Homeplus Co., which has escaped the brink of bankruptcy and is again undergoing corporate rehabilitation proceedings, has chosen to adopt the operating model of the U.S. grocery chain Trader Joe's as its roadmap to normalize management. Unlike traditional big-box stores, it plans to restructure its business by cutting the number of product items and increasing the share of private brands (PB) to boost competitiveness.
According to the industry on the 27th, Homeplus Co. plans to complete product sourcing as soon as 200 billion won in emergency debtor-in-possession (DIP) operating funds is executed and resume operations next month at 67 key stores that are temporarily closed. Multi-story stores will be downsized into single-floor stores of about 1,000 pyeong, and sales will focus on food, PB, and daily essentials.
Homeplus Co. looked to Trader Joe's as it pushed to reopen. Trader Joe's, unlike typical big-box retailers that carry tens of thousands of items in large stores, sells about 4,000 products, more than 80% of which are PB.
By concentrating sales on bestsellers, it reduced inventory and logistics burdens, and by dealing directly with manufacturers, it lowered intermediate distribution expense to secure price competitiveness. Instead of keeping slow sellers, it quickly discontinued them and steadily rolled out new PB products to raise turnover.
In Korea, it became known for items like eco-bags and frozen kimbap, but Trader Joe's core strength lies in PB. Early on, it developed distinctive products that were hard to find in the United States at the time, such as Indian curry and Japanese soy sauce. Later, it secured loyal customers by successively turning characterful products like Mandarin Orange Chicken and Everything but the Bagel Seasoning into hits.
Homeplus Co. chose Trader Joe's for the same reason. By reducing sales floor area and the number of stock keeping units (SKUs), it can lower product purchasing expense and inventory burdens, and by focusing on high-turnover categories like food and essentials and increasing exclusive PBs, it believes it can improve both operating efficiency and profitability.
Homeplus Co.'s PB "Simple+" was once recognized for quality and price competitiveness, but customer attrition followed amid rehabilitation proceedings and product supply disruptions. Since it will be difficult to draw consumers back with the same product lineup after reopening, the plan is not merely to expand PB's share but to drive visits with items available only at Homeplus Co.
◇ Whether the Trader Joe's model will succeed in Korea is uncertain
Still, many are skeptical that Trader Joe's model can deliver results in Korea. Its success is seen as the product of a combination of factors beyond a simple store-operating approach, including product planning prowess, brand fandom, and the unique U.S. consumer environment. Store experience elements—such as how products are presented, employee service, and interior design—are also cited as drivers of customer loyalty.
Trader Joe's has targeted niches with an eye to the U.S. consumer environment. While big-box retailers like Walmart and Costco are largely in the suburbs and capture bulk-shopping demand, Trader Joe's sells food-centric products such as ready-to-eat meals, frozen foods, and snacks in relatively small stores near urban centers and residential areas.
By contrast, many large hypermarkets in Korea are already situated within urban living zones, and consumers have used them as one-stop shopping venues for fresh produce, meat, seafood, and daily necessities. Demand for ready-to-eat meals and small-quantity shopping has also been significantly preempted by e-commerce players like Coupang, convenience stores, and corporate supermarkets (SSM).
Financial capacity is another variable. Homeplus Co. has secured 200 billion won in DIP funds and escaped an immediate bankruptcy crisis, but inside and outside the industry it is seen as merely securing short-term liquidity sufficient to keep operating for roughly two to three months. Since the secured funds must first be directed to product purchases, store reopenings, overdue rent, utilities, and payroll, the capacity to invest in new PB development and store overhauls is limited.
재무적 여력도 변수다. 홈플러스는 2000억원 규모 DIP 자금을 확보하며 당장의 파산 위기에서는 벗어났지만, 업계 안팎에서는 사실상 2~3개월가량 운영을 이어갈 수 있는 단기 유동성 확보 수준에 불과하다고 보고 있다. 확보한 자금도 상품 매입과 매장 재개장, 밀린 임차료, 공과금, 임금 지급 등에 우선 투입해야 하는 만큼 신규 PB 개발과 점포 개편 등에 투자할 여력은 제한적이라는 분석이다.
Time is not on Homeplus Co.'s side. The court set Sept. 4, the final deadline under corporate rehabilitation proceedings, as the deadline to pass the rehabilitation plan. Homeplus Co. must prepare a revised rehabilitation plan and win creditor approval by then. As creditor consultations typically take about a month, it must draw up concrete normalization measures by early Aug.