Super low price competition among Korean retail companies
Online retail sales in South Korea last year rose by 16% from the previous year, keeping up double-digit expansion streak and far outpacing growth of 6.8% in overall retail sales, as more turned to online shopping with enhanced fast delivery and pay systems. However, its offline sales are shrinking and grow only 2% last year. What are the choices of retailers in this change of shopping trend?
The Korean Ministry of Trade, Industry and Energy announced early this year that the nation’s major retailers saw their combined sales increase by 6.8% in 2018, with offline sales rising 1.9% and online 15.9%. Online sales accounted for 37.9% in the entire sales in the retail industry, up by 2.9% points from a year ago.
As Korean consumers find it more convenient to do shopping online than offline due to fast delivery and simple payment service, the super supermarkets (SSMs) are suffering from poor performance. The SSMs operated by retail conglomerates have begun therefore low price competition by promoting super cheap products to attract more customers, for example “10won (about 0.008euro) super cheap war” by Lotte mart and “Everyday people’s price” by E-mart.
More and more Korean customers enjoy online grocery shopping and this trend will definitely change the business strategy of the entire retail industry. The fundamental transformation of distribution structure enabled the recent price competition among the SSMs and it is one of the industry’s efforts to keep pace with this change in shopping trend. For now, customers enjoy quality goods at low price.