E-Mart is moving beyond its push to strengthen fresh food and groceries and entering the deep-discount household goods business in earnest. With Daiso dominant in physical stores and Coupang in online sales of manufactured goods, E-Mart aims to compete head-on on both quality and price.
E-Mart said on the 21st that it will begin full-scale operation of Wow Shop, a deep-discount household goods chain it had been running on a trial basis. Wow Shop sells goods at fixed price points ranging from 1,000 won to 10,000 won. Sixty percent of all items are priced at 2,000 won or less.
The company will open Wow Shop outlets of about 330 square meters each at Starfield Market Wolgye and E-Mart Eunpyeong on the 22nd. Another store will open at Starfield Market Gunsan on Oct. 30, bringing the total number of mid- to large-size Wow Shop outlets to five by the end of the year. The company also plans to add Wow Shop zones inside E-Mart and E-Mart Everyday stores to widen its sales channels.
"Since December last year, we have tested product assortments and store layouts across various commercial districts through the Wow Shop trial, analyzing customer response and operational fit," an E-Mart official said. "We decided to formally launch Wow Shop in order to extend E-Mart's core value of offering a wide range of products at competitive prices into non-food categories such as household goods."
The expansion is seen as a step beyond E-Mart's existing food-centered strategy. The retailer had concentrated on strengthening its grocery business, including fresh and processed foods. It sought to differentiate its physical stores around food, where shoppers want to check freshness and quality in person, rather than manufactured goods that are easy to compare and buy online.
Going forward, however, the company intends to broaden its lineup to include deep-discount manufactured goods, generating new revenue while giving customers more reasons to visit. E-Mart expects add-on purchases to rise as shoppers drawn in by Wow Shop also buy its food products. Large discount chains including E-Mart and Lotte Mart have until now brought Daiso outlets into their stores as a way to increase foot traffic.
E-Mart plans to differentiate itself from Daiso on price and quality. To that end, it is strengthening its product assortment and sourcing capabilities. The company expanded the Wow Shop lineup to about 12,000 items from roughly 1,300 during the trial period. Beyond kitchenware and home furnishings, it added everyday categories such as beauty products, health supplements, stationery and toys, and electronics. Each store will carry 7,000 to 8,000 items, selected to reflect seasonal demand and local characteristics.
Domestic and imported goods each account for half of the lineup. The company plans to build its own product development capabilities through global sourcing that draws on the strengths of individual countries, including the United States, Europe, Japan and China, along with brand partnerships and exclusive product planning.
Some observers say it will not be easy to catch up with Daiso, which has already established itself in the market. Daiso has been expanding beyond household goods into cosmetics and health supplements while opening larger stores, sustaining its growth. Asung Daiso, which operates the chain, posted revenue of 4.5364 trillion won and operating profit of 442.4 billion won last year, up 14.3% and 19.2% from a year earlier.
"Introducing Wow Shop inside E-Mart stores is a promising attempt in terms of synergy with existing food purchases," an industry official said. "But consumers already associate deep-discount household goods with Daiso, and changing that perception will take considerable time and effort."