COVID-19 Prolongation... Marts and Franchises "Good Coexistence Continues"

Planned Exhibition of Korean Agricultural Products at Large Supermarkets
Supporting Farmers by Selling B-Grade Products
Franchise Industry Waives Royalties
Marketing Cost Burden and Cash Support Measures Announced

[Asia Economy Reporters Lee Seon-ae and Cha Min-young] The distribution industry's 'good coexistence' efforts to overcome the novel coronavirus infection (COVID-19) continue into April. Large supermarkets have stepped up to help farmers suffering from consumption stagnation, while dining franchises continue support measures such as royalty exemptions and logistics cost reductions to ease the pain of franchise owners.

◆Large Supermarkets Help Farmers Through Good Consumption= According to related industries on the 3rd, as online school openings are expected to sharply reduce domestic agricultural product consumption, large supermarkets have taken action to address this issue. SSG.com, affiliated with E-Mart, is holding a special exhibition titled 'Reviving Our Farmers Affected by COVID-19' until the 8th. To promote fresh food consumption, they have gathered about 1,000 types of agricultural and marine products and are offering discounts of up to 33%. The scale amounts to about 10 billion KRW. Lotte Mart is also selling about 440 tons, including 300 tons of eco-friendly agricultural products such as green onions, mushrooms, onions, and apples during the same period.

Notably, all major distributors have focused on distributing B-grade products, known as 'motnani products.' These are products with the same taste and quality but lower marketability due to their unattractive appearance. SSG.com is selling 3kg of 'Gangwon-do Motnani Potatoes' limited to 600 units per day for 4,990 KRW. 'Gyeongbuk Bojogae Apples,' which have blemishes or spots but the same taste, are sold for 5,980 KRW per 3kg. Lotte Mart has directly purchased about 300 tons of apples damaged by typhoons during the harvest season and difficult to ship due to consumption stagnation, offering them at prices 50% lower than regular products.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT), as of the 31st of last month, wholesale prices for 16 domestic vegetable varieties recorded between 1% and 49% lower than the average year. Supply increased, but consumption decreased. The largest drop was in peeled garlic (Namdo), which halved to 70,000 KRW per 20kg. Following were green onions (-44%), large green onions (-41%), peeled garlic (Daeseo) (-35%), and garlic cloves (-35%). Red leaf lettuce and potatoes, which have high school meal consumption, also recorded wholesale prices 22% lower than the average year. It is expected that many farmers will overcome difficulties through this large supermarket event.

◆Franchise Headquarters Survive Only if Franchise Stores Survive= The franchise industry is extending coexistence support, believing that the headquarters can gain strength only when franchise owners overcome difficulties. Chicken franchise Genesis BBQ has decided not to charge interest on overdue payments for goods from franchise stores suffering due to the prolonged COVID-19 outbreak until the situation stabilizes. A BBQ official explained, "As the COVID-19 situation prolongs and threatens the national economy, the company has decided to expand support to eliminate any concerns franchisees may have," adding, "Payment for goods can also be made after about two deliveries, allowing some flexibility."

The large-capacity coffee franchise The Venti decided to extend special support for franchise owners following February. Previously, The Venti exempted the entire February royalty for about 430 franchise stores nationwide and reduced logistics costs by 10%. The Venti will also exempt the entire March royalty for all franchise stores and provide additional logistics cost reductions proportional to the sales decline.

Stores with a 0-20% sales decline compared to the previous month will receive an additional 5% logistics cost reduction. Stores with sales declines of 20-40%, 40-60%, and over 60% will receive additional logistics cost reductions of 10%, 15%, and 25%, respectively. Through this, franchise stores experiencing sales declines compared to the previous month will receive logistics cost reductions ranging from a minimum of 10% to a maximum of 30%. The Venti stated, "We plan to continue mutual cooperation through generous support until sales stabilize at all stores."

Coffee specialty store Mega Coffee will bear 100% of marketing costs such as drama and radio advertisements and new menu launch promotions for the time being. Beer specialty store Yeokjeon Halmeoni Maekju supported 4.26 million KRW (2 million KRW each) to 426 franchise stores and will also bear 300 million KRW in advertising costs. Chicken Maru decided to reduce the price of chicken supplied to franchise stores by 5-10%.

This content was produced with the assistance of AI translation services.