From Changdong in 1993 to a Big Three

Korea’s large marts, the notes write, began in November 1993, when Shinsegae Retail, as it then was, opened E-Mart’s Changdong store. After they appeared, a trade that had been centered on traditional markets, small retailers, and department stores began to be rearranged around the large mart. In 1996 the distribution market was fully opened, and foreign large marts came in; after a stretch of competition, the domestic chains, having learned consumers’ tastes and taken hold of the distribution net, grew at speed.

As of 2010, they count 342 large marts in Korea, most of them large chains. The names they place in the field are E-Mart, Homeplus, Lotte Mart, Hanaro Mart, and New Core Outlet; among them, E-Mart, Homeplus, and Lotte Mart held more than 80 percent of the large-mart market and were called the Big Three. E-Mart, then the chain with the most stores, expanded around the capital area and the metropolitan cities by taking over Walmart, which had withdrawn from Korea, and existing local shops. Homeplus, based in the capital area and in the Yeongnam region, bought the large retailer Homever in 2008 and, as of 2015, was operating some 120 stores. Lotte Mart, backed by Lotte Shopping, then first in the domestic distribution trade, entered the large-mart field in 1998 and, as of 2015, was running some 90 branches. Those counts belong to the years the notes name, not to a later official census. Costco, they add, was also among the firms in a fairly fierce field of large discounters.

Five forces, a soju brand, and a milk shelf

To judge how attractive the industry was, the notes turn to a reading of its structure. For a firm already inside, a high barrier to entry makes the industry more attractive; for a firm still thinking of coming in, the same barrier makes it less so. They list a cost advantage from scale, a barrier of product differentiation when an established name is already well known or well liked, a capital barrier when the sums needed to enter are very large, and a government-policy barrier when the state limits the number of rivals, in the name of international competitiveness or of economies of scale.

A buyer’s bargaining power, they write, grows when the volume purchased is large, when the goods are standardized and of low added value, or when the buyer’s own added value is high. A supplier’s power grows when few rivals handle the same goods, when demand for the supplier’s product is high, and when there is little room to switch to something else. Chamisul, they say, had very strong supplier power in the soju market, because few competing brands stood against it, demand was very high, and substitutes were scarce. Seoul Milk, by contrast, faced same-kind rivals such as Namyang Milk and Konkuk Milk, and also other-kind substitutes such as juice, carbonated drinks, and yogurt.

A 2017 glance, kept in that year

Looking ahead from the same notes, the attractiveness of the large-mart industry is read against later figures that still belong to 2017 and 2018. Growth in the retail market in 2017 was lower than the year before, and a split in growth by type of trade continued. Consumer sentiment recovered as a stretch of domestic political unrest, which the notes tie to a scandal in state affairs under the former president, eased; actual spending, they add, did not expand. By type of trade, convenience stores and online channels kept growing, while sales at department stores, large marts, and supermarkets were stagnant or falling. Through the third quarter of 2017, department-store sales were down 2.6 percent from a year earlier, a drop they also place in the aftermath of THAAD.

The business climate for retail in 2018, they expected, would be unfriendly, though operating results across the trade might stay near the 2017 level. Even in a poor climate, they write, investment would still be hard to avoid if mid- and long-term competitiveness was to be kept, and an improvement in financial stability would not come easily. Firms that already held leading positions and a spread of retail formats, and that were moderating the scale of investment, were, in their judgment, unlikely to see profitability and financial stability worsen further. All of that is the notes’ reading of those years, not a later official total. The same Korean report, at fuller length, is on CampusDown.

Sources

1. The notes’ five-forces account of Korea’s large-mart industry, including the 1993 Changdong opening and the 2010 and 2015 store figures they give

Last updated: 14 November 2026