Emart has joined the "5,000 Won War." By benchmarking Daiso's "under 5,000 won" pricing strategy, Emart is implementing an ultra-low price policy as a customer acquisition strategy to draw shoppers, lost to the online market, back to its offline stores. There is growing attention on whether this move will become a game-changer that enables Emart to catch up with Coupang, which has emerged as a new powerhouse in Korea's retail industry.

Emart launched its private label (PL) brand "OK Price (5K PRICE)" on the 14th, featuring all products priced under 5,000 won. Photo by Emart

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Okay Price is a private brand focused on processed foods and daily necessities. Product prices range from 880 won to 4,980 won, with all items priced under 5,000 won.

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Product sizes have been reduced by about 25% to 50% compared to existing products, and prices are up to 70% lower than those of regular brand items. An Emart representative explained, "By selling these products simultaneously at both Emart and Everyday, we were able to more than double our purchasing volume compared to previous PL products, and the resulting economies of scale allowed us to achieve the industry's lowest level of cost competitiveness. We invested about a year in developing these products to fulfill the essential role of hypermarkets in stabilizing basket prices and to drive price innovation in this era of high inflation."

This is part of Emart's "price destruction declaration," an initiative launched last year to strengthen its core competitiveness. With the surge in online shopping during the COVID-19 pandemic leading to a decline in store visitors and sluggish domestic demand, Emart has held large-scale discount events to attract customers. This year, Emart also hosted the "Goraeit Festa," offering fresh foods, processed foods, and daily necessities at dramatic prices.

Emart introduced private label products priced under 5,000 won as a hidden card to encourage customers to visit stores continuously, as mega discount events can result in only a temporary sales boost. Photo by Emart

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The results have been notable. In the second quarter of this year, Emart recorded total standalone sales (transaction amount) of 4.2906 trillion won and an operating profit of 15.6 billion won. Sales grew by 12% year-on-year, and operating profit turned positive. During the Goraeit Festa in June, both sales and customer traffic increased by 33% and 18%, respectively, compared to the same period last year.

However, Emart noted that mega discount events can result in only a temporary sales boost, so it introduced PL products priced under 5,000 won as a hidden card to encourage customers to visit stores continuously.

Exterior view of the Daiso store at Busan Premium Outlet.

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Emart's OK Price closely resembles Daiso's pricing policy. Daiso has maintained its ultra-low price policy of keeping all products under 5,000 won and is the only offline retailer to have consistently grown. This success is attributed to targeting price-conscious consumers amid high inflation. Last year, Asung Daiso posted annual sales of 3.9689 trillion won, up 14.7% year-on-year, putting it on the verge of joining the "4 trillion won club." During the same period, operating profit reached 371.1 billion won, a 41.8% increase over the previous year, with an operating margin of 9.35%. This is overwhelmingly higher than the average operating margin of major competitors such as Emart and Coupang, which typically range from 1% to 2%.

Similarly, Emart aims to increase repeat store visits by offering PL products priced under 5,000 won. However, while both Emart and Daiso set the price ceiling at 5,000 won, Emart differentiates itself by focusing a significant portion of its lineup on processed foods. Of the 162 items in the initial OK Price launch, most are processed foods such as canola oil, sunflower oil, dried noodle ramen, and Himalayan pink salt seaweed. In contrast, Daiso primarily offers household essentials such as kitchenware, bathroom items, and cleaning supplies.

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This strategy is seen as a move to counter Coupang's rapid growth in the online market. Coupang's explosive growth, fueled by the rise of online shopping habits, pushed its consolidated sales above 38 trillion won last year, surpassing Emart's 29 trillion won. Coupang Inc., listed in the US, posted consolidated sales of 11.9763 trillion won in the second quarter of this year, up 19% year-on-year, maintaining double-digit growth. Notably, fresh food sales saw remarkable growth, with Coupang's Q2 fresh food sales rising by about 25% compared to the previous year.

Fresh foods are a category where hypermarkets like Emart have an advantage, as consumers prefer to check freshness in person. Emart is expanding new store formats such as "Emart Food Market" and "Starfield Market," which highlight fresh foods, while also aiming to draw customers back to offline stores with ultra-low-priced processed foods like those in the OK Price lineup.

AliExpress recently opened the '1000 Won Mart Korea Shipping Section,' and convenience stores have also increased buy-one-get-one-free promotions this year, intensifying the ultra-low price competition in the distribution industry. Getty Images Bank

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The retail industry is currently embroiled in fierce ultra-low price competition. Chinese e-commerce platform AliExpress recently opened the "1,000 Won Mart Korea Shipping Section," operating a permanent ultra-low-price zone for products under 5,000 won. Convenience stores have also increased buy-one-get-one-free promotions this year and launched "ultra-low-price marketing" campaigns, offering discounts of up to 50% on major food and daily necessities.An industry insider commented, "As the consumer trend of prioritizing cost-effectiveness spreads, ultra-low-price product strategies will become an essential response for retailers."