Living Costs Rise Again... Retail Industry Launches Large-Scale 'Discount War'

Coupang Seasonal Fruits 450t, Lotte Mart Ribs 150t
Government Encourages Discounts... Distribution Channels Simultaneously Lower Prices

As consumer prices, which had slowed down at the beginning of the year, started to surge again, the distribution industry has launched large-scale discount events. This is interpreted as a preemptive response, as the government has urged distribution and food companies to make efforts to stabilize prices, and consumer sentiment could be dampened due to price increases.

According to the industry on the 12th, Coupang has purchased about 450 tons of fruits such as strawberries, oranges, and Korean melons for a week from the day before until the 17th and started discount sales through Rocket Fresh.

Coupang's move to discount seasonal fruits comes as consumer prices, centered on agricultural and marine products, have rebounded recently. According to the consumer price trend announced by Statistics Korea for February, the consumer price index last month was 113.77 (2020=100), up 3.1% from a year earlier. The consumer price inflation rate, which had exceeded 3% from August to December last year, fell to the 2% range in January (2.8%) but re-entered the 3% range within a month.

In particular, this price increase was led by agricultural product prices. Agricultural product prices jumped by 20.9%, raising the overall price level by 0.80 percentage points (P). Among the fresh food indices, the fresh fruit category, which reflects the price trend of fruits, surged 41.2% compared to a year ago.

In response, the government has hastened efforts to curb price increases. On the 10th, Song Mi-ryeong, Minister of Agriculture, Food and Rural Affairs, visited the Nonghyup Changdong Hanaro Mart in Dobong-gu, Seoul, to check the price situation of major agricultural and livestock products and processed foods.

Minister Song said, "The government will do its best to stabilize the burden of grocery prices for the public by mobilizing all available means and resources," and added, "To achieve price stability, it is crucial not only for the government but also for distribution and food companies to actively participate through their own discount events and price reduction efforts," encouraging participation from distribution companies.

Distribution companies are focusing on stabilizing prices of food items such as agricultural products. Lotte Mart will hold a 'Galbi Festival' event at all offline stores for a week from the 14th to the 20th. This event offers up to 50% discounts on major galbi products, including LA galbi, steamed galbi, and flower galbi meat. To prepare for the half-price galbi event, Lotte Mart purchased 150 tons of galbi in bulk over the past three months. In the 'LA Galbi Festival' held in March last year, the prepared quantity of 100 tons was sold out, and sales of galbi products increased fourfold compared to the same period the previous year.

Lotte Mart also offers domestic onions at 3,990 won for 2kg when purchased with the event card, and domestic radishes are sold at 990 won each. Emart also plans to offer up to 50% discounts on 40 popular daily items, including popular food, vegetables, and processed foods, throughout March. From the 15th, cleaned freshwater eel and all U.S. beef products will also be discounted by 50%.

GS Retail's supermarket GS The Fresh is running 'Real Rice Week' from this month, offering groceries and daily necessities at special prices once a month. For one week each month, fresh foods with high price sensitivity are offered at 1,000 won, with key products including soybean tofu, bean sprouts, Busan fish cakes, and smoked pork loin.

The industry expects the high inflation trend to continue for the time being and is busy preparing countermeasures. A representative from a major mart said, "If food prices rise and consumers close their wallets, it inevitably affects sales of industrial products as well," adding, "Each distribution company is fiercely competing to lower prices through direct transactions with production areas and bulk purchases."