Lotte, E-mart Everyday vie for No. 2 spot behind GS The Fresh

The competition for second place in South Korea's corporate supermarket (SSM) sector is heating up. GS The Fresh holds a commanding lead at the top, while Lotte Super and E-mart Everyday battle for the No. 2 spot. Homeplus Express, which recently changed hands, has also rejoined the fray.

According to industry data Wednesday, GS The Fresh maintains an unshakable lead in both sales and store count. The company posted 469.8 billion won ($350 million) in sales and 9.3 billion won in operating profit in the second quarter of this year, up 10.1 percent and 72.2 percent, respectively, from a year earlier. Its cumulative sales for the first half of the year reached 923.2 billion won.

The secret to its dominance lies in quick commerce and franchise expansion. Quick commerce accounts for 10 percent of GS The Fresh's total sales. Its store count has grown to 604, of which 500 are franchises — a stark contrast to rivals that rely heavily on directly run stores. "Instead of operating directly run stores, where headquarters bears the costs, we can generate stable, fee-based revenue by expanding franchises," an industry official said. "This applies the franchise know-how accumulated from running convenience stores (GS25) to the SSM business."

The battle for second place, however, is more complicated. By store count, Lotte Super, with 311 stores, is ahead of E-mart Everyday, which has 246. But by sales, E-mart Everyday takes the lead. In the second quarter, E-mart Everyday's sales rose 7.2 percent on-year to 389.1 billion won, while Lotte Super's sales grew 1.2 percent to 324.4 billion won over the same period. For the first half combined, E-mart Everyday posted 753.6 billion won in sales, compared with Lotte Super's 641.5 billion won. E-mart Everyday's earnings have been on an upward trend since it began integrated purchasing with affiliates such as E-mart, Traders and E-mart24.

Quick commerce is once again the deciding factor. Lotte Super partnered with Coupang Eats to relaunch quick commerce services at about 170 stores nationwide starting Monday — roughly three years and seven months after it suspended the service in 2023 amid profitability concerns following the integration of Lotte Mart and Lotte Super. E-mart Everyday, meanwhile, has been building up quick commerce through its own app and food delivery platforms since 2022. Related sales rose 52.2 percent on-year in the first half of this year.

Both companies are also cutting directly run stores while expanding franchises. Lotte Super has reduced its directly run stores from about 340 in 2020 to around 190 currently. E-mart Everyday similarly cut its count from about 200 at the end of last year to around 180 recently. "This is a time to shift toward a model that can generate steady profit in an otherwise sluggish offline retail market," an industry official said.

Homeplus Express has also rejoined the competition. The company was the first in the SSM sector to introduce quick commerce, in 2021, growing rapidly in the Greater Seoul area to earn the label "quick commerce powerhouse." It went through a slump during Homeplus' corporate rehabilitation process but resumed full operations after being acquired in May by NS Home Shopping, a Harim Group affiliate, and undergoing reorganization.

A Homeplus Express official said, "We will combine NS Home Shopping's product management capabilities to expand differentiated product offerings, and enhance our product competitiveness by aligning with Harim Group's food-focused values."