Shoppers crowd in for the opening day of Traders Wholesale Club's latest store in Seoul's Gangseo District, Friday. Courtesy of E-Mart

Warehouse stores are gaining traction in the country's retail market, marking year-on-year growth in both sales and operating profit. In contrast, major supermarket chains are seeing a decline in the number of locations due to reduced sales.

The main driver of this trend is the continued rise in retail market prices since last year, prompting consumers to look for more affordable options to save money. Warehouse stores typically offer prices 10 to 15 percent lower than those of supermarkets.

The country's warehouse store market has traditionally been dominated by Costco Korea, a regional branch of the U.S.-based Costco Wholesale. However, the domestic market has become more diversified as Traders Wholesale Club, a warehouse store division under retail giant E-Mart, has gained increasing popularity.

Costco currently runs 19 stores in Korea, while Traders has 29.

Traders' performance last year improved from the previous year, reflecting its popularity. Sales logged over 3.54 trillion won ($2.45 billion), up 5.2 percent from 2023. Operating profit logged 92.4 billion won, up 59 percent.

Traders' 2024 performance showed the steepest growth among E-Mart's other retail outlets, including No Brand, Electro Mart and Molly's Pet Shop.

The latest Traders store, which opened on Friday in Seoul's Gangseo District, achieved sales of 2 billion won on its opening day and 2.4 billion won the following day. These figures represent the brand's highest daily sales to date.

Costco Korea also showed improved performance last year. According to its regulatory filing with the Financial Supervisory Service, the company recorded over 6.53 trillion won in sales and an operating profit of over 218 billion won for fiscal year 2024. These figures represent increases of 7.6 percent and 15.8 percent, respectively, compared to the previous year.

Lotte Mart Maxx, a warehouse store division under Lotte Shopping with six locations nationwide, also saw a year-on-year sales increase of 20 percent last month.

On the other hand, the number of major supermarkets in Korea have been declining gradually in recent years. E-Mart has shut down six stores since 2020, while as of last year, Homeplus ran 127 stores, a decrease of four from the previous year. Lotte Mart also closed one store last year.

The decline of supermarkets is due largely to reduced consumption across the country's retail sector, driven by soaring market prices. Other key factors include the growth of online commerce, the rising number of single-person households and the shift of consumers to convenience stores, which are gaining popularity for their affordability and accessibility.

"Warehouse stores have competitive prices because they offer products in bulk at lower costs," an industry official explained. "Additionally, they operate with lower profit margins than supermarkets, which enables them to offer more affordable prices."