SEOUL (BLOOMBERG) – In South Korea, where the highest inflation in years is causing chicken prices to rise, one grocery store is cutting costs.
Homeplus, the nation’s second-largest retailer, has slashed prices for fried chicken by as much as two-thirds to cash in on consumer angst. Demand has surged. Koreans have left no stone unturned in looking for ways to save on food. That includes standing in hours-long queues to buy discounted poultry.
Inside one Homeplus store, a long line of customers waited patiently near the meats section on a recent day in hope of some cheap eats. An employee in a tall chef’s hat emerged from the kitchen with key news: “We have 30 chickens coming!”
For shoppers at the front of the queue, the wait paid off. For those at the back, it was a waste of time. The experiment comes with risks.
Homeplus has turned the logic of seeking wider profit margins through price hikes on its head. But if successful, the retailer, which has nearly 140 branches, could boost its market share in a country where fried chicken is big business and emerge as an unlikely ally in the Bank of Korea’s fight against inflation.
“I think there will be immense pressure on franchises to lower their prices or at least to stop raising them, given how cheap Homeplus is selling their fried chicken,” said Lloyd Chan, an economist at Oxford Economics.
Whether prepared in pepper sauce or braised in soy, chicken plays a key role in South Korean cuisine. Poultry dishes are the number one choice on food delivery apps, beating out pizza, hamburgers and Chinese food.
The country is dotted with tens of thousands of chicken “hofs” – pubs that specialise in fried chicken and beer. But prices have soared recently, out-pacing most other foods.
Golden Olive Chicken, the marquee product at BBQ Chicken, one of the biggest brands in South Korea, now costs 24,000 won (S$25) – up from 16,000 won five years ago.
Higher delivery fees introduced during the pandemic have only added to consumer grumbles. So in late June, Homeplus launched “Dangdang” chicken, which in Korean means “fair” or “proud,” but is also shorthand for “made today, for sale today.”
Customers flooded the retailers’ supermarkets to buy a bucket for 6,990 won. In the weeks that followed, rival chains followed suit.