Large Supermarkets Losing Customers to E-commerce... Counterattack Led by 'Ultra-Low Prices'

Large-Scale Procurement Enables Grocery Discounts
Reducing Distribution Steps to Achieve Up to Half Price

The large-scale supermarket industry is making every effort to win back customers lost to e-commerce companies. They are strengthening their core competitiveness by implementing ultra-low price policies on groceries, which are their main strength.

According to the industry on the 29th, Emart will select eggs, spinach, and cup rice as key food items next month and start selling them at up to half price. A 30-egg carton will be sold 33% cheaper, and the price of one bunch of spinach is reduced by 50%. Three types of CJ cup rice will be discounted by 50-56% compared to the regular price. In addition, Emart plans to offer 'Two Whole Old-Fashioned Fried Chickens,' made from domestic chicken, at a price under 10,000 won.

Earlier, Emart has been selecting three food items each month since January this year and maintaining ultra-low prices throughout the month. In January, they offered pork belly, green onions, and steamed buns; in February, they added beef bulgogi, onions, and dumplings to pork belly. Emart stated, "The newly introduced pricing policy 'Price Shock Declaration' this year has received great response by significantly reducing customers' actual shopping basket burden," adding, "The advantage of being able to purchase popular products at the lowest price level throughout the month has maximized customer benefits."

Lotte Mart will also enter the food price war starting from the 29th by selecting pork belly and neck meat as Hot Price items. Hot Price is a project that selects items weekly and sells them at ultra-low prices. Lotte Mart explained that this week, they chose pork belly and neck meat to coincide with 'SamSam Day.' Lotte Mart will sell domestic pork belly and neck meat at a 50% discount until the 3rd of next month, at a price of less than 1,400 won per 100g. Additionally, they will offer discounts or 1+1 deals on side dishes like assorted wraps and green onion salad that go well with pork belly.

Homeplus will hold a large-scale discount event next month to celebrate its 27th anniversary as part of the 'Price Stabilization Project.' They plan to reduce consumers' shopping basket price burdens by offering up to 70% discounts on food items. Representative products include strawberries, pork belly and neck meat, old-fashioned fried chicken, and large egg cartons, all priced under 5,000 won. Homeplus also announced 1+1 or promotional benefits on processed foods and snacks.

The secret to large supermarkets maintaining ultra-low price policies on groceries lies in securing large quantities. They secure as much volume as possible through advance contracts, bulk purchases, and diversifying sourcing areas to sell at low prices. Additionally, directly handling product processing and reducing distribution stages have also contributed to achieving ultra-low prices.

The reason large supermarkets are strengthening their core competitiveness in food sales by emphasizing ultra-low price policies is related to the growth of the e-commerce industry. E-commerce companies, which previously dealt with daily necessities, industrial goods, and fashion accessories, have recently expanded their scope to include food, causing large supermarkets to lose customers' shopping baskets.

This phenomenon is also reflected in performance. Last year, Emart, the number one large supermarket, was thoroughly outperformed by the e-commerce giant Coupang. Its sales decreased by 2.1% compared to the previous year, reaching 16.55 trillion won, about half of Coupang's 31.8298 trillion won, and operating profit dropped to 188 billion won, one-quarter of Coupang's 617.4 billion won. The background for large supermarkets adopting ultra-low price policies is ultimately to strengthen their core business and regain customers lost to the e-commerce industry.

The ultra-low price strategy of large supermarkets seems to be effective for now. Emart's price reversal products introduced last month reportedly sold 31% of the planned volume within two weeks of launch. Lotte Mart and Homeplus also report smooth sales of groceries promoted with ultra-low prices. An industry insider said, "The ultra-low price policy is successfully reducing customers' shopping basket burdens in this high inflation era," adding, "We are making every effort to ensure quality control to provide satisfaction not only with the shocking prices but also with product quality."

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