South Korea's hypermarkets are doubling down on groceries while sharply cutting space for non-food goods. With e-commerce having taken the lead in manufactured goods and other non-food categories, the chains are building their survival strategy around food, where shoppers still want to inspect quality in person before buying.
E-Mart's (139480) Eunpyeong store, which reopened after a renovation in April this year, raised the share of floor space devoted to food to 67% from 57%, a gain of 10 percentage points, according to retail industry sources on the 29th. The E-Mart Yangjae store, which reopened in March, also lifted its grocery share to 61% from 51% while shrinking non-food sections.
Lotte Mart is moving quickly on the same shift, rolling out stores specialized in groceries. Its Grand Grocery Eunpyeong store, which reopened in December 2023, expanded the food share to 90% from 66%. The Lotte Mart Uiwang store, renovated in May 2024, raised its food share to 76% from 66% and cut non-food aisles.
The chains are reorganizing around food to differentiate themselves by widening their range of fresh produce and ready-to-eat meals, the core strength that online rivals find hardest to replicate. In non-food, by contrast, competition with online sellers is intensifying.
Food's share of hypermarket revenue has been rising steadily. Data on hypermarket sales by product category from the Ministry of Trade, Industry and Energy show the food share was about 65% as of December 2021 and has climbed consistently to 74.4% in August this year. In August, when demand ahead of the Chuseok holiday was pulled forward, total hypermarket sales rose 4.5% from a year earlier, with food sales up 5.4% and non-food sales gaining only about 1%.
"Food categories, including fresh produce, are still areas where hypermarkets are competitive because consumers want to check quality themselves before buying," an industry official said. "Since non-food has become hard to compete in against online channels, we are looking for a breakthrough by maximizing the strengths of offline channels."
