The country's largest discount store, Emart, is expanding its scale with new openings. It aims to secure price competitiveness through integrated purchasing and is also launching its delivery service 'quick commerce' in earnest.
Emart CEO Chung Yong-jin noted at the regular shareholders' meeting held at the Post Tower in Myeong-dong, Seoul, on the 26th that "we will secure product competitiveness based on integrated purchasing and strengthen our core competitiveness through marketing innovation," unveiling this business strategy.
Emart's top priority is the transition to an integrated purchasing system. It seeks to achieve economies of scale by integrating various purchasing styles that were divided among large discount stores (Emart), warehouse discount stores (Traders), and online shopping malls (Gmarket·SSG.com). The aim is to reinvest the cost savings achieved into securing price competitiveness, creating a virtuous cycle of increasing sales.
CEO Chung emphasized that there is a clear focus on accelerating growth through new store openings and diversifying sales channels this year. Emart has recently focused on 'downsizing' to eliminate inefficiencies rather than expanding its scale. The number of Emart stores, including Traders, peaked at 160 in 2020 and has steadily decreased to 154 as of the end of last year.
Last December, the food market Suseong store (Daegu) opened, specializing in food, and last month, the Traders Magok store was introduced, reigniting new openings. The opening of the food market Goduk store (in the first half of this year) and the Traders Guwol store (in the second half of this year) is also planned.
Next year, three or more new stores will open. There are plans to expand openings by securing more than five new sites. CEO Chung said, "Stores are the basis for operations and a growth engine," and added that they will actively expand stores in various forms such as Traders and food markets by assessing the scale, location, and revenue of the business area.
He indicated plans to transform stores with low asset efficiency into new business models like shopping malls and food markets to increase customer and revenue growth. They will also strengthen the quick commerce business, considering the competitive landscape for fast delivery. CEO Chung emphasized that "we will gradually expand delivery services such as quick commerce by utilizing existing store assets to enhance customer convenience and secure new customers."
Emart launched its quick commerce service at the Wangsimni and Guro stores through the delivery app Baedal Minjok last November. Currently, three stores, including Dongtan store, are operating the service. It is in a pilot service stage to assess the business potential before deciding on whether to expand the service.
CEO Chung stated that efforts for rigorous cost structure innovation will not cease. He noted that key issues for cost efficiency include organizational restructuring for workforce efficiency and enhancing productivity utilizing artificial intelligence (AI) and big data. Through this, he aims to achieve a consolidated operating profit of 1 trillion won by 2027, reinforcing shareholder return policies such as raising minimum dividends and stock buybacks.
Previously, Emart announced a corporate value enhancement plan to raise the minimum dividend per share from 2,000 won to 2,500 won and to buy back and retire 560,000 shares (2% of total shares) over the next two years. Emart's stock price began to rebound from this point, exceeding the 80,000 won level, marking an increase of over 40% compared to the annual low of 54,800 won.
At the shareholders' meeting that day, agenda item 6 regarding the value enhancement plan was defeated. This agenda had been continuously requested by the shareholder action platform ACT. ACT submitted five proposals, including the disclosure of the value enhancement plan and mandatory quarterly reporting, to Emart after consulting with the company.
While the small shareholder alliance supports the value enhancement proposal, they opposed agenda item 5 regarding the setting of the director's compensation limit. This reflected shareholder dissatisfaction concerning past controversies over the compensation of executives, including Chairman Chung Yong-jin. Last year, Chairman Chung's total compensation from Emart was 3.6 billion won, which is 90 million won (2.4%) less than the previous year. His total compensation last year consisted of a salary of 1.98 billion won and bonuses and performance pay of 1.63 billion won. However, this agenda was approved at the shareholders' meeting.