E-Mart and Lotte Mart fill the empty space at Homeplus... 3rd quarter performance ‘soaring’

Amid Homeplus' management difficulties, E-Mart and Lotte Mart engaged in fierce sales competition and achieved both top-line growth and enhanced profitability.

However, as the 'holiday special' played a role in the third quarter, it is unclear whether the high growth rate will continue in the fourth quarter amid competition with e-commerce and uniform price discount stores.

◇ E-Mart store sales increased by 10.6%, Lotte Mart by 18%

According to the Financial Supervisory Service's electronic disclosure system on the 11th, the operating profit of E-Mart's discount store (large mart) division in the third quarter was 90.8 billion won, up 63.6% from a year ago.

Sales at same-store stores that have been open for more than a year increased by 10.6% due to strong sales of Chuseok gift sets.

The operating profit of Lotte Shopping Mart Division (Lotte Mart) in the third quarter increased by 87.5% to 21.6 billion won. Excluding only Korea, operating profit jumped 725.5% to 17.9 billion won.

Sales at domestic Lotte Mart stores in the third quarter increased by 18% compared to the previous year.

As large supermarkets are a mature industry that is difficult to grow at a high rate except for seasonal factors such as holidays, this growth is interpreted to have been influenced by the easing of competition due to Homeplus' management difficulties.

In particular, it is analyzed that E-Mart has benefited relatively greatly from the easing of competition.

As a result of E-Mart's analysis of sales at stores located within 3km of Homeplus branches in the third quarter, sales at the Yeongdeungpo branch increased by 22%. The Dunsan branch grew by 19%.

Lotte Mart estimates that some stores saw an increase in sales of up to 3 percentage points.

The Ministry of Trade, Industry and Energy's sales trends at major retailers also showed a 'turnaround' trend in the hypermarket industry.

Sales at large supermarkets, which had decreased by 11.2% in July compared to the previous year, are showing a rebound, increasing by 4.5% in August and 4.0% in September.

Due to the management difficulties of Homeplus, overall consumption at large supermarkets temporarily stagnated, but E-Mart and Lotte Mart quickly filled the space.

◇ Competing with Coupang and Daiso… Focus on developing fresh food discounts and PB products

However, as the impact of the Chuseok timing difference was reflected in the third quarter of this year, it is unclear whether this growth trend will continue in the fourth quarter.

E-Mart announced on this day that its October sales on a separate basis were 1.3984 trillion won, down 3.5% from a year ago.

The reason for the negative growth is that last year's Chuseok fell on October 6, the fourth quarter, but this year it fell on September 25, the third quarter.

E-Mart and Lotte Mart are in the position that sales trends in early November are good, as they held ‘Sseok Day’ and ‘Mega Tongkeun’ discount events earlier this month, respectively.

In addition to competition with e-commerce companies such as Coupang, competition with flat-price discount stores centered on Daiso is also a variable.

Both E-Mart and Lotte Mart plan to attract customers in the fourth quarter by focusing on product competitiveness.

E-Mart plans to strengthen its ordering capabilities based on an integrated purchasing strategy and hold large discount events. In addition, we are strengthening our ultra-low price product range, including ‘5K Price’.

Lotte Mart is also increasing its ability to attract customers and developing PB products based on the ‘Tonkken Day’ promotion. Online, we also plan to strengthen discount events based on the ‘ZETTA’ app.

An official from the distribution industry said, “The hypermarket industry showed overall growth in the third quarter as the ability to attract customers increased,” and added, “For some stores, the effect of easing competition is likely to continue.”