As the shift towards e-commerce accelerates in South Korea, store-based retailers are reconsidering the role of offline stores, seeking to revamp the customer’s shopping experience. Traditional grocery retailers, often failing to differentiate from competitors in terms of attractiveness as a shopping destination, continued to experience declining value sales in 2021.
The digitalisation of traditional grocery retailers has been slower than other retailing channels, yet is making progress due to the support of government bodies and leading marketplace players. For instance, in September 2021, Guro traditional market, a local market located at Guro district in Seoul, launched a livestreaming show through Naver Corp’s online grocery shopping platform and provided a 2-hour delivery service at a cost of KRW4,000 for online orders.
Since 2020, the unmanned store has quickly emerged as a key trend across various industries in South Korea. Self-laundry shops, self-printing outlets, and even self-photo studios have popped up as a result of fast-rising operational costs, such as wages and rent.
Over the review period, government bodies, such as KOSME (Korea SMEs and Start-ups Agency), continued to roll out support programmes for local businesses, especially those operating in traditional markets and small towns. For instance, KOSME selected a number of local markets in September 2021 to support small businesses to enhance marketing and merchandising strategies, including digitalisation, and remodelling of offline stores.
Social distancing measures have affected South Koreans’ consumption of alcoholic drinks to a great extent, from drinking in bars and restaurants to drinking at home. Consequently, sales of alcoholic drinks via off-trade channels recorded double-digit volume growth in 2020, with a significant shift observed in beer, wine and spirits.
Although there were initially concerns over the sustainability of unmanned stores during the early stage of their expansion, industry consensus on the prospects of this business model is shifting towards the positive. Given the nature of demand for packaged ice cream and snacks, which are mostly impulse purchases, offline stores have the advantage over e-commerce players in terms of order-to-consumption lead times.
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Traditional grocery retailing is the aggregation of those channels that are invariably non-chained and are, therefore, owned by families and/or run on an individual basis. For Euromonitor traditional grocery retailing is the aggregation of three channels: Independent Small Grocers, Food/Drink/Tobacco Specialists and Other Grocery Retailers. While there can be modern (i.e. chained) food/drink/tobacco specialists or other grocery retailers, due to the store's presence in the channel, these stores are still considered as traditional for Euromonitor International.See All of Our Definitions
This report originates from Passport, our Traditional Grocery Retailers research and analysis database.
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