Discount marts get makeovers to catch consumers' attention

Industry

Published: 31 Jan. 2022, 07:00

Discount marts get makeovers to catch consumers' attention

Customers shop at Bottle Bunker, a specialty wine store that opened at Zettaplex last December. [LOTTE MART]

Discount marts have been undergoing various renovations as they struggle to survive, and the efforts are paying off, as seen by the increased profits and surging visitors.

Lotte Mart’s Jamsil branch in Songpa District, southern Seoul, was renovated Dec. 23 and renamed Zettaplex.

Although aisles of fresh groceries and processed foods tend to fill the first floor of average discount marts, a huge 1,322-square-meter (14,229-square-foot) wine shop, Bottle Bunker, occupies 70 percent of Zettaplex’s first floor.

The venue is the biggest wine store in Korea, and it has been successful in attracting customers. Most of the non-food product sections were given over to fresh foods so it could still carry a variety of fruits and vegetables.

Sales generated from Zettaplex between Dec. 23 and Jan. 22 rose 55.2 percent compared to the same period a year before, when it was branded as a normal Lotte Mart.

Wine sales at the branch soared 545.2 percent on year, and sales of hard liquor such as whiskey rose 1,098.7 percent.

Lotte Mart renovated its Songcheon branch in Jeonju, North Jeolla, and opened it back up on Jan. 19. The branch was renamed Lotte Mart Maxx and transformed into a warehouse-style discount store selling bulk items at cheaper prices.

Between Jan. 19 to 24, visitors to the branch jumped 291 percent on year and sales surged 289 percent.

According to the company, foreign snacks sold especially well. During the same period, 1,800 12-pack sets of Portugal egg tarts were sold. Customers also bought 1,216 1,005-gram bags of Bon O Bon Suave chocolates from Mexico and 976 boxes of Taiwanese nougat biscuits.

“People spent more time at home due to the pandemic, and many were interested in buying imported snacks that they enjoyed when traveling abroad but couldn’t find at other discount marts,” said a spokesperson for Lotte Mart Maxx.

The retailer is currently renovating three more Lotte Marts to turn them into Lotte Mart Maxxes, set to open in March.

Customers shop at a Lotte Mart Maxx branch in Jeonju, North Jeolla. [LOTTE MART]

Emart is also taking a similar approach.

The company renovated nine Emart branches in 2020, 19 in 2021 and plans to finish at least another 10 branches this year.

Changes focus on increasing the size of grocery and food sections while downsizing non-foodstuff sections. Specialty stores such as the wine store Wine & Liquor and electronics store Electro Mart were added.

The nine branches renovated in 2020 saw sales rise an average of 26 percent on year between Jan. 1 and Aug. 31 last year.

Homeplus plans to renovate 17 branches this year. Similar to Emart, it will also carry more food products and add unique stores that customers can only find at Homeplus.

Companies are scrambling to add that special spark to their discount marts as many customers choose to shop online during the pandemic.

According to Lotte Shopping, which runs Lotte Mart, operating profit of the discount store fell 50 percent on year to 12 billion won in the last third quarter. Sales fell 8.4 percent to 1.48 trillion won. With business tumbling, last year was the first time it took voluntary resignations from employees since the discount mart started business in 1998.

The company introduced e-commerce website Lotte On in 2020 and other retailers like Shinsegae started its own online shopping mall SSG.com in 2019, but both are still in the red.

Lotte Shopping’s Lotte On reported an operating loss of 46 billion won in the third quarter, with losses widening from 28 billion won a year ago. Sales were down 14 percent on year to 24 billion won. SSG.com’s operating loss was 38.2 billion won, widening from 3.1 billion a year ago. However, sales rose 14.7 percent on year to 386.5 billion won.

Some say it is best for retailers to focus on providing unique experiences at offline stores, rather than strengthening their online business.

“Companies need to come up with a new retail strategy that can combine online and offline, providing fun in-person experiences,” said Sul Do-won, a business professor at Yonsei University’s Graduate School of Business.

BY CHOI HYUN-JU, LEE TAE-HEE [lee.taehee2@joongang.co.kr]