Third Quarter Retail Sentiment Rebounds to RBSI 92 Amid Seasonal Boost

On the 10th, the Korea Chamber of Commerce and Industry (KCCI) reported that the Retail Business Sentiment Index (RBSI) for the third quarter has risen to 92, reflecting a significant recovery in the retail sector compared to the previous quarter’s score of 80. This increase, measured across 500 retail firms, suggests that businesses anticipate improved market conditions, with confidence levels over the benchmark of 100 indicating positive expectations for the future.

This optimistic sentiment is attributed to several factors, including a rise in foreign tourist arrivals, seasonal boosts from the summer vacation period, and heightened consumer spending during the upcoming Chuseok holiday (September 24-26). Among the surveyed companies, 178 reported a favorable outlook, primarily due to increased demand driven by the holiday and vacation seasons (80.3%) and an improvement in household consumption sentiment (57.9%).

Segment-wise, department stores recorded the most substantial improvement, with their RBSI score surging from 115 to 139. This growth is attributed to sustained consumer spending and the influence of the K-culture trend, alongside the depreciation of the Korean Won, which is expected to drive shopping activity among foreign tourists, enhancing sales figures.

The year-to-date data from January to May also reflects this trend, with the cumulative count of foreign tourists reaching 8.716 million, marking a 21% increase year-on-year. Furthermore, foreign credit card spending during this timeframe rose by 47.3%, indicating that tourism-driven shopping is positively impacting domestic retail sentiment.

Convenience stores witnessed a notable uptick, with their index climbing from 85 to 127. This surge is likely linked to the traditional influx of consumers during the summer vacation, with increased sales anticipated for core products such as beverages and ready-to-eat meals. Additionally, the recent trend of foreign travelers frequenting convenience stores is expected to contribute to additional revenue during this busy season.

Large discount stores also experienced a recovery, with their RBSI rising from 66 to 112, rebounding from previously low expectations. The earlier onset of the Chuseok shopping season has enhanced performance expectations, compounded by increased sales in warehouse-style discount stores, as well as anticipated institutional improvements aimed at fostering fair competition across online and offline channels.

However, supermarkets only saw a slight increase in their index, from 80 to 85, still falling below the benchmark. Despite expectations for demand during the holiday and vacation periods, intensified competition from large discount stores, online shopping, and convenience stores has constrained their ability to capitalize on this demand increase.

Unlike other sectors, online shopping remained stagnant, maintaining a score of 74 amid stiff competition. The rise of international low-cost platforms has intensified price and delivery competition within the market, raising concerns over declining profitability. Furthermore, there has been a notable shift of consumer demand towards offline channels, such as convenience stores, due to the increase in outdoor summer activities.

Lee Seung-ryun, head of the retail logistics policy team at KCCI, emphasized that for the recovery sentiment to translate into real economic benefits, initiatives like the Korea Grand Festival (October 29 - November 15) must be successfully executed, coupled with the global expansion of retail and consumer goods and the establishment of distribution infrastructure linked to policies aimed at balanced regional development.