The Power of the 'Jipbap Craze'... Hope for Improved Performance in Large Supermarkets

Emart Achieves Industry-First Sales of 22 Trillion Won... Increased Demand for Fresh Food and Food Ingredients
Lotte Mart Returns to Operating Profit... Streamlines Underperforming Stores and Enhances Profitability
Strong Performance Continues This Year... Focus on Strengthening Online Competitiveness

[Asia Economy reporters Jo In-kyung and Kim Yu-ri] Large discount stores, which had been experiencing stagnation and sluggishness, barely managed to improve their performance last year despite the COVID-19 pandemic, thanks to increased demand for fresh food and groceries. Boldly shedding underperforming offline stores and agilely responding to the rapidly growing online market also proved effective strategies.

Emart Achieves Record High Sales

On the 19th, Emart announced that its consolidated sales for 2020 reached KRW 22.033 trillion, with an operating profit of KRW 237.2 billion. These figures represent increases of 15.6% and 57.4%, respectively, compared to the previous year. The improvement in performance was driven by increased fresh food sales and the strong growth of SSG.com, the integrated online mall of the Shinsegae Group.

An Emart official stated, "Last year, we renovated nine existing stores including Wolgye Branch, and the increase in demand for home-cooked meals due to social distancing also contributed to the rise in sales of food ingredients."

Warehouse-type discount store Traders benefited the most from the COVID-19 impact. Its sales rose 23.9% year-on-year to KRW 2.8946 trillion, and operating profit increased by 58.7% to KRW 84.3 billion. Specialty stores such as No Brand and Electromart closed 41 stores over the past year but still saw sales grow by 15.0% to KRW 1.234 trillion. For large discount stores, sales declined in the first and second quarters, which were the early stages of the pandemic, but grew by 2.7% in the third quarter and 6.4% in the fourth quarter compared to the same periods last year.

SSG.com surpassed KRW 1 trillion in sales for the first time last year, reaching KRW 1.2941 trillion, a 53.3% increase year-on-year. Online fresh food sales surged, increasing processing volume, and total transaction value rose sharply by 37% to KRW 3.9236 trillion. The operating loss, which was KRW 81.9 billion in 2019, was reduced by half to KRW 46.9 billion.

Although Emart set a new record as the first large discount store to surpass KRW 22 trillion in sales, its operating profit remains far below previous levels. This is interpreted as reflecting fierce competition among offline retailers and inevitable cutthroat competition to secure the online market.

Lotte Mart Successfully Turns Around

Lotte Mart also showed signs of recovery. Its annual sales for 2020 were KRW 6.039 trillion, a 4.6% decrease from the previous year, but operating profit turned positive at KRW 19 billion.

The turnaround was attributed to intensive restructuring. Lotte Mart closed 12 underperforming stores last year. Although sales slightly decreased during this process, profitability improved significantly. Industry insiders expect the positive performance trend of large discount stores to continue this year. The ‘Let's Support Korean Agriculture’ campaign conducted jointly with the government early this year promoted sales of fresh agricultural, marine, and livestock products, and the increase of the Lunar New Year gift allowance to KRW 200,000 also contributed to sales growth.

Emart has set a goal to surpass KRW 23 trillion in sales this year by investing KRW 560 billion. It plans to fully leverage online and offline synergies, renovate large discount store locations, and open five new Traders stores by 2025. Lotte Mart also plans to focus on improving offline profitability through additional store efficiency measures and strengthen online competitiveness by expanding logistics hub stores utilizing its assets.

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