Korean discount stores focus on fresh products to compete with online players

ZETTAPLEX in Jamsil. [Courtesy of Lotte Mart]

South Korea’s three major discount store operators are renewing their stores as part of a survival strategy amid growing competition with e-commerce platforms. They are focusing on fresh foods that are in high demand from customers that prefer to shop offline.

According to retail industry sources on Thursday, Lotte Mart is preparing to open its second ZETTAPLEX at its existing Seoul Station store, with an aim to transform the store into a luxury mart in the second half of this year.

It will be the first addition in about two years after Lotte Mart in Jamsil, southern Seoul, opened ZETTAPLEX in December 2021. The second ZETTAPLEX store will strengthen the grocery assortment and boast specialized non-food brands such as Bottle Bunker, Pet Store, Toys “R” Us, and LOHBs+.

ZETTAPLEX emphasizes competitiveness in fresh products.

The luxury mart has diversified the display of fruits beyond just sweetness, considering factors like acidity, moisture, and hardness to cater to customers‘ preferences.

The discount store also boasts the largest salad zone in the country, offering over 150 different products. In its meat corner, the store has expanded its premium selection, including native Korean beef “Hoban Chikso,” and “Jeju Berkshire Black Pork” from pure-bred black pigs from Jeju Island.

The store also operates a specialized tuna sashimi store in the center of the store, offering “omakase”-style products, where the best fish of the day is selected and merchandised.

During the 18 months since opening, ZETTAPLEX Jamsil saw sales increase by 15 percent compared to the same period before.

Emart Inc. has also renewed its discount stores in Wolgye, Yeonsu, and Korea International Exhibition Center (KINTEX) under the name of “The Town Mall.”

The renewed stores have expanded unique attractions such as smart farms and large butcher showcases to enhance the joy of shopping for fresh produce, entertainment, food, and cultural content, thereby increasing customers’ stay time.

In particular, the recently opened KINTEX store has introduced 98 shops from the entertainment, living, and lifestyle sectors, offering a wide range of experiences from shopping to leisure and relaxation.

Homeplus Co. has remodeled its existing stores into “Mega Food Markets” and expanded them to 18 locations under the name of “Mega Food Markets 2.0.”

Mega Food Market is Homeplus‘ future-oriented store, where it significantly reduced the space for non-food products, which can be purchased online and expanded the fresh produce section.

The Centum City store in Busan that opened recently has a large space of about 60,000 square meters and offers a wide range of fresh produce, specialized meat, and seafood sections.

The discount store chains’ move comes as they face growing competition with e-commerce platforms.

According to data from the Ministry of Trade, Industry and Energy, large discount store chains accounted for only 11.8 percent of the entire retail market in May, sharply down from 19.1 percent in May 2019. During the same period, the share of online sales increased to 50.2 percent from 41.2 percent.

“After taking over the market in non-food categories such as home appliances, fashion, and household goods, e-commerce platforms are expanding into the food sector,” said a retail industry insider. “Large discount store chains are concentrating on fresh produce to compete with e-commerce platforms by leveraging their unique offline strengths.”