Shinsegae seeks to take on Coupang with new membership

Shinsegae Group’s new paid membership program, called Shinsegae Universe, was unveiled Thursday in an apparent move to lock in customer loyalty across all its shopping platforms and renew its competition with Coupang, the nation’s No. 1 e-commerce operator.

"Shinsegae Group evolved into a multi-platform (retail system) that can meet the detailed shopping demands for diverse customers across online and offline (markets)," said Kang Heui-seok, CEO of E-mart, Shinsegae Group's discount store chain, during the launch ceremony.

"(With Shinsegae Universe), we will set a new standard for future retail in Korea by utilizing Shinsegae's online and offline data, along with its logistics infrastructure across the country."

The paid membership, which has an annual fee of 30,000 won ($23), will provide its customers with a five percent discount for purchases made at six of its affiliates, including E-mart, SSG.com, Starbucks, Gmarket, Shinsegae Department Store and Shinsegae Duty Free.

The membership also aims to lock in its customers with a slew of benefits such as cashback worth 30,000 won that could be used at a Shinsegae affiliate of one's choice. Subscribers will also be offered a five percent discount, with an annual limit of 250,000 won, when buying fashion goods at Shinsegae Department Stores, along with discounts up to 15 percent at maximum at outlets of Shinsegae Duty Free stores.

According to Shinsegae Group, Gmarket, Shinsegae Group's online retailer, will function as a key hub to bridge the group's online and offline channels.

"Gmarket will lead the utilization of Shinsegae's data and connect the membership to Shinsegae's partnered vendors, for the expansion of Shinsegae Universe," said Gmarket CEO Jeon Hang-il.

During the ceremony, the E-mart CEO added that in addition to the six affiliates currently participating in the integrated membership, Shinsegae's other subsidiaries such as E-mart 24, Shinsegae Food, and Starfield are also planning to participate.

"We will continue to strengthen links with external partners such as travel, entertainment, games, aviation and telecommunications industries. We are already completing membership talks with Korean Air and KT," Kang added.

Shinsegae's expansion of its paid membership comes as it seeks to take on its archrival Coupang.

Coupang has fast narrowed the sales gap with Shinsegae, the nation’s largest retail giant, to less than 10 billion won from over one trillion won a year ago. When it comes to E-mart, its sales were outpaced by those of Coupang in the first quarter this year for the first time.

Coupang's latest performance is said to have been largely driven up by the increased number of subscribers to its paid membership Rocket Wow -- which offers its subscribers a variety of services, including overnight deliveries, special discounts and streaming service, Coupang Play. Industry watchers say Shinsegae appears to be aiming to find a fresh growth engine with its new membership system.

"Whichever company has more loyal customers than its competitors will soon gain the upper hand in the saturated commerce market," said a representative from the commerce industry.

"As such, the competition for paid membership will inevitably intensify in the future."

Currently, Coupang stands as the No. 1 retailer with the most paid subscribers at 11 million people.

With Shinsegae Universe, Shinsegae Group said it aims to secure 10 million subscribers and increase its sales by more than 50 percent within five years.