Q.Why are hypermarkets growing in popularity?
But a new kind of store is gaining popularity in Korea. It’s the hypermarket, which is also called “super supermarket” in Korean. And they are increasingly noticeable.
Markets galore
Hypermarkets are run by large companies while supermarkets are usually owned by individuals. They are larger in size than supermarkets that are usually found on street corners, and smaller than the discount stores found in areas with large populations.
Most of the existing hypermarkets in Korea range in size from 1,000 square meters to 3,300 square meters.
Hypermarkets sell food, but also keep other merchandise in stock.
There are a variety of manufactured goods and household appliances, but the amount of merchandise is smaller than that available at discount stores.
Unlike supermarkets, hypermarkets and discount stores usually occupy entire buildings. Discount stores are over 3,300 square meters. Discount stores sell almost anything, from food to electronic goods, clothing and cosmetics.
In Korea, GS Supermarket and Lotte Super dominate the super supermarket business, and they are expected to continue to do so for a while.
This year, GS Supermarket plans to open at least 20 new stores while Lotte Super has a plan to open 20 to 30 stores.
Both of these retail giants are able to expand so quickly because of the fast growth in sales at super supermarkets.
Growing in popularity
Why are hypermarkets growing in popularity, especially during such difficult economic times? One reason is that a growing number of people are trying to save on the price of gasoline, so they are opting to walk or bike to big supermarkets located nearby rather than venturing out to discount stores located far from home.
Another reason is that there is increasing interest in food safety.
Buying food in bulk and keeping it in the refrigerator for more than a week could cause it to lose freshness and flavor, so more and more people are buying smaller quantities of food on a more frequent basis.
Practical purchases
The biggest reason, however, has to do with people’s desire to be practical and buy only what they need during an economic slump.
Discount stores provide items at cheaper prices. But the large discounts offered often lure customers into spending more money and buying things they don’t need.
Hypermarkets usually sell items in smaller quantities than at discount stores. For instance, vegetables like radishes, cabbage and onions are sold in quarters or half portions. At discount stores, these items are sold in bunches.
The same is true for snacks. At hypermarkets, at least 30 percent of the confections sold are 100 grams or less.
Manufactured goods, like ramen, canned foods and powdered milk are often sold in single units instead of in bulk like at discount stores.
Promising future
In that regard, experts within the distribution industry are predicting that the popularity of hypermarkets will increase this year.Economists’ outlook that the real economy will remain sluggish at least this year is backing the claim.
According to a report by Shinsegae Department Store’s research center, one of Korea’s biggest retail chains, hypermarkets and supermarkets will enjoy much higher sales growth this year than discount stores or department stores.
The research center predicts an average 11.8 percent sales increase for hypermarkets and supermarkets, 6.1 percent for discount stores and 3.1 percent for department stores.
All in the name
Foreigners hearing the term “super supermarket” might be left scratching their heads, as it is a Konglish term.
GS Supermarket was the first to use the term in 1996 when it opened a 660-square-meter store, which was well received.
Other countries may use other terms for the same kind of store, but that does not mean the stores don’t exist overseas.
There are many similar kinds of large retail stores in the United States and Japan. In Japan, they are called “shokuhin” supermarkets (shokuhin is Japanese for food). A leading shokuhin supermarket chain is run by a company Benimaru.
Controversial practices
Despite the rosy picture that has been painted for the future of the hypermarket, there are some stumbling blocks.
Recently, a nationwide association of supermarkets issued a statement claiming that the large companies that operate hypermarkets are using their financial resources to run small business owners out of business.
For example, Homeplus operates more than 110 hypermarkets under the name Homeplus Express. Lotte and GS also operate around 110 hypermarkets each, under the names Lotte Super and GS Supermarket, respectively.
Getting responsible
To ease resistance to their presence in communities with many small business owners, conglomerates that operate hypermarkets are investing in various kinds of corporate social responsibility activities.
Lotte Super, for instance, signed a deal with local farms under which it buys 93 billion won worth of agricultural products from the farms and distributes them through the hypermarkets they operate.
Hypermarket operators are also planning to hire more employees in regions outside of Seoul to help ease the rising unemployment problem there.
Pending bill
Still, anger among small merchants is palpable. Last June, lawmakers crafted a special bill reflecting the growing anger against hypermarkets.
The bill, which is aimed at making it more difficult for large companies to own several kinds of stores at once, is pending in the National Assembly.
If the bill passes the legislature, hypermarkets will take a hit, according to some market watchers.
By Choi Ji-young [joe@joongang.co.kr]
with the Korea JoongAng Daily
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