"Core Business Competitiveness Recovery"... Large Supermarkets Enter Ultra-Low Price Competition

Three Major Supermarkets Declare 'Price Destruction'
Consumer Sentiment Shrinks Amid High Inflation
Offline Store Attraction Measures

Since the beginning of the year, the large supermarket industry has been announcing a series of 'price destruction' initiatives. This strategy aims to thaw frozen consumer sentiment caused by high inflation and high interest rates through 'ultra-low-priced products.' It is interpreted as a measure to attract consumers who shifted to the e-commerce market during the COVID-19 pandemic back to offline stores, focusing on price, which is the core competitiveness of large supermarkets.

Lotte Mart announced on the 1st that it will launch a consumer life support project called ‘This Week's Hot Price’ starting this month. The project selects one product each week from food and daily necessities and sells it at an ultra-low price.

The first item Lotte Mart chose is rice. Until the 4th, all stores will sell ‘Jeonggalhan Rice’ (10kg) at a 38% discount compared to the regular price. The discount applies when L.Point members pay with the event card. Only one bag can be purchased per person. The second week's item will be selected from family food products.

The large supermarket that ignited the ultra-low-price competition at the beginning of the year is Emart. Since last month, Emart has introduced a year-round 'Price Shock Declaration' event, selling three core food products and 40 processed and daily necessities at ultra-low prices. Last month, it offered pork belly, green onions, and steamed buns at prices up to 40% cheaper than the regular price. This month, it offered beef bulgogi, onions, and frozen dumplings at prices up to 41% lower.

Homeplus also launched a ‘Price Stabilization Project’ that offers major food and daily necessities at up to half price every month. From today until the 7th, it has prepared various holiday-themed ritual items, livestock and seafood products, and fresh fruits for the Lunar New Year. Especially, until the 5th, the ‘Homeplus 5-Day Market’ event will discount more than 20 types of food, including ‘Barley-Fed Pork’ (Bomeokdwae) and ‘Dangdang Chicken.’

The reason large supermarkets have entered the lowest-price competition since the beginning of the year is that their performance recovery has been slow even after the transition to the COVID-19 endemic phase. Consumers who moved to the e-commerce market due to the pandemic are still shopping online, but with continued high inflation and high interest rates, disposable income has decreased, leading to reduced spending. According to the industrial activity trends announced by Statistics Korea, retail sales in all sectors, including durable goods, non-durable goods, and semi-durable goods, decreased in December last year. The retail sales index, which shows consumer trends, fell by 8% in December last year, and especially in non-durable goods such as food and beverages, sales dropped by 0.7% compared to the previous month. Compared to the same month last year, it decreased by 1.8%.

The ultra-low-price discount competition among large supermarkets is expected to continue for the time being. As the rapidly growing e-commerce market strengthens its market dominance through fast delivery and low-price offensives, price policies that can enhance core competitiveness are essential to secure loyal customers. An industry insider said, "Large supermarkets sell food and daily necessities, so they inevitably are sensitive to consumer sentiment and prices," adding, "Ultimately, the reason to visit a supermarket is the price, so the competition will become even fiercer."

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