It was close to home, and with a hospital, a dry cleaner, and Asung Daiso Co. on the first and second floors, it was convenient to come by for other items, so I used it often.
At 11 a.m. on the 5th, Park Hyang-nam, 71, a nearby resident met in front of the escalator going down to the basement food section at the Homeplus Co. Sinn ae branch in Jungnang District, Seoul, said, "Now I have to go to the E-MART (Mokdong branch) in the next neighborhood or to the Homeplus Co. Sangbong branch." A notice at the store entrance read "Tenant stores operating normally," but the basement level with the fresh food section had its lights off and access was restricted.
The Sinnae branch is one of 37 stores nationwide that Homeplus Co. recently decided to close. Last month, Homeplus Co. temporarily suspended operations at 37 stores until court approval of its rehabilitation plan, but the day before decided to close all of them. As a result, the number of stores operated by Homeplus Co. will be reduced to about 67 nationwide.
Only tenant stores were continuing to operate on the first and second floors of the Sinnae branch, but many had already closed or were preparing to withdraw after operating only through this month. A notice at the dry cleaning tenant store said, "We will not accept laundry from June." The owner of a home appliances and accessories store said, "We will operate only through this month and plan to move the store to another city," adding, "We are running discounts of up to 50% to clear inventory." Asung Daiso Co., which was operating normally on the same floor, noted, "No future plans have been set, and we will respond according to the situation."
◇ Even stores not slated for closure face product shortages
This is not a problem limited to stores set for closure. Stores that remain open are also experiencing disruptions in product supply. At 1 p.m. the same day, Homeplus Co. locations in Mapo District, Seoul, had placed PB (private brand) products to fill gaps caused by shortages. On the beverage shelves, products were placed only on the front row visible to customers, with no stock behind. PB tumblers sat in the freezer case for cheese, and cutting boards and knives were displayed where meat products should have been.
Choi Eun-su, 35, a homemaker, said, "Eggs are so expensive that I came to shop after seeing the Homeplus Co. discount flyer, but the section where eggs should be had only frying pans," adding, "When I asked a clerk, I was told only a small quantity of eggs comes in for the morning and there are none in the afternoon. It's understandable to be out of stock, but I was taken aback to see completely unrelated products displayed."
An employee at Homeplus Co., a person surnamed Kim, 59, said, "When customers can't find what they're looking for, we tell them, 'If it's not there, we don't have it,'" adding, "Even after selling through remaining stock, deliveries are not coming in well."
A resident of an apartment near the Homeplus Co. in Gangseo District, a person surnamed Yang, 33, said, "Unless I urgently need side dishes, I don't go even if it's close," adding, "Whether due to supply issues or not, freshness often suffered, and with a high share of PB products, there were many times when what I wanted wasn't there." Yang added, "If this continues, I think even the stores that are open now may soon move toward closure."
Homeplus Co. acknowledges there are currently problems with product supply but says it is working to normalize supply to the remaining stores. A Homeplus Co. official said, "It's true there are issues with product supply," but added, "Since the suspension of 37 stores, we have been concentrating products at the remaining 67 stores to prevent sales declines at key locations and keep customers from leaving, and that policy remains unchanged."
◇ Homeplus Co. Express shelves also empty in many places
Homeplus Co. Express, the supermarkets (SSM) division up for sale, also appears to be striving for normalization. Notices titled "June normalization guide" were posted at the Homeplus Co. Express stores visited that day in Jongno District and Seodaemun District, Seoul. However, inside the stores, many empty shelves had only price tags marked "sold out."
Employees at these stores said, "We are preparing for normal operations in June, including discussing how to arrange products that will arrive," but added, "No specific schedule has been set for when stock will come in." Recently, NS Home Shopping, an affiliate of Harim Group, has been reviewing a plan to provide payment guarantees to suppliers ahead of acquiring Homeplus Co. Express. The move is seen as a step to resume product supply after the acquisition and refill empty shelves.
Homeplus Co. faces a July 3 deadline to submit its rehabilitation plan. In particular, after the sale of Homeplus Co. Express, it is also pursuing mergers and acquisitions (M&A) for the remaining business units—hypermarkets, online, and headquarters—excluding Express, but securing operating funds needed to carry out the rehabilitation plan remains a challenge.
A distribution industry official said, "For hypermarkets, it is crucial that customers can buy what they want at any time," adding, "If product supply disruptions continue, customer attrition is bound to accelerate. Whether they can normalize supply at the remaining stores and restore customer trust is the key variable for rehabilitation."
Lee Jeong-hee, a professor in the Department of Economics at Chung-Ang University, said, "More important than store closures themselves is restoring the competitiveness of the remaining stores," adding, "If supply disruptions continue due to anxiety among suppliers and partner firms and customers start moving to other marts, the rehabilitation effort could become even more difficult."