(Inside Retail Asia | 27 April 2017)
The rapidly rising ranks of Korean singles is driving huge changes in the country’s retail industry.
Currently 27 percent of the country’s population lives alone, a figure set to soar to 32.7 percent by 2030 – or one in three homes.
Seol Do Won, vice chairman of the Korean Chainstore Association told the C-star Retail Forum in Shanghai last month that the rising population of people living alone is reshaping the size and role of retail stores and the type of products they stock. Such consumers are less likely to shop at hypermarkets and more likely to shop at convenience stores, where they can buy ready-to-eat meals and smaller pack sizes.
The trend is also increasing the number of small purchases, bringing down the average basket price.
Industry is responding by expanding the development of meal solutions, developing ‘small-helping’ packages and stocking appliances and furniture suited for use by one or two people instead of families. Homeplus, the department store/hypermarket chain originally launched with Tesco, has even developed its own house-brand ‘Singles’ Pride.
Retailers are also downsizing stores and expanding their networks of convenience stores, drug stores and specialty stores, as the focus moves away from giant hypermarkets.
With a relatively mature retail market, and a stable population, sales growth in Korea has dropped sharply since 2009. Retail sales rose just 3.6 percent in 2015 and 6.1 percent last year, although Won cautions last year’s figure was influenced by the end of Mers in 2015 which saw consumers resume shopping and other social activities away from their homes. Increased tourism also played a role, but has abated this year due to political tensions with China.
“They are very high growth categories, but hypermarket and supermarket sales and department stores have slightly decreased,” said Won.
So, too, traditional Korean retail stores – typically family-run – whose share of the total market fell from 45 percent to 35 percent between 2011 and 2016.