A hypermarket of E-Mart in Seoul/Courtesy of E-Mart

Offline retailer faces stiff competition from online stores

E-Mart, South Korea’s largest discount chain, saw its 2019 sales go down 1.7 percent from a year ago, the Seoul-headquartered company announced on January 10. The amount was 14.67 trillion won.

It is the second time for the business leader to suffer the sales contraction since its launch in the early 1990s.

E-Mart officials said that the company decided to spin off the online business late 2018 led to the disappointing performances. But the turnover on its mainstay hypermarkets, which have operated longer than 1 year, also headed down.

E-Mart is an iconic subsidiary of Shinsegae Group, a mid-tier conglomerate headed by Vice Chairman Chung Yong-jin, grandson of Samsung founder Lee Byung-chul. He is also a cousin of Samsung's de facto leader Lee Jae-yong. 

The slump in the offline stores appears to be contagious, as demonstrated by the recent performances of E-Mart competitors _ No. 2 player Homeplus and smallest rival Lotte Mart.

The two brick-and-mortar stores have also been plagued by weak sales records.

Watchers note that the challenges from online shops like Coupang, WeMakePrice, and Ticket Monster chip away at both the top line and bottom line of traditional powerhouses.

The above-mentioned companies have recently shelled out big bucks to make their presence felt in the market despite big deficits.

Some worried that the startups will not be able to continue to afford big investments, but they have kept making aggressive investments.

“The country’s offline retailers would sweat as their online competitors keep charging ahead like crazy. They have also put forth efforts in the online business, but they have yet to chalk up big success yet,” a Seoul analyst said.
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