The ongoing conflict in the Middle East is predicted to significantly stifle the Korean retail sector's usual 'spring special' performance. According to a survey conducted by the Korea Chamber of Commerce and Industry involving 500 retail companies, the Retail Business Sentiment Index (RBSI) for Q2 2026 stood at 80, maintaining a similar trajectory to the previous quarter's figure of 79.

This index is critical for assessing market sentiment; a reading above 100 indicates optimism for the upcoming quarter, whereas a figure below 100 reflects a more pessimistic outlook. The Chamber highlighted that while Q2 could typically benefit from seasonal factors—such as spring outings and significant events like weddings and relocations—the adverse effects of the Middle East conflict are severely hindering these domestic growth drivers.

Further exacerbating the situation, 69.8% of respondents cited substantial burdens stemming from rising purchase prices and logistics costs driven by fluctuating oil prices and exchange rates, revealing that a mere 6.4% felt unaffected by these pressures.

From an operational perspective, the resurgence observed in offline retail contrasts sharply with the decline in online shopping. Notably, department stores saw their RBSI soar from 112 to 115, outperforming the key threshold of 100. This could be attributed to a surge in foreign tourists spurred by the K-consumer goods craze and a weaker Korean won, which are bolstering sales in this segment.

Conversely, convenience stores benefitted from favorable weather conditions, leading to increased foot traffic and heightened sales of prepared meals and beverages, pushing their RBSI from 65 to 85. However, their higher logistics costs present a persistent drawback to their profitability.

Supermarkets, which primarily operate in close-proximity areas, also displayed a notable rebound, from 67 to 80, driven by an uptick in demand for home-cooked meals amid rising dining-out prices. However, fierce competition over fresh produce from both hypermarkets and convenience stores indicates a potential drag on growth expectations.

Meanwhile, large hypermarkets experienced a stagnant improvement, edging from 64 to 66, subdued by intensified competition within offline channels and shifts in consumer buying patterns toward purchasing only what is necessary. The observed trend toward smaller, need-based purchases, coupled with a post-Lunar New Year dip in consumption, complicates their prospects.

Online shopping, conversely, recorded a downturn in expectations, falling from 82 to 74. This decline is attributed to increased competition between domestic platforms and cross-border commerce (e.g., Alibaba, Temu), as well as a reduction in consumer spending during spring as outdoor activities resume. The conflict in the Middle East further compounds challenges related to rising logistics and delivery costs, constraining potential market recovery.

Choi Ja-young, president of the Korea Distribution Society, emphasized the need for proactive governmental measures, such as fiscal injections to ease high oil prices and tax relief, to address the contraction in consumer sentiment and domestic market performance induced by the ongoing conflict.

Lee Hee-won, head of the Korea Chamber of Commerce and Industry’s Distribution Logistics Promotion Institute, reiterated the importance of swift and concentrated execution of supplementary budgets aimed at mitigating the pressures of logistics costs and stimulating consumer spending in traditional markets and the broader retail sector.