Why this is important to Wisconsin businesses: Wisconsin companies wishing to enter the market must understand cultural norms and consumer preferences.
Among department stores in Korea, Lotte Department Store, Hyundai Department Store and Shinsegae Department Store sell more high-end products with higher retail prices. A total of 97 department stores are in operation nationwide as of 2015, and with a slow economy, this category of stores has been logging negative growth (-0.23% in 2014 and -0.06% in 2015, according to Statistic Korea). In the top three department store chains, food represented 14.3% of sales in 2014, according to the South Korean government.
The total market size of supermarket chains is estimated at $36 billion, and this segmentis growing. Leading supermarket chains include Lotte Super, Homeplus, Express, GS Supermarket and E-mart Every Day.
Convenience stores have been growing rapidly for the last decade. According to Statistic Korea, the overall convenience store industry logged 29.6% growth in 2015 with $16 billion in sales. Nowadays, convenience stores are not only for purchasing food products, but also have banking, postal delivery and other services and serve a wide range of demographics. The top four convenience chains include CU, GS25, Seven Eleven and Mini Stop.
As for the online retail market in South Korea, the majority of consumers shop for food and agricultural products through PC and mobile. The market size of online retail surpassed that of hypermarkets in 2014, and the gap is growing wider every year. In 2014, a total of $3.6 billion in food and beverages and $1.2 billion in agricultural products were purchased through online shopping channels, and those sales increased to $4.9 billion for food and beverage and $1.4 billion for agricultural products in 2015.
South Korea is one of the most connected countries in the world, according to the Ministry of Science; about 99.2% of households have access to broadband internet, and 85% of Koreans age 6 or older own smartphones. In the online shopping mall segment, open markets such as G Market (Ebay) and 11Street and online shopping malls operated by hypermarket chains such as Emart and Homeplus are dominating. These channels represent a 35% market share, according to the Korea Chamber of Commerce and Industry (KCCI).
Health and beauty chain stores, which mainly sell cosmetics, skin care products, functional foods and snacks, can also be considered a source of small packaged processed foods in the South Korean market. The market size of the health and beauty sector reached $1.7 billion in 2017, up from from $150 million in 2009. The largest food company in South Korea, Olive Young (operated by CJ Group), is the leading store chain in the health and beauty sector with 980 stores nationwide. GS Group operates the Lalavla chain, with 191 stores; Lotte Group operates 100 stores under the LOHB name; and Shinsegae Group operates 11 Boots stores.
The South Korean retail sector is highly competitive and fast-moving. To enter the market smoothly, Wisconsin companies must understand cultural norms and consumer preferences in South Korea.