Retailers try specialty stores to spur growth
The entrance to Pierrot Shopping in Starfield COEX in Seoul / Courtesy of Shinsegae E-mart
By Park Jae-hyuk
Korea's top three discount chains have been rushing to open new types of stores to overcome worsening profitability amid growth in e-commerce and stricter government regulations, according to industry officials Sunday.
The business bellwether E-mart opened a two-story Pierrot Shopping store in a 2,513-square-meter space at Starfield COEX in Seoul, Thursday, to attract customers in their 20s and 30s.
The new store resembling Japan's Don Quijote deals in various products, including luxury goods, electronic appliances and sex toys.
E-mart said it displayed the stuff in a disorderly manner for the purpose of amusing young customers.
For foreign tourists, Pierrot Shopping also offers souvenirs, such as seaweed, red ginseng, cosmetics, rice cookers and K-pop merchandise. Tourists can also get tax refunds at a customer center and kiosks in the store.
“Japan's Don Quijote which we benchmarked posted 8 trillion won ($7.1 billion) in sales last year with its 370 stores,” Pierrot Shopping's brand manager You Jin-chel said. “E-mart will open three Pierrot Shopping stores this year, so the store can be the new growth engine of E-mart.”
A model promotes imported pork being sold in bulk at a Home plus Special's west Busan store, Sunday. / Courtesy of Home plus
Home plus, which had been conservative in innovative attempts for the past few years, has also begun converting its outlets into warehouse stores named “Home plus Special.”
The nation's second-largest discount chain opened its first Home plus Special store in Daegu, Wednesday.
To attract both singles and families, the warehouse outlet sells merchandise in small packages as well as in bulk.
“We will convert 20 stores in Seoul, Incheon, Daejeon, Daegu and Busan into Home plus Special stores this year,” a Home plus official said. “We will sell popular merchandise in bulk and our exclusively sourced products.”
Lotte Mart has run a special store named Market D on the second floor of its Suwon branch in Gyeonggi Province since April 30.
Market D has an advantage in pricing because the store does not repack supplied products.
Lotte plans to open three additional Market D stores this year, and will increase the number of stores to 15 by 2020.
According to industry officials, the operating profit of E-mart dropped to 566.9 billion won last year from 775.9 billion won in 2012, when the discount chain was separated from Shinsegae.
The operating profit of Home plus decreased to 240.3 billion won from 329.2 billion won during the same period.
The number of hypermarkets has continued to decrease as well. Both E-mart and Home plus will each close two of their stores this year. Lotte Mart shut down its west Daejeon branch last month.