High Inflation and Weakened Consumer Sentiment: Next Year's Retail Growth Rate Forecast to Hit Five-Year Low

Due to the effects of high inflation and weakened consumer sentiment, it is forecast that the growth rate of the domestic retail distribution market next year will reach its lowest level in the past five years.

On December 21, the Korean Chamber of Commerce and Industry announced the results of its "2026 Distribution Industry Outlook Survey," conducted with 300 retail distribution companies nationwide. According to the survey, the growth rate of the domestic retail distribution market in 2026 is projected to remain at 0.6%. This forecast is based on the retail sales growth rate as reported by Statistics Korea.

The main reasons cited for the slowdown in growth were weakened consumer sentiment at 67.9%, high inflation at 46.5%, intensified market competition at 34.0%, and household debt burden at 25.8%.

By business type, online shopping is expected to lead the overall market with a 3.2% growth compared to the previous year. This is attributed to the spread of consumer preferences prioritizing value for money and practicality, as well as the strengthening of delivery services.

In contrast, offline channels are generally expected to underperform. Both hypermarkets and supermarkets are projected to experience negative growth of -0.9%. This is due to a combination of intensified competition with online channels, increased small-quantity purchases driven by the rise in one- and two-person households, and deteriorating profitability resulting from discount competition.

Department stores are forecast to grow by 0.7%. Despite weakened consumer sentiment, it is analyzed that luxury consumption driven by rising asset values and demand for experiential content will be maintained at a certain level. Convenience stores, despite steady demand for nearby consumption, are expected to see only 0.1% growth due to rising labor and rental costs and intensified competition among stores.

Industry insiders cited "distribution of consumption coupons for livelihood recovery" as the top retail news of 2025, with 44.7% of respondents selecting it. Continued sluggish domestic demand ranked second at 43.0%, and the slowdown in e-commerce growth was third at 38.3%. Consumption coupons were evaluated as having expanded sales, especially in neighborhood channels such as traditional markets and small to mid-sized supermarkets.

Park Kyungdo, a professor at Sogang University, stated, "In the face of stagnant domestic market growth and intensifying competition, it is important for the distribution industry to pioneer overseas markets through collaboration between large corporations and small and medium-sized enterprises." He further suggested, "The industry should focus on the global south market as a new growth engine, centering on content-linked products such as K-beauty and K-food."

Lee Heewon, Director of the Distribution and Logistics Promotion Center at the Korean Chamber of Commerce and Industry, said, "It is necessary to revive weakened consumer sentiment and expand growth potential through policies to stimulate consumption, regulatory improvements in line with global standards, fostering advanced industries centered on regional hubs, and building industrial infrastructure such as artificial intelligence (AI)."