Homeplus Co., which once formed a big-three structure in hypermarkets with E-MART and Lotte Mart, is struggling to operate normally due to worsening cash liquidity, while E-MART, which led with its warehouse club Trader's in the first quarter, is seen to have enjoyed a relatively clear windfall. Observers say E-MART, which moved last year to cement its No. 1 position in the industry, is first to absorb the benefits of market realignment triggered by Trader's competitiveness, store remodels, and an ultra-low-price strategy.
Lotte Mart also is estimated to have succeeded in defending sales and profitability on the back of a less intense competitive landscape. Lotte Mart plans to strengthen its online fresh-food delivery competitiveness through an automated fulfillment center (CFC) set to be completed in Busan in the first half of this year.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) and the securities industry on the 23rd, E-MART Trader's first-quarter sales were tentatively tallied at 1.0602 trillion won, up 9.7% from a year earlier. During the same period, sales in the discount store (hypermarket) institutional sector fell 0.1% to 3.0314 trillion won. Profitability also appears to have improved. LS Securities estimated E-MART's first-quarter operating profit at Trader's and discount stores at 49.8 billion won and 78.8 billion won, up 17% and 1.3% year over year, respectively.
According to the Ministry of Trade, Industry and Resources, hypermarkets were the only retail channel among all formats to see a sales decline last year, down 4.2% from the previous year. Despite this environment, E-MART has aggressively expanded investment in domestic stores and products. There is assessment that this preemptive response is translating into real results as it aligns with market realignment sparked by Homeplus Co.'s management woes.
E-MART invested 333.1 billion won in the mart institutional sector last year, up 55.8% from a year earlier. It also opened three new stores: Trader's Magok in Feb., E-MART Godeok in Apr., and Trader's Guwol in Sept.
E-MART also plans to open a new Trader's store in Uijeongbu in the second half of this year and to remodel seven existing hypermarkets into mall-type stores with enhanced experiential content or into Starfield Market formats. In Aug. last year, E-MART launched its private label "5K PRICE," with most items priced at 5,000 won or less, and it has recently expanded the lineup to small appliances under 10,000 won, ramping up efforts to strengthen price competitiveness.
Lotte Mart likewise is seen to have benefited in part from eased competition stemming from Homeplus Co.'s store reductions, successfully defending sales and profitability. According to Kyobo Securities, Lotte Mart's first-quarter sales in the discount store institutional sector likely reached 1.6643 trillion won, up 2.7% from a year earlier, with operating profit at 29.3 billion won, up 4.0%. However, as these figures include overseas operations, some analysis says the increase would be limited if looking only at domestic operations.
Lotte Mart is set to complete its first advanced automated fulfillment center (CFC) in Busan in the first half of this year. Starting in the second half, it plans to intensify competition with alliances such as Naver and Kurly by strengthening online fresh-food delivery competitiveness. Lotte Mart is introducing the smart platform of the U.K. retail tech company Ocado and is investing 950 billion won through 2030 to sequentially build CFCs across six regions nationwide.
Meanwhile, Homeplus Co. is proceeding with store restructuring under corporate rehabilitation. In its rehabilitation plan, Homeplus Co. said it would dispose of 41 underperforming stores over six years and close 19 of them within this year.
The number of Homeplus Co. stores fell to 107 now from 126 at the end of 2024. As the difficulty in supplying products smoothly due to a cash crunch continues, customer traffic is declining and a vicious cycle of falling sales for tenant companies is repeating.
Homeplus Co. plans to secure operating funds and move toward normalization by selling its corporate supermarket (SSM) subsidiary Homeplus Express. In the recently closed open bid, NS Home Shopping, an affiliate of Harim Group, was selected as the preferred bidder. The industry estimates the sale price at around 300 billion won, but there is also a view that it may only be enough to cover accumulated losses.
Lee Jin-hyup, an analyst at Hanwha Investment & Securities, said, "With Homeplus Co.'s weakened sales capabilities due to a lack of funds, competitors E-MART and Lotte Shopping stand to benefit," adding, "In particular, for E-MART, about 70 of its 132 total stores are understood to overlap with Homeplus Co."