Corporate supermarkets see uptick in demand for fresh food
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According to statistics that the Ministry of Trade, Industry, and Energy released on Monday, total sales at SSM companies, including GS The Fresh, Lotte Super, Homeplus Express, and Emart Everyday, increased by about 3.7 percent compared to a year ago, marking the first growth in five years. This is remarkable considering that they had seen consecutive declines in sales since recording a growth rate of 2 percent in 2018.
After four years of decline, the number of SSM stores saw a turnaround in 2023 and the total number of stores operated by four SSM companies was 1,147 as of March 2024, up from 2018’s 1,229 figure.
The resurgence of SSM is attributed as demand for home-cooked meals grows amid soaring dining-out prices, coupled with strategies targeting this trend. This includes reducing non-food product categories and expanding the selection of fresh food items, with food accounting for a whopping 93 percent of SSM sales as of March 2024. This is significantly higher compared to the food sales proportion in supermarkets, which is at 69 percent. The introduction of more conveniently packaged items has also made SSMs more appealing to consumers, particularly in areas with a high concentration of one to two-person households and office workers.
Each company implemented its own strategies to capitalize on this trend. Homeplus, for example, introduced its “Mega Food Market” section with fresh and instant food items that was originally in its discount marts, to its supermarket. Homeplus Express’ deli section, which offers instant food items, saw continuous growth with a 146 percent increase in 2021, followed by 30 percent in 2022 and 12 percent in 2023. Analysis of instant food sales by time of day shows that sales between 4 p.m. and 7 p.m., when most consumers are preparing dinner, account for over 30 percent of total sales.
Lotte Super, an SSM brand operated by Lotte Shopping, has seen positive results in its fresh food section. After introducing “Ultimate Products” in March 2023, the average sales growth rate of stores implementing this strategy was about twice that of the overall average. Ultimate Products are fresh food items selected based on customer demand and supplied at the lowest prices possible. Lotte Super has introduced Ultimate Products to around 40 locations, including its Jangan and Daelim branches in Seoul, as of April 2024.
SSM’s immediate delivery services via neighborhood stores are also growing in popularity.
Homeplus Express’ 1-hour immediate delivery service allows customers within a 2 to 2.5 km radius of 242 stores nationwide to receive their ordered items within an hour. According to the company, immediate delivery sales for the fiscal year ending in March 2024 grew by 53 percent compared to the same period during the previous year, with a customer retention rate of 40 percent. This means that 4 out of 10 shoppers made repeat purchases in the same month they first used the service. Notably, half or 46 percent of VIP+ customers use immediate delivery two to five times per month.
Emart Everyday’s instant delivery sales also recorded growth as of April 2024, increasing by about 10 percent year-on-year. The company said it doubled the distance of its instant delivery operations from the original 1 kilometer to 2 kilometers, which led to an increase in the number of customers.
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