2023 retail outlook worse than pre-pandemic levels: survey

SEOUL, South Korea — More than half of retail business owners, or 55.3 percent  or those surveyed, projected a gloomy outlook for 2023, as business sentiment among them seemed worse than pre-pandemic levels.

According to a survey conducted by the Korea Chamber of Commerce and Industry on 300 retail business owners that was released Sunday, respondents predicted an average of 1.8 percent growth in the retail sector next year, compared to this year’s estimated 5.9 percent growth.

“Despite expectations about economic recovery after pandemic disruptions, negative factors such as high inflation and rate hikes are driving down overall business sentiment next year,” the KCCI said in the analysis report.

Business owners offered a negative outlook, citing consumer sentiment (51.8 percent), interest rate hikes (47 percent) and inflated prices (40.4 percent) as key factors.

But 44.7 percent said they had a positive outlook, pinning high hopes on the end of the COVID-19 pandemic (63.4 percent) as well as a possible recovery in consumer sentiment (50 percent).

Among retailers, online shopping was projected to see the biggest growth at an average of 4.6 percent, compared to 4.2 percent at department stores and 2.1 percent at convenience stores.

Expectations were high for online shopping due to the spread of rational consumption patterns (72.5 percent), an increase in the number of online shopping platforms (58.8 percent) and the growing popularity of ultra-fast or early morning delivery services (52.9 percent).

Department stores are refurbishing their floor spaces to greet shoppers, as they are also projected to see sales growth with more customers expected to visit physical stores for premium shopping.

Meanwhile, negative growth was projected for large and smaller supermarket chains at minus 0.8 percent and minus 0.1 percent, respectively. Both have seen declines in shoppers due to an aging population and a falling birthrate. Fiercer competition among supermarket chains was also cited as one of the key reasons behind sluggish sales expected in years to come.

In order to tackle the gloomy outlook, 31.3 percent of the respondents said they planned to reduce costs, 17.3 percent planned to expand their online business and 16.7 percent planned to renew their offline stores.

“The retail industry is extremely trend-sensitive, which means their survival depends on their responsiveness to social and technological changes,” said Chang Keun-moo, a senior official at the KCCI.