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Retail giants spur online expansion

Korea’s major retailers are stepping up their forays into online marketplaces as they seek a fresh growth driver in the face of tightening regulations and stiff competition on their home turf.

Lotte Shopping, Shinsegae Group, Homeplus and GS Retail are bolstering their Web and mobile businesses by opening virtual stores and improving services such as in-store pickup options and faster deliveries.

The e-commerce market, dominated by a host of online vendors such as Auction, Gmarket and 11st, is expanding faster than ever on the back of the smartphone boom and surging demand from dual-earner households. 
(Yonhap News)
(Yonhap News)

“The rapid advance of Web and mobile technologies have enabled consumers to utilize various retail channels simultaneously and blurred the edges between them,” the Shinsegae Retail Research Institute said in its 2012 outlook.

Online sales of E-Mart, a Shinsegae-affiliated discount chain operator, are estimated at 300 billion won ($266.8 million) last year. The segment accounted for a meager 1 percent in the third quarter of 2010, or 38.6 billion won. But the ratio rose to 2.7 percent in the last quarter of 2011, rocketing revenues to 97.2 billion won.

Lotte Mart earned 120 billion won online last year, taking up about 1.7 percent of the total revenue, up from 0.6 percent two years ago.

Homeplus also saw a 133-fold surge in Internet purchases to 160 billion won last year from 2002. That made up 1.5 percent of the total sales.

GS i Super, an online supermarket run by GS Retail, contributed 2.3 percent of the retail giant’s revenues last year, up from 1.8 percent in 2007.

In a bid to lure more customers, companies are devising strategies to make shopping easier, faster and more fun.

E Super, run by Hyundai Department Store, began offering free shipping on orders worth 10,000 won or more, cut delivery times and is revamping its website by injecting 5 billion won.

GS i Super now delivers 6,000 items of fresh produce directly from farmers to customers, and provides discounts on them.

Homeplus’ “virtual stores” allow customers to shop at bus stations and other public venues with their smartphones and pick up at offline stores.

According to the Korea Chamber of Commerce & Industry, the online shopping market is forecast to reach 18.1 trillion won this year, up around 13 percent from 2011.

Despite its relatively small slice in the 20 billion retail market, online shopping will emerge as a major force behind retail growth and continue to bite into dominant department and discount stores, experts say.

“Internet shopping will expand 40 percent to 50 percent annually over the next few years, versus offline department stores’ 10 percent,” Kim Han-su, a senior researcher at a Lotte-affiliated think tank in Seoul, said in a report. “Online vendors will also provide a growth engine by diversifying into premium brands and luxury goods.”

By Shin Hyon-hee (