Customers break down on- and off-line barrier in retail is broken
Customers shop at a Homeplus grocery store in Seoul, March 5. Courtesy of Homeplus
By Kim Jae-heun
The COVID-19 pandemic has brought many changes to retail markets around the world ― especially a transition to digitization. It shorten this process much quicker than the industry expected before the outbreak of the coronavirus.
However, digitization did not mean end for bricks-and-mortar business with large discount stores such as E-Mart, Homeplus and Lotte Mart taking advantage of their fresh food venues, which customers still feel comfortable purchasing from. These e-commerce firms are utilizing their supermarket outlets as “fulfillment centers,” where customers can pick up their products after purchasing them online.
Homeplus' strategy is to focus on its discount stores while quickly adopting to trends for its online business.
This is possible for Homeplus because it can use its supermarkets across the country as distribution or logistics centers and not spend money building new facilities. Homeplus owns discount stores here equal in size to 420 soccer stadiums.
In 2018, Homeplus added three more fulfillment centers in Incheon and Anyang, and Suwon in Gyeonggi Province to strengthen and expand its logistics system. Its sales coming from online business in Suwon and Anyang skyrocketed by 125 percent and 101 percent, respectively year-on-year.
A clerk at a CJ Olive Young health and beauty store in Seoul hands over products to a delivery driver March 26. Courtesy of CJ Olive Young
The country's largest health and beauty firm CJ Olive Young is also breaking the barrier between its on and offline businesses. It has 1,260 shops in the country and has signed partnership agreements with local delivery service firms to deliver products within three hours. Customers can get refunds on products not delivered within this timeframe at their nearest stores for online purchases too.
It started the refund program at flagship stores in Gangnam and Myeongdong in Seoul first, before expanding it to 500 major stores nationwide.
This increased the number of orders online for CJ Olive Young 12-fold from 2019 and sales soared 62 percent.
Soon, CJ Olive Young will allow customers to also pick up their products at stores after purchasing them online.
EBay Korea, which operates open market stores G-market and Auction, has recently opened online stores for six Lotte Premium Outlets on its platform.
The collaboration between eBay Korea and Lotte Shopping began in 2009. Lotte started selling its Lotte Department Store products on eBay Korea's platform and now Lotte Outlet and Lotte Home Shopping are selling their items there too.
“The partnership with a large retailer is important. We will beef up our cooperation with not only retailers but also independent companies as well,” an eBay Korea official said.
The largest fashion e-commerce firm Musinsa is bucking the trend. It plans to open a store for its house brand “Musinsa Standard” after attracting an investment of 130 billion won.
“The barrier between online and offline shopping has broken down in the local retail market. Customers will be able to buy and receive products freely regardless of the platform they use,” an industry source said.