① Egg collection work starts at 6:30 am every day at Yeongil Farm Gyesa, Gonjiam-eup, Gwangju, Gyeonggi-do. ② The collected eggs are transferred to the Gwangju Agricultural Cooperatives and cleaned and inspected for 30 minutes. ③ It will be delivered from the Lotte Logistics Center in Osan, Gyeonggi-do to regarding 80 stores nationwide from around 12:00 pm. ④ It will be displayed at Lotte Mart World Tower in Jamsil, Seoul at 1:00 pm. Provided by Lotte Mart
Yoo Yoo-hwan, an E-Mart buyer (deputy manager), has not been able to enter Seoul’s house for the past two months. This is because they were given a special mission to secure new trading farms in production areas across the country. The distance traveled in two months was 20,000 km. After wandering around Sangju and Gimcheon in Gyeongbuk, Haman and Geochang in Gyeongsangnam-do, and Yeongdong in North Chungcheong Province, regarding 200 new trading farms were secured. You Buyer said, “There is a sense of crisis that everyone will die with the complacency of ‘do what you do’.”
After the e-commerce (e-commerce) distribution revolution began in earnest, offline large marts, which in the past said, ‘Even if chewed gum is attached, can be sold’ took an emergency. This is because the strength of marts, which can be seen and bought directly, is no longer an absolute weapon as consumers’ online trust increases. Industrial products have already taken the lead online. In order to survive, we have no choice but to set fire to the ‘extreme new line’ that has crossed the super new line. An industry official said, “Now, super fresh food is the biggest topic in large marts. It has become a core competency of buyers to create a distribution structure that delivers the discovered products to consumers as quickly as possible.”
Hypermarket, online and super fresh competition
According to the industry on the 28th, it is estimated that the operating profit margins of the three domestic large marts stood at only 1% last year. Sales are also stagnant. As the proportion of online consumption of fresh food increases following industrial products, hypermarkets are facing a double burden of deterioration in top-line and profitability. Amid the sense of crisis that “the products to be sold will disappear at this rate,” large marts are betting their lives on innovation in fresh food distribution.
E-Mart gave up on renewing the contract with Vendor A, which it had been dealing with for several years this year. Company A took the role of receiving the products from the local collectors, storing them in their own refrigerated warehouse for a few days, and then sending them back to the E-Mart distribution center. This is the distribution structure of ‘Farmhouse → Collecting Merchant → Company A → E-Mart Logistics Center → Store’. Starting this year, E-Mart has switched to a three-step structure of ‘production area → fresh center → store’ by utilizing the fresh center created with an investment of 100 billion won, excluding company A. Since then, the period for fresh food from the production area to be spread on the shelves has been shortened from three days to one day. It is responding with its own Fresh Center to the new attack of platforms such as Curly and Oasis. The proportion of agricultural products through E-Mart Fresh Center increased from 26% in 2018 to 35% last year.
Local food is also E-Mart’s representative ‘super fresh experiment’. Local food is a method of selling fresh food produced in an area near a mart at a local store. The freshness was improved and the logistics cost was reduced by 20%. The number of local food stores more than doubled from 50 in 2019 to 100 last year. Local food sales also surged from 60 billion won to 100 billion won during the same period.
The era of selling only on the same day of harvest
An increasing number of products are sold and discarded only on the same day they are harvested. Lotte Mart’s ‘Today’s Egg’ is a prime example. In order to ‘sell on the same day of production’, it is necessary to engage in a speed battle between minutes and seconds. Yeongil Farm, a poultry farm in Gonjiam, Gyeonggi-do. About 200 eggs laid at dawn are collected at 6:30 am and arrive at the Gwangju Agricultural Cooperative at 8:00 am. After cleaning, sorting, and packaging work is completed within 30 minutes, a truck loaded with eggs leaves the Lotte Mart logistics center at 9:00. When eggs are received at the Lotte Mart Logistics Center in Osan, Gyeonggi-do, they go through work once more, and at 12:30 PM, the delivery vehicle loads the eggs and leaves for the final delivery destination. At 1:00 PM or 4:00 PM at the latest, they are spread on the shelves of marts nationwide. Consumers meet the eggs laid that morning following seven hours of collecting the poultry farm.
Lotte Mart will discard all eggs not sold that day. The shelf life of eggs, which was previously 30 days, has been reduced to just one day in the era of the ‘super fresh revolution’. A Lotte Mart official said, “It is more expensive than regular eggs, but there is very little waste.” The proportion of direct sales of Lotte Mart’s fresh food products increased from 53.9% in 2019 to 61.1% last year.
By Park Han-shin/Noh Yoo-jeong, staff reporter phs@hankyung.com
ⓒ Hankyung.com, unauthorized reprinting and redistribution prohibited
