"Doing Better at What They Do Well" - Marts Find Competitiveness in Their Original Intentions

Lotte Mart Sees Effects Within a Year of Joint Sourcing with Supermarkets
Emart Focuses on Synergy with Supermarkets and Convenience Stores Through Rapid Shelf Maintenance
Price Competitiveness Up with Joint Ordering... Next Steps Include Logistics Integration

Large supermarkets are intensifying their strategy to strengthen their core business competitiveness in order to survive the competition between online and offline channels. Offline marts, which have long continued their business, are focusing on enhancing their competitiveness in fresh food, aiming to establish themselves once again as channels that customers cannot help but visit. Following Lotte Mart, Emart plans to expand synergies among offline channels through joint sourcing with supermarkets and convenience stores, and to strengthen product competitiveness. Since last year, Lotte Mart has focused on securing price competitiveness through joint ordering among offline channels, and based on the results seen in the third quarter of this year, it plans to take a second leap forward, including logistics integration.

Visitors are shopping at the foreigner-specialized store in Zeta Plex Seoul Station, Jung-gu, Seoul, which was renewed and reopened last September [Photo by Lotte Mart].

According to the distribution industry on the 15th, Emart's separate operating profit for the third quarter was 110.2 billion KRW, a slight increase of 5% compared to the same period last year. Emart's separate operating profit returned to a growth trend for the first time in three quarters since the fourth quarter of last year. As high inflation increased the burden on shoppers, the year-round project contributing to price stabilization, "The Limited," gained attention, and major store renovations reflecting customer lifestyles continued, producing results. However, as the distribution environment rapidly changes, questions remain about the competitiveness of marts themselves. According to the Ministry of Trade, Industry and Energy, the sales share of large supermarkets by distribution type in the third quarter was around 13%, lagging behind not only online channels but also department stores and convenience stores.

The solution for large supermarkets is to strengthen their core business competitiveness. The plan is to jointly source major product categories, such as fresh food, which marts excel at, together with supermarkets and convenience stores to increase volume and thereby secure cost competitiveness. To achieve tangible results, each company's CEO was unified into one person to enable chemical integration. The first to attempt and achieve results was Lotte Mart. At the end of last year, Lotte Mart appointed Kang Seong-hyun as the joint CEO of Mart and Supermarket and accelerated the work of business integration. As a result, Lotte Mart recorded an operating profit of 51 billion KRW in the third quarter, an increase of 57.3% compared to the same period last year, marking the highest quarterly performance since 2014. The key factor that enabled noticeable results amid the sluggish performance of large supermarkets due to changes in the distribution environment was the integrated product sourcing between marts and supermarkets. The supermarket also recorded an operating profit of 14 billion KRW in the third quarter, a 146.6% increase compared to the same period last year. It has recorded profits for three consecutive quarters since the first quarter.

Large supermarkets plan to focus on enhancing product quality, which is the essential competitiveness of marts, and strengthening price competitiveness by expanding integrated sourcing items next year. Han Chae-yang, who was appointed as the CEO of Emart, Emart Everyday, and Emart24 simultaneously last month, emphasized as his first statement, "We will put all our efforts into strengthening core business competitiveness," which aligns with this direction. They plan to increase synergy under the "one CEO system for the three offline companies," focusing on strengthening purchasing competitiveness. Along with securing product competitiveness, Emart also plans to actively pursue new store openings, which have been reduced in scale so far, to support external growth. Emart (discount store) stores have decreased by 14 net locations from 2017 to this year. Emart aims to accelerate new store openings by securing five store sites next year. They are examining major hubs for re-entry after closure, including the Godeok Biz Valley store in 2025, and newly developed residential complexes.

They are also putting effort into renovating existing stores. Emart plans to continuously create "Emart Towns" in the form of shopping malls without Emart stores, like the The Town Mall Kintex store introduced this year. The first goal is to make these spaces places where visitors can spend more time, tailored to customer lifestyles.

Lotte Mart is expanding the range of jointly sourced products through chemical integration while also actively reducing costs through logistics efficiency. Next year, they plan to integrate logistics centers, and in 2025, system integration will be carried out. Currently, Hyundai Lotte Mart has logistics centers in Osan and Gimhae, and Lotte Super has six logistics centers. Store renovations include not only applying the Zeta Flex brand to major stores but also introducing experimental attempts such as "Grand Grocery," a store specialized in groceries. CEO Kang said, "We are preparing a store that organizes 90% of the store with grocery product categories and gathers food-specialized stores," adding, "The goal is to debut it next month at the Eunpyeong store."

Visitors are browsing products at the E-Mart Yeonsu branch in Yeonsu-gu, Incheon, which reopened after renovations last March.
[Photo by E-Mart].

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