'Sharp Sales Drop' Large Mart... Discount War for Survival

Disaster Relief Fund Usage Excluded
Fewer Customers from Late May
Emart, Lotte Mart Ultra-Low Price Marketing
Discounts on Directly Sourced Vegetables
Early Summer Health Food Event Launched

[Asia Economy Reporter Lim Hye-seon] Large supermarkets, which have seen customer visits dry up due to being excluded from disaster relief fund usage, are launching massive 'ultra-low price' marketing campaigns. These large supermarkets are holding the biggest sales event in 10 years since 2010. While 10 years ago they engaged in endless price competition to capture market share, this time it is a matter of survival. Due to the impact of the novel coronavirus disease (COVID-19), customer numbers have decreased, and without benefiting from the disaster relief fund boom, large supermarkets recorded their worst sales in May.

◆ Large Supermarkets Compete with Ultra-Low Prices = Since the end of last month, large supermarkets have been selecting weekly sale items such as Korean beef, daily necessities, and fruits to hold shocking discount events. Starting from the 11th, to cope with the heatwave, they are discounting seafood known as health foods like abalone and eel a month earlier than usual. The key points to watch are the dramatic discounts and ultra-low price competition through direct sourcing from production areas. Emart is selling about 40 tons of popular health seafood such as native eel and live abalone at low prices until the 16th. They are selling 'native freshwater eel' weighing 150-250g each, raised in Gochang, and 'wild sea eel' (3 pieces) for 9,900 won. The freshwater eel variety 'Japonica' is a premium eel breed generally not seen in large supermarkets. Since COVID-19, the decline in dining out demand has become a concern for eel farms. Emart has purchased about 100,000 native Japonica freshwater eels, totaling 20 tons, in bulk to sell at affordable prices. The premium health food 'Wando live abalone (100g)' is also sold at a 35% discount for 3,380 to 4,030 won.

Lotte Mart has prepared a 'weekend special event' until the 14th. Across all stores nationwide, they are selling 'Canadian lobster' about 30% cheaper than market prices, and various meats to support Korean beef and pork farms. The price for one 'Canadian lobster' is 9,920 won. Thanks to a direct sourcing distribution method that eliminates middleman margins and pre-secured stock, they can offer lower prices. Korean beef soup cuts and bulgogi (100g) are priced at 5,280 won and 5,600 won respectively. Domestic pork hind leg and front leg (100g) prices are 680 won and 990 won respectively. Daily necessities are also sold at a 50% discount. When purchasing two or more of '9 types of scalp shampoo and rinse,' prices range from 11,900 to 13,900 won. Products effective in odor removal are also prepared, and a 1+1 event is held for all 'LG Special Odor' products.

Large supermarkets plan to focus on 'price' as a customer attraction strategy for the time being. While short-term sales decline is a problem, it is also to prevent customer attrition. A supermarket official said, "With customers moving to non-face-to-face channels and the impact of disaster relief funds, even convenience stores are taking away customers," adding, "There is no proper way to bring back customers once lost, so we are exploring various methods."

◆ Sales Plunge "Let's Lower Prices at Least" = The reason large supermarkets have launched ultra-low price marketing is the desperate feeling that only cheaper prices can attract customers. Emart's total sales from the 13th of last month, when emergency disaster relief funds began to be distributed, to the 8th of this month decreased by about 10% compared to the same period last year. Sales of major items such as beef, pork, fruits, and vegetables also dropped by 15%, 11%, 12%, and 7% respectively. Lotte Mart is in a similar situation, with sales down about 15%. The disappearance of the disaster relief fund boom has had a significant impact.

A large supermarket official explained, "The decision to prohibit the use of disaster relief funds has led to a continued decline in sales," and "Since the end of May, we have been holding large discount events with the desperate feeling that 'there is nowhere left to retreat.'"

The results of ultra-low price marketing are positive. By offering products at prices cheaper than supermarkets and convenience stores where disaster relief funds can be used, they have succeeded in reversing performance. As a result of Emart's large-scale discount event held over two days from the 6th to the 7th, sales of major promotional items increased. Banana sales during the Banana Valley 1+1 event rose 71% compared to the same period last year. Sales of refrigerated cold noodles surged 188% thanks to a 50% discount event when purchasing two. On the 6th, wine priced under 30,000 won was sold at a 20% discount, and cup noodle sales during a 1+1 event increased by 70.5% and 567% respectively.

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