South Korean retail giant Shinsegae’s warehouse-style supermarket E-mart Traders is threatening its US rival Costco, heading off with stellar sales growth.

According to the company, E-mart Traders saw accumulated sales of 755.1 billion won ($677 million) from January to May this year, an about 28.3 percent jump year-on-year. 

 

The company posted solid 30 percent on-year growth in sales for the last three consecutive years. It reached sales of 1.52 trillion won in 2017, up 27.2 percent from the previous year. 

Its operating profit in the first quarter of 2018 recorded 130 billion won, an about 6.8 percent increase on-year. 

Industry insiders expect the company to see 1.9 trillion won in sales by year-end, breaking the 2 trillion won-mark by the end of next year.

Costco Korea, which opened its first store in 1998, has been feeling the fallout. 

The Korean branch of the Seattle-based warehouse chain recorded an operating profit of 160 billion won from September 2015 to August 2016, down by 8.5 percent on-year, the first decline since 2001. Its sale revenue recorded 3.8 trillion won in the fiscal year of 2017. 

The number of E-mart Traders stores has already overtaken its US rival.
Since its launch in 2010, it has opened 14 stores across the country, with new branches in Gunsan and Gimpo opening in December last year. 

Two additional stores will open this year in Nowon-gu and Wirye, which is located next to the boundary of Songpa-gu in Seoul, the company said.

Unlike at Costco, E-mart Traders customers do not need to sign up for a membership and pay a compulsory annual fee of 30,000 won. It also accepts all kinds of payment methods including credit cards and cash. Costco only accepts the Samsung Card and cash for payment. 

“One of our strong points is the product replacement span. We have some 4,000 to 5,000 products on shelves, but we had a 60 percent product replacement rate as of last year,” said Noh Jae-ak, vice president of E-mart Traders. 

“Exposing new and various products from processed food to daily necessities to customers every time they visit is our main drive behind the growth,” he added.

Earlier this year, the company announced a plan to strengthen its warehouse store operations, with an emphasis on expanding its customer base from people in their 30 and 40s to those in their 20s who are interested in new, cost-effective overseas products.

By Kim Da-sol (ddd@heraldcorp.com)