Lotte Mart’s Yangpyeong branch takes on Costco on prices
The price cuts will be applied to over 30 daily necessities including detergents, processed and fresh food. Steady sellers like Shin Ramyun and Spam were on the list alongside popular seasonal fruits like watermelon and cherries.
“The Yangpyeong branch is only 120 meters [394 feet] away from Costco and in order to compete with a membership-only warehouse club, we concluded it was crucial to gain a price advantage on daily necessities,” said the company in a statement released Monday.
The branch was already selling seasonal fruits at a lower price than Costco, but this is the first time it designated a set of products that will be discounted.
Under the policy, Lotte Mart’s Yangpyeong branch will investigate the prices of 30 or so products at Costco every morning and price their own products at the same price or lower. A Lotte Mart spokesman said the duration of the policy has not been decided, but it will continue for some time.
Membership-based warehouse clubs can offer lower prices than ordinary discount chains for two reasons: First, they have additional revenue from membership fees; second, they sell products in large quantities, which are cheaper by the unit compared to ordinary sized products.
Costco is the leading warehouse club in Korea and the only global supermarket chain surviving in Korea. Established in 1994, Yangpyeong was its first branch among the current 13. The business model was a new one when Costco started in Korea, but since 2010, domestic companies like E-Mart and Lotte have opened as similar warehouse stores. E-Mart Traders began in 2010 and Lotte Mart Vic Market started in 2012.
Lotte Mart launched its Yangpyeong branch in late April. At 10 stories, the branch was the biggest the discount chain built since 2005. To attract customers, the Yangpyeong branch was dedicated to the concept of “relaxing.” Its first floor is not for shopping, but is a resting place equipped with sofas and open spaces.
BY SONG KYOUNG-SON [firstname.lastname@example.org]