South Korean retailers have turned more pessimistic about business conditions in the fourth quarter as households grow more cautious and shift toward buying only what they need. Department stores are expected to hold up as demand for winter coats rises and people spend more time indoors, while the outlook for convenience stores dropped sharply, leaving prospects split across retail formats.
The Korea Chamber of Commerce and Industry said on the 21st that its Retail Business Survey Index (RBSI) for the fourth quarter came in at 88, down 4 points from the third-quarter reading of 92. The survey covered 500 retailers in Seoul and the six largest metropolitan cities, including department stores, hypermarkets, convenience stores, supermarkets and online shopping operators.
The RBSI measures how retailers expect business conditions in the coming quarter to compare with the current one. A reading above 100 means more companies expect conditions to improve, while a reading below 100 means the opposite. The third-quarter outlook had rebounded on summer vacation and Chuseok holiday demand before losing momentum in the fourth quarter, though the latest figure remains above the five-year average of 83, pointing to a mild correction.
The chamber attributed the decline to a combination of more cautious household spending, the spread of selective and thrift-oriented buying patterns, and the seasonal off-period for formats such as convenience stores. Among the 203 companies that expect conditions to worsen in the fourth quarter, 70.7% cited more cautious household spending as the biggest factor, followed by a weak year-end peak season at 8.9% and customers shifting to other shopping channels at 7.9%.
Asked about consumer behavior, 78.4% of respondents said preference for value-for-money products was similar to or higher than in previous years. Another 83.6% said the share of small-volume, purpose-driven purchases — buying only what is needed — was similar to or higher than before.
The outlook varied widely by retail format. The index for department stores stood at 130, slightly below the previous quarter's 139 but still the highest among the formats surveyed. The reading reflects expectations that sales of higher-priced winter coats will pick up in the fourth quarter, with year-end gifts and holiday gatherings adding to demand along with foreign tourists visiting during the cold season.
Hypermarkets came in at 111, little changed from 112 in the previous quarter. The chamber said seasonal demand for essential food items — including ingredients for kimchi-making in November and December and year-end gatherings — should flow in, while stores that have renovated their fresh food and beverage sections are expected to draw more shoppers.
Online shopping rose 8 points to 82 from 74 in the previous quarter. Price-sensitive consumers are making active use of real-time price comparisons and stacked discount coupons, and colder weather is expected to increase preference for online shopping.
Convenience stores fell 48 points to 79 from 127 in the previous quarter. The drop reflects a base effect from the third quarter, when the format benefited from the extreme heat, as well as expectations of reduced outdoor activity and weaker consumption of beverages and frozen treats as temperatures fall and the winter off-season sets in.
Supermarkets fell to 73 from 85 in the previous quarter, a decline attributed to concerns that competition will intensify as grocery demand moves to hypermarkets and e-commerce platforms running large-scale year-end promotions.
"Even with expectations for a year-end boost, the spread of value-oriented spending and seasonal factors are combining to produce a striking gap between retail formats," said Lee Seung-ryun, head of the chamber's distribution and logistics policy team. "With households remaining cautious about spending and competition among retail channels intensifying, any short-term rebound in sentiment is expected to be limited."