SSM chains turn to quick commerce after seven months of declining sales

Corporate supermarket chains, known in Korea as SSM, have posted seven consecutive months of declining sales, even as they race to reverse the trend by expanding quick-commerce services that deliver groceries within roughly an hour.

According to retail sales data released by the Ministry of Trade, Industry and Energy, SSM sales fell 10.8 percent year-on-year in June, extending a contraction that began in December last year. Food categories, long considered the sector's core strength, dropped 10.6 percent. Subcategories including fresh produce, meat and seafood (-10.4 percent), fresh and prepared foods (-8.9 percent), and processed foods (-12.2 percent) all declined.

The slide reflects intensifying competition from online retailers such as Coupang Inc and Kurly, which have aggressively expanded fresh-food offerings and eroded SSM's traditional edge. Online retailers' food sales rose 11.2 percent in June. Because food accounts for 92.9 percent of SSM revenue, any weakness in that category hits the sector hard.

In response, SSM operators are leaning into quick commerce, using their fresh-food supply chains to target nearby shoppers who want fast delivery. The strategy is also calibrated to the growing number of single-person households and persistently high consumer prices.

GS The Fresh, the sector's top operator, saw first-half quick-commerce sales rise 41.9 percent year-on-year. Quick commerce accounted for 9.9 percent of total sales in the second quarter — a record high. The chain runs the service through its own mobile app and through delivery platforms including Baemin, Coupang Eats and Yogiyo. Fresh food made up 45 percent of quick-commerce sales in the first half.

According to GS Retail, the Dangjin branch — the top quick-commerce store in the chain's national network — averaged about 10,000 quick-commerce orders per month, or more than 300 a day, partly because it is the only store in the area offering the service. The top-selling store overall, the Gwanak branch, logged around 5,000 quick-commerce orders per month, averaging about 150 a day. Driven by quick-commerce growth, GS The Fresh posted second-quarter sales of 469.8 billion won ($332 million), up 10.1 percent, while operating profit surged 72.2 percent to 9.3 billion won.

E-mart Everyday is following a similar path. The chain operates quick commerce through its own "e-Mile" service as well as through Baemin, Coupang Eats and Yogiyo. Quick-commerce sales from January through May rose 40.6 percent year-on-year. First-quarter sales reached 364.5 billion won, up 2.3 percent, while operating profit climbed 51.4 percent to 8.3 billion won.

Homeplus Express, acquired by NS Home Shopping, is also using quick commerce to accelerate its recovery. The majority of its 286 stores nationwide are equipped to handle quick-commerce fulfillment, and more than 90 percent are located in the Greater Seoul area or major metropolitan cities — making the network well suited for rapid delivery operations.

Lotte Super, meanwhile, is taking a more cautious approach. The chain shut down its "1-Hour Express Delivery" quick-commerce service in 2023 and has not launched a replacement, instead focusing on closing underperforming company-operated stores and renovating existing locations. Lotte Super's second-quarter sales edged up 1.4 percent to 313 billion won, but the company swung to an operating loss of 1.8 billion won. The company said the loss reflected severance costs from a voluntary retirement program and higher depreciation charges.