High Inflation Era... Seeking Cost-Effective PB Products

No Brand and Electroman 'Popular'
Lotte Mart PB Product Sales Increase by 10%
Convenience Stores Also Expanding Product Range

[Asia Economy Reporter Lim Chun-han] Recently, as consumers have been cutting back on spending due to high inflation, private brand (PB) products have gained great popularity in the distribution industry. Large supermarkets and convenience stores are expanding their range from food items to daily necessities to capture the market.

According to Emart on the 11th, PB products account for about 20% of total sales. Representative PB brands include No Brand and Electroman. These brands minimize costs for packaging and advertising, offering cost-effective products that have received positive responses. In fact, from the 1st of last month to the 8th of this month, 560,000 packs of No Brand Good Morning Good Milk were sold, and 1,300 units of Electroman wall-mounted air conditioners were sold, ranking first among all air conditioners. These products are 40% and 20% cheaper, respectively, compared to regular products.

At Lotte Mart, PB product sales increased by 10% compared to the same period last year. In particular, the composition ratio of food PB products expanded from about 12% in 2019 to approximately 15% in 2022. Representative products such as Only Price olive oil, mayonnaise, ketchup, and macaroni maintain the industry's lowest prices and are about 30-60% cheaper than manufacturer brand products. At Homeplus, PB product sales increased by 14%. This year, they revamped their PB products and introduced Mulga Anjeong 365, which promotes reasonable prices. Popular products included Homeplus Signature label-free clear spring water, beauty tissues, and toilet paper, which are daily necessities closely related to everyday life. The reason large supermarkets focus on PB products is that they have freedom in selecting display stands and high authority in price setting, which helps improve profitability.

Convenience stores have also entered the ultra-low-price PB war. Their strategy is to solidify the demand for convenience store shopping that expanded after the COVID-19 pandemic and to take market share from large supermarkets. CU increased its Deuktem series items from 2 last year to 10 this year, and GS25 is continuously expanding its Sil-sok Pick series products. Seven Eleven launched five products through Goodmin, including safe eggs, bite-sized pork belly, thinly sliced pork belly, one-meal tofu, and safe bean sprouts, while Emart24 operates about 50 items in its I'm e cost-effective line.

An industry insider said, "As grocery prices have risen sharply, demand for cost-effective products is increasing," adding, "We plan to continue expanding various PB products based on taste and quality."