Customers line up in front of the newly opened Olive Young N Seongsu in Seongdong-gu, eastern Seoul, on Nov. 21. (Newsis)
Customers line up in front of the newly opened Olive Young N Seongsu in Seongdong-gu, eastern Seoul, on Nov. 21. (Newsis)

The Korea Chamber of Commerce and Industry released its 2025 Retail Industry White Paper on Tuesday, citing "AI" and "K-culture" as the key words to define retail growth this year.

Amid intensifying economic recession and growing uncertainties, the report stresses that survival will hinge on retail companies finding next-generation business and revenue models.

It emphasizes leveraging AI and K-culture as growth drivers while actively addressing the evolving consumer trend of prioritizing value and cost-efficiency.

Identifying "S.N.A.K.E" as the defining theme for this year's consumer market, the report highlights that "Survival" has emerged as the top priority for the retail industry amid growing domestic and global uncertainties.

According to Statistics Korea, the retail market's growth peaked at 7.5 percent in 2021 but has slowed since.

The limited size of the consumer market has fueled intense competition, with businesses competing for market share in an increasingly price-sensitive environment.

KCCI forecasts a meager 0.4 percent growth rate for the retail sector this year, attributing the slowdown to US trade policy shifts and heightened political uncertainty in Korea.

With slowing market growth, developing the "Next Business Model" that creates new revenue streams is becoming increasingly important for retailers, the report suggests.

The decline in profitability from product sales alone has exposed the limits of sustainable growth.

As a result, many companies are turning to retail media — an advertising business that leverages offline stores and online channels — to secure profitability. By incorporating advertising strategies into retail operations, businesses can tap into new revenue streams beyond traditional product sales.

Additionally, retailers are focusing on consumer-to-consumer platforms, such as secondhand marketplaces and hyper-personalized, conversational shopping experiences.

"Artificial Intelligence" is emerging as a key tool for reducing operational costs and enhancing efficiency.

Retailers are increasingly adopting AI to analyze consumer behavior, predict future demand and respond flexibly to rapidly changing market conditions.

Globally, the market for retail applications of AI is projected to expand from $9.97 billion in 2023 to $54.92 billion by 2033, representing a 5.5-fold increase over the decade, based on Precedence Research data in 2023.

Meanwhile, the limitations of the domestic market have driven increased focus on merging "K-culture" with commerce to create new opportunities.

One successful case is Olive Young, Korea's biggest beauty retailer, which has become a must-visit destination for international tourists.

Featuring a curated selection of K-beauty, wellness and lifestyle products, the retailer expects its global transactions to grow at an average annual rate of 84 percent between 2020 and 2033, with its product range now exceeding 15,000 items.

Similarly, major department stores like Shinsegae, Hyundai and Lotte, alongside fashion platform Musinsa, are making aggressive efforts to globalize Korean fashion.

Lastly, the ongoing economic slowdown and heightened uncertainty are accelerating the trend of "Economical Consumption," characterized by frugal and value-oriented spending.

In the US, similar economic pressures have driven the rapid growth of hard-discount stores, while in Korea, large supermarkets have increasingly prioritized price-focused promotions for essential goods. Analysts predict that this recession-driven frugality will continue to shape consumer behavior, with spending concentrated on necessities like food and household items while minimizing outlays on non-essentials.