[700 Trillion Distribution War ] Coupang Transformed into 'Supermarket·OTT', Olive Young Selling Wine... No Boundaries

Distribution Market, 600 Trillion Last Year and 700 Trillion Expected in 2026
Top 3 Share at 12%, Industry All-Rounder Survival Competition
Expansion and Comprehensive Competition for Survival Intensify

Editor's NoteLast year, the distribution market size was approximately 600 trillion won, and it is expected to reach 700 trillion won in three years. A fierce battle with blurred boundaries has begun over this market. The distribution industry must compete comprehensively not only with traditional retail but also with household subscription economies such as online video services (OTT), water purifiers, and bidets, as they vie to capture consumers' leisure time, energy, and money. Moving beyond the relatively clear business categories of the past, we are now entering an era of limitless expansion without boundaries. This article examines the directions pursued by each company, the paid membership wars to secure loyal customers amid such competition, and the essential requirements these services must guarantee.

Convenience stores have evolved beyond the concept of supermarkets operating 24 hours to become a 'lifestyle platform' serving various functions such as neighborhood restaurants, cafes, bars, pharmacies, post offices, and banks. The photo shows the 'CU Bisan Jae Branch,' a finance-specialized convenience store in Anyang-si, Gyeonggi Province, created through a collaboration between CU and Hana Bank. Photo by CU.

"In the enormous distribution market expected to reach $550 billion (approximately 700 trillion won) within the next three years, Coupang's market share is still in the single digits. Our journey is just beginning." (Kim Beom-seok, Coupang founder, during the Q1 earnings conference call this year).

The distribution market has entered an era of all-out competition that has broken down not only the boundaries between online and offline but also between business types. The 'Top 3' distribution channels now include traditional offline retail giants like Lotte and Shinsegae, as well as Coupang, which has grown based on online platforms. Additionally, 'category killer' channels specializing in single product categories such as fresh food, beauty, and fashion have diversified their business areas to become 'all-rounders' (versatile platforms) that satisfy customer demands all at once.

According to the distribution industry on the 19th, the market, which previously had relatively clear distinctions between business types, has recently entered a state of infinite competition where boundaries are virtually meaningless and rivals cannot be specifically identified. The transformation into all-rounders with expanded assortments is described by industry insiders as a struggle for future survival.

A representative example is convenience stores. Convenience stores have evolved from small supermarkets open 24 hours into neighborhood general stores that serve as restaurants, cafes, pubs, pharmacies, post offices, banks, and gold shops near homes. CU, in collaboration with Pepper Savings Bank last month, launched a savings product (Peppers Partnership Savings) offering a competitive annual interest rate of up to 6%, leading to 'visits to convenience stores for financial investment.' GS25, which introduced a gold vending machine in September last year, recorded nearly 2.9 billion won in gold bar sales by last month. The goal of convenience stores is to enable consumers to solve all their daily needs through the convenience store platform.

Coupang has transformed from an early social commerce model that recruited buyers to sell products into an online shopping mall and supermarket with direct purchasing and an open market format, while expanding its service categories with delivery service Coupang Eats and OTT Coupang Play to increase its influence. CJ Olive Young has also evolved beyond its existing health and beauty (H&B) stores into an online-offline multi-lifestyle platform. Since COVID-19, Olive Young has actively expanded its health category with health foods and hygiene products, as well as lifestyle product groups such as home interior and food. Recently, the number of stores selling alcoholic beverages like wine and highballs has increased to about 100.

A model is posing with 'Ready to Drink (RTD)' alcoholic beverages at an Olive Young store. Olive Young plans to expand its lifestyle product categories, including home interior and food items.
[Photo by Olive Young].

There is no winner yet in the competition to secure a dominant market position. According to global market research firm Euromonitor, last year the domestic distribution market was worth $466 billion (approximately 602 trillion won). Market shares were about 5.1% for nine companies affiliated with Shinsegae and E-Mart, 4.4% for Coupang, and 2.5% for six companies affiliated with Lotte. Even combined, the top three players' market share was only about 12%. Euromonitor estimates the domestic distribution market size will reach 700 trillion won by 2026. This means that no player currently holds a dominant position in this rapidly growing field.

Experts predict that in the absence of a dominant market player, the competitive landscape of the distribution market will expand more multidimensionally. Professor Seo Yong-gu of the Department of Business Administration at Sookmyung Women's University said, "In the 'big blur era,' where boundaries between industries and sectors are breaking down, attempts to increase customer loyalty will continue."