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15 Sep 2023


Retail sales in 2024 will remain under pressure from fragile purchasing power,awaiting government support measures (Current Issue No.3433 Full Ed.)


        KResearch holds the view that expansion of retail sales in 2024 may depend upon a boost from the new government's stimulus policies. The positive impact of any potential measures, particularly the digital wallet project, on retailers will hinge on consumer spending behavior as well as the conditions set for eligible areas and types of retail stores.

        For the remainder of 2023, retail sales are expected to expand at a slower pace, compared to the first-half growth of 6.8 percent YoY. The 2023 full-year retail sales figure is thus projected to grow by 5.0 percent YoY. This is attributed to the high base effect, pressure from limited purchasing power, and the high cost of living amid rising product prices in line with production costs. However, the sales growth might be driven largely in the last quarter when retail businesses in various segments are likely to launch marketing campaigns to stimulate spending.

        Looking into 2024, attention must be paid to the new government’s stimulus measures, especially the digital wallet. The degree of impact would depend on consumer spending behavior and financial status. Plus, eligibility conditions – in terms of areas and types of stores – would have varied effects on sales of retail shops. Preliminarily, KResearch projects that retail sales in 2024 may expand by 4.0-5.0 percent YoY (excluding the effects of stimulus measures). Supporting factors include the return of foreign tourists, the 2024 Olympic Games, and the UEFA EURO 2024, during which businesses may introduce marketing activities to boost shopping and retail sales; and the rising prices of some products, especially in the food category.

        Going forward, consumer purchasing power and confidence in spending, along with any results of the implementation of stimulus measures, must be monitored. Despite the bright outlook for continual growth, operators will still face heightened competition, particularly the ongoing entry of low-priced products from China, and increased costs if the minimum wage is raised. These factors could pose challenges for retail businesses, especially small and medium-sized enterprises, in achieving profitability.

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