Survey results for Q4 2026 Retail Business Survey Index (RBSI)

Weak consumer spending, rising procurement costs and operating expenses point to sluggish sales and profitability

Incheon's retail sector is expected to struggle with recovery in the fourth quarter of this year. [AI-generated image]
Incheon's retail sector is expected to struggle with recovery in the fourth quarter of this year. [AI-generated image]

Incheon's retail sector is expected to face continued difficulty recovering in the fourth quarter of this year.

With consumer sentiment already dampened by prolonged high prices and elevated interest rates, rising procurement costs and operating expenses — including labor — are making improvements in both sales and profitability unlikely, analysts said.

The Incheon Chamber of Commerce and Industry surveyed 65 local retail businesses — including hypermarkets, supermarkets and convenience stores — and found the composite outlook index for the fourth quarter of 2026 stood at 93 in its Retail Business Survey Index.

The reading fell below the 100-point baseline that separates positive from negative outlooks, indicating that pessimistic expectations outweigh optimistic ones.

The RBSI quantifies how businesses perceive the outlook for the coming quarter. A reading above 100 means more businesses expect conditions to improve, while a reading below 100 means more expect them to worsen.

Both the sales and profitability sub-indexes came in below the baseline. The fourth-quarter sales outlook index stood at 90, while the profitability outlook index stood at 89.

The results reflect concerns that consumers have less room to spend and that year-end shopping demand may not rebound as strongly as hoped.

Wariness about deteriorating profitability is also growing. On top of higher procurement costs driven by a weak won, the industry expects fixed expenses such as winter energy bills and labor costs to rise — making it difficult to turn sales into profit even when revenue is generated.

The outlook varied by retail format. Hypermarkets were the only segment to post an index above the baseline, at 111, reflecting expectations of stronger sales driven by year-end consumer activity and winter demand.

Supermarkets came in at 100, projecting conditions similar to the third quarter. Convenience stores posted the most pessimistic reading among all formats, at 56.

While convenience stores benefited from a seasonal boost during the third-quarter heat wave, the fourth quarter brings a combination of off-peak conditions and weakening consumer spending, raising the likelihood of a sales slowdown.

In fact, the top business challenge cited by retailers was weak consumer sentiment and slowing sales, with 53.8 percent of respondents naming it as their primary concern.

Rising operating costs — including labor and logistics — and higher procurement costs combined with supply chain instability each accounted for 12.3 percent of responses. Intensifying competition between online and offline retailers was cited as a burden by 10.8 percent of respondents.

Shifts in consumer spending patterns are also expected to continue. Retailers anticipate that demand for value-for-money products — including private-brand items, ultra-low-price goods and discounted products — will hold steady or grow further.

Among respondents, 49.2 percent said preference for value-oriented products would remain similar to previous years, while 36.9 percent expected it to increase.

The trend toward buying only what is needed in small quantities is also expected to persist. Some 53.8 percent of respondents said small-volume, purpose-driven purchasing would remain at levels similar to previous years, while 30.8 percent said it would increase.

The findings suggest that consumers will continue to manage spending carefully, weighing price and necessity before making purchases.

The Incheon Chamber of Commerce and Industry said recovery expectations among local retailers remain limited, as weak consumer spending and rising costs converge even ahead of the year-end peak season.

It also warned that intensifying discount competition could backfire, with promotional activities aimed at defending sales potentially eroding profitability further.

The survey was conducted from Aug. 31 to Sept. 18, covering 65 retail businesses in Incheon, including hypermarkets, convenience stores and supermarkets.


gilbert@heraldcorp.com