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 (KCCI) among 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 KCCI analyzed that the increase in foreign tourist arrivals, the seasonal boost from summer vacations, and the anticipated consumer spending during the Chuseok holiday from September 24 to 26 have contributed to the 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, while 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 influx of foreign tourists, driven by the 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 rebounded significantly, rising from 85 in the second quarter to 127 in the third quarter. This increase reflects expectations for higher 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 increased sales.
Hypermarkets saw their index rise from 66 to 112, surpassing the benchmark. Factors contributing to this increase include the early Chuseok holiday creating peak season effects, rising demand for warehouse-style stores due to high inflation, and 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 in the fresh food market from hypermarkets, online shopping, and convenience stores 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, some consumer demand has shifted to offline channels like convenience stores due to increased outdoor activities during the summer.
Lee Seung-ryun, head of the KCCI's Retail Logistics Policy Team, stated, "To translate expectations for domestic recovery into actual consumption, it is essential to successfully host national shopping festivals like the Korea Grand Festival and expand the global presence of retail and consumer goods companies. Additionally, creating retail infrastructure linked to regional balanced development policies is crucial."
* This article has been translated by AI.
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