Coscto’s new competition in Korea

While I was in Korea this fall, I visited many small to large grocers in the country and have learned a lot from their operations.

Costco Wholesale operates a very attractive business model and also offers aggressive pricing for medium- to large-sized households.

They are growing globally and are very aggressive in the Asian market.

Costco Wholesale Korea has even operated during statutory holidays despite hefty financial penalties in cities, claiming that their total net profit for operating during the “weekends” is far gather than the penalty imposed which is about US$30,000.

In North America, there are no other similar business format operated by other mainstream grocers such as Walmart, Loblaws, Metro and Target.

However, it’s a different story in Korea.

E-Mart is the largest Korean grocer with 172 super large format stores across the country and has a presence in China with 28 stores.

E-Mart has very recently launched a business unit called “E-Mart Traders”, a Costco-type format and strategy with large wholesale stores with inventory on the floor to offer very competitive pricing for customers.

E-Mart Traders currently runs seven stores in the country. The retailer even has its own E-Mart Traders’ signature pallets made with plastic in a their bright lime green colour scheme.

The best part about E-Mart Traders is its private label grocery and produce items.

I believe that the percentage of their private brand merchandise to total merchandise mix was greater than Costco’s. All the private brand merchandise was designed uniformly to clearly show their signature logo and labelling.

Maybe it’s time for North American mainstream grocers to step it up and review business opportunities for wholesale format business units to compete with Costco?