What: Major Korean retailers adopt 'reverse pricing' strategy, setting consumer-acceptable price points first and adjusting costs accordingly to combat inflation pressures. 

Why it is important: This innovative pricing strategy shows how Korean retailers are adapting to economic pressures while protecting market share, offering valuable insights for global retailers facing similar inflationary challenges.
South Korean retailers are pioneering a 'reverse pricing' strategy to combat inflation's impact on household budgets. Major players including E-Mart, Lotte Mart, and CU are now determining prices based on consumer acceptance rather than traditional cost-plus models, fundamentally changing how products are developed and sold.
E-Mart's innovative approach is exemplified by their 5980-won whisky "Just for Highball," designed to compete with soju prices in restaurants, and their collaboration with LG Household & Health Care on the "Glow:up by Beyond" skincare line, all priced at 4950 won. Their No Brand sneakers, priced at 29,980 won, further demonstrate this strategy's success across categories.
Lotte Mart has successfully implemented this approach with 1000-won essential items like tofu and bean sprouts, while their "World Buffet" deli line offers international dishes at fixed price points through strategic sourcing and preparation methods. E-Land's Kim's Club has proven the model's effectiveness with their "Deli by Ashley" line, which has sold over 5 million units and increased store traffic by 20%. Convenience store chain CU has extended the strategy to multiple categories, including 880-won instant soups and 990-won snacks.

IADS Notes: The adoption of reverse pricing by major Korean retailers in June 2025 marks a significant shift in retail strategy amid persistent inflation. This approach follows a challenging period where department store growth fell below 1% in January 2025, with market polarisation intensifying as successful stores achieved 5% growth while others declined by 3.3%. The strategy aligns with broader market pressures, as evidenced by March 2025 data showing middle-class spending remaining below pre-pandemic levels, with the marginal propensity to consume dropping from 90.8 in 2019 to 81.8 in 2024. E-Mart's successful pricing initiatives, including their private label expansion, demonstrate how retailers are adapting to changing consumer behaviour, while Lotte's 44.3% profit growth in May 2025 through cost-efficiency measures shows the effectiveness of strategic pricing approaches in maintaining market share during economic challenges.

Korean retailers embrace ‘reverse pricing’ as inflation bites