How to buy goods at cheaper prices

Customers crowd a department store in central Seoul, Sunday, to buy products at discounted prices. The store kicked off a summer bargain sale that will continue through July 31. / Yonhap

By Nam Hyun-woo, Chung Hyun-chae, Park Ji-won

Jung Eun-ji, 26, a university student living in Seoul, recently stopped buying snacks made in Korea after realizing that imported products are much cheaper.

Now, she mostly buys imported snacks from stores that sell foreign-made stock. The number of such shops has risen in the past several years. Or she might buy bulk quantities at much cheaper prices online.

This purchasing behavior is not confined only to her. More Korean customers are willing to buy imported snacks and make more effort to search for cheaper snacks online.

"For the same price, I can eat more imported snacks compared to those made in Korea that are wrapped with too much wrapping paper," Jung said.

"It is not hard at all now to buy imported snacks in supermarkets nearby. I have few reasons to buy Korean snacks," she added.

One in four snacks sold in supermarkets are currently imported. Sales of imported snacks account for some 20 percent and are growing every year, according to industry sources.

However, local companies claim that they have sufficient reason to raise their product prices. They said that there are rising costs in manufacturing and the procurement of ingredients.

"Despite growing demand for imported snacks, local makers continue to increase their product prices regularly," a manager at Lotte Confectionary said.

"Blaming rising costs, snack companies try to raise their prices, thereby forcing customers to buy imported ones," he added.

The price gap between locally-manufactured goods and those that are imported is getting wider as the market continues to open. Consumers also tend to find cheaper goods because they are able to get easy access to product information.

A customer picks out some hair dye products at a large discount store chain in Jung-gu, Seoul, June 20. / Yonhap

Weird calculations for popcorn

Recently, Choo Young-hoon, 28, a jobseeker, visited a multiplex near Konkuk University with his girlfriend and paid 8,500 won for a "popcorn combo pack," comprised of a box of garlic flavored popcorn and two fizzy drinks.

While the girlfriend went to the restroom, he browsed through his smartphone and found an article saying that the prime cost for popcorn is only 613 won. The combo pack's cost price was some 1,800 won.

"Given that consumer prices include service charges for cleaning the theater, this is still way too expensive," the 29-year-old said.

Earlier last month, the Korea National Council of Consumer Organization, a consumer price watchdog, released a report that three major multiplex chains — CGV, Lotte Cinema and Megabox — sell popcorn sets for 8,500 won.

"Given that companies purchase massive amounts of raw material and use licensed beverage dispensers, they are provided with price cut. Thus, the gap between prime costs and consumer prices would be greater than this," the organization said in the report.

It also alleged that the three companies have engaged in price fixing, saying that all three of them sell a combo at 8,500 won, some 4.7 times higher than prime costs.

However, the companies denied the allegation.

An official at Lotte Cinema said the company set the price after considering various factors such as distribution costs and has never talked with other companies over the price of popcorn.

For years, consumer organizations have complained that snacks sold at multiplex facilities are too expensive. However, the prices have not been reduced, with companies reiterating that "there are many invisible costs which are not included in consumer organizations' reports."

Consumers also know that the prices are unreasonable.

"I'd rather buy popcorn from outside a theater," Choo said. "But it is also true that buying snacks inside of a multiplex is more convenient," adding that popcorn bought inside the theater is fresher than that bought outside.

Price changes depending on customers

A woman surnamed Chung, 24, tries to choose hair salons which set relatively low prices. She usually gathers information on salons, but sometimes she randomly enters hair salons after checking the prices displayed outside the shop. In most cases, the real prices are much higher.

"Every three months when I cut or perm my hair I have to pay too much money because hair salons make me pay extra charges saying that they give me extra treatment," said Chung.

Many people who have their hair done usually feel the same way in Korea due to its high prices.

One office worker surnamed Choi has also had her hair done recently. She had her hair dyed light brown and had it permed. In response to people that say her new hair style looks great, her first reply is that "it cost too much."

Choi had to pay 400,000 won for her hairdo. The displayed price outside was 150,000 won.

The Korea Consumer Agency (KCA) said Thursday that 32 percent of hair salons don't display the exact prices outside the shops which is against the law.

Restaurants and hair salons are businesses obligated to display their prices outside their premises to protect customer choice and stabilize consumer prices.

About 90 percent of 73 hair salons which displayed their prices did not include averages, just their lowest.

When this reporter visited a famous franchise salon named after its chief hairdresser, the price of a perm and dyeing was 130,000 won more than the displayed price.

When asked about the price of products such as hair dye, however, the hairstylist was reluctant to answer, saying it depends on the length of hair being treated. This is based on the premise that salons buy hair products from well-known companies that specialize in hair and beauty such as L'Oreal, Wella, Aveda and Amos Professional.

L'Oreal Professional Paris, a company specializing in hair products, does not make public the prices it sells to salons, only admitting that trade prices are lower than consumer prices of which the cheapest hair treatment costs 36,000 won.

"As a matter of fact, the price is entirely up to hair salons, because the prices aren't decided by law," said Chung, a man who runs his own beauty salon near Gangnam.

"The government needs to make some supportive regulations to diversify retail channels (on information and products) so that the present system where most profit is taken by few companies could be changed," said Lee Ju-hong, a staffer at the Green Consumer Network Korea.

The government plans to increase the number of direct importers to 230 from 122 by next year as part of efforts to bolster competition among importers and manufacturers so that customers can obtain cheaper products.

The government expects the direct import market to be worth some 8 trillion won, accounting for 10 percent of the total import market, by 2017.