping demand at department stores. From January to May this year, the number of foreign tourists visiting Korea reached 8.716 million, a 21% increase compared to the same period last year. Spending by foreign tourists using credit cards also rose by 47.3% to 7.9845 trillion won.
Shopping accounted for the largest share of foreign tourist spending at 45%, followed by food and beverages at 15.3% and accommodation at 14.0%.
The outlook for convenience stores also improved significantly, with the index jumping from 85 in the second quarter to 127 in the third quarter. This reflects expectations for increased sales of summer beverages and ready-to-eat meals. The popularity of convenience stores as a key destination for foreign tourists is also seen as a factor for revenue growth.
Hypermarkets saw their index rise from 66 to 112, surpassing the benchmark. The early Chuseok holiday is expected to create a peak season effect, while high inflation has increased demand for warehouse-style stores. There are also expectations for regulatory improvements to ensure fair competition among online and offline retailers.
In contrast, supermarkets only saw a slight increase from 80 to 85, remaining below the benchmark. Despite expectations for demand during the vacation and holiday seasons, intensified competition from hypermarkets, online shopping, and convenience stores in the fresh food market has impacted their outlook.
The online shopping index remained stagnant at 74, reflecting concerns over declining profitability amid increasing competition from low-cost overseas platforms and delivery services. Additionally, the rise in outdoor activities during the summer has shifted some consumer demand to offline channels like convenience stores.
Lee Seung-ryun, head of the retail logistics policy team at the Chamber of Commerce, stated, "To translate expectations for domestic recovery into actual consumption, it is essential to successfully host nationwide shopping festivals like the Korea Grand Festival and to expand the global presence of retail and consumer goods companies. It is also important to develop retail infrastructure in line with regional balanced development policies."
* This article has been translated by AI.
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