Offline Retail Fires 'Starting Gun' for Comeback... Large Supermarkets Also See 'Surprise Rebound'

Chairman Chung Yongjin’s “Strengthening of Core Business Competitiveness”
Emart’s Standalone Third-Quarter Gross Sales Top KRW 5 Trillion for First Time
Lotte Mart Operating Profit Surges 87.5%

Offline retail has fired the starting gun on a comeback. After department stores posted strong results early this year, helped by the stock market wealth effect and an increase in foreign tourists, large supermarkets, which had struggled amid the onslaught of online shopping, also managed to turn their performance around. Large supermarkets significantly stepped up product sourcing and drew grocery shoppers into stores with major monthly discount events.

Large supermarkets, which had been pushed to the brink by the spread of online shopping, have turned their performance around on the back of rising visitor numbers and sales growth. Getty Images

According to the Financial Supervisory Service’s electronic disclosure system on November 13, E-Mart’s gross sales on a standalone basis reached KRW 5.104 trillion in the third quarter of this year, up 11.1% from a year earlier. It was the first time quarterly gross sales had topped KRW 5 trillion. Operating profit on a standalone basis, including Traders and E-Mart Everyday, rose 46.3% to KRW 166 billion.

The results appear to reflect the “strengthening of competitiveness in the core business” emphasized by Shinsegae Group Chairman Chung Yong-jin. Cumulative gross sales for the first three quarters reached KRW 14.2621 trillion, while operating profit came to KRW 337.9 billion, up 5.6% and 28.8%, respectively. Traders, the warehouse-style discount retailer, recorded gross sales of KRW 1.1668 trillion and operating profit of KRW 55.2 billion in the third quarter, up 16.6% and 40.5%, respectively. Both figures were quarterly records.

Lotte Shopping’s mart division also posted gross sales of KRW 1.6024 trillion in the third quarter, up 9.7%, while operating profit surged 87.5% to KRW 21.6 billion. In South Korea, offline sales increased despite initial costs associated with opening Zeta Smart Centers, and operating profit reached KRW 17.9 billion.

The improvement in results was underpinned by an increase in visitors. In the third quarter, E-Mart’s visitor numbers rose year on year by 5.3% at its discount stores, 8.0% at Traders, and 11.5% at E-Mart Everyday. The increase in visitors to discount stores was substantially higher than the 0.7% recorded in the first half. Sales at existing stores also grew at double-digit rates across the board, up 10.6% at discount stores, 13.3% at Traders, and 13.5% at E-Mart Everyday.

Competitive prices brought customers back. E-Mart consolidated product purchasing, which had previously been divided by business unit, to increase purchasing volumes, and used the resulting cost savings to lower selling prices. Sales and visitor numbers during its “Goraeit” discount event in the third quarter rose 29.2% and 14.7%, respectively. Sales of its ultra-low-priced private label, “5K Price,” more than doubled. Lotte Mart and Lotte Super also saw success with a strategy of increasing fresh food sales through their regular “Tongkeun Day” discount event and expanding private-label and exclusive products.

The shift in the timing of Chuseok and operational disruptions at Homeplus also contributed to the results. Chuseok, which fell in October last year, came earlier in September this year, bringing demand for holiday gift sets into the third quarter. “The increase in discount store sales reflected a combination of factors: the difference in the timing of Chuseok, the base effect from consumer coupons the previous year, and the impact of Homeplus suspending operations,” said Park Jong-dae, a researcher at Hana Securities. “The 60 E-Mart stores near Homeplus locations are seeing average growth of around 10%, which is higher than elsewhere.”

The three major department store operators have also continued to post strong results this year, supported by an increase in foreign tourists and greater luxury goods consumption. In the third quarter, Lotte Department Store recorded gross sales of KRW 2.0397 trillion, up 5.7% from a year earlier, and operating profit of KRW 112.9 billion, up 35.7%. Shinsegae Department Store posted gross sales of KRW 1.8565 trillion and operating profit of KRW 103.7 billion, up 8.5% and 23.5%, respectively. Hyundai Department Store also saw revenue and operating profit increase by 6.5% and 27.8%, respectively.

Shopping by foreign customers and higher sales of luxury goods, fashion, and high-end jewelry drove the growth. Shinsegae Department Store’s cumulative sales to foreign customers in the first three quarters of this year reached KRW 850 billion, more than double the figure for the same period last year. Demand from foreign shoppers flowed into major stores, while increased sales of higher-margin products supported department store results.

The rebound in offline retail is also reflected in government statistics. According to the Ministry of Trade, Industry and Energy, offline sales in September rose 5.1% from the same month a year earlier, surpassing the 4.0% growth in online sales. During the period, department store and large supermarket sales rose 8.4% and 4.0%, respectively. Large supermarket sales had risen 4.5% in August, marking a second consecutive month of growth.

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