Retailers scramble to cope with soaring inflation

A clerk displays packaged pork in a cooler at an E-mart store in Seoul on May 27. Courtesy of E-mart

By Kim Jae-heun

Discount stores, supermarkets and other retailers are introducing a range of measures to cope with surging inflation as they try to offer customers fresh goods and processed products at reasonable prices, according to company officials, Monday.

The officials said that price hikes are inevitable to a certain degree, due to the soaring costs of raw materials, but they can minimize the increase by boosting their inventories of daily necessities and diversifying their supply channels, among others. According to recent government data, consumer prices here jumped 5.4 percent in May from a year ago, the highest increase since September 2008.

Lotte Mart established a special team which will predict price changes for individual products based on their quality and manage their sales prices. In particular, the team will control the prices of 500 grocery items that account for the top 30 percent of Lotte Mart's sales, varying from fresh foods to kitchen utensils.

"It is almost impossible to prevent the price hikes of all daily necessities sold at our stores. However, we can try to keep at least 500 top grocery items from getting more expensive than now. We will put up our best defense possible in these times of high inflation," a Lotte Mart official said.

E-mart is expanding its private brand products to ensure that enough daily necessities are in stock while diversifying its supply channels and making pre-orders with them.

For instance, its specialty store for home appliances, Electroman, has been producing basic types of electric fans to offer customers reasonable prices. It also moved up the production period for Electroman's electric fans from late December to October of last year to minimize price hikes affected by soaring raw material prices then. This decision helped E-mart to reduce the electric fan's price 20 percent compared to those produced by other firms.

"We have been able to sell our private brand's electric fans 10,000 won ($7.99) to 30,000 won cheaper thanks to our efforts. In fact, the Electroman fan became a bestseller and achieved the highest sales in its category between January and April," an E-mart official said.

The discount store chain also froze the price of frozen pork produced by its private brand, "No Brand," recently. The retailer expanded the meat it had in stock by three times, from 100 tons to 300 tons, considering the current rise in the won to dollar exchange rate.

"We changed our importers of frozen pork from Denmark to Spain in April to avoid the effects of ongoing African swine fever. Here, we have already secured three to four months of frozen pork supplies from Europe," the official added.

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