Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
E-mart in downsizing mode amid worsening profits
Electro Mart store at Shinsegae's Starfield shopping mall in Wirye New Town, Gyeonggi Province / Korea Times file
By Kwak Yeon-soo
By Kwak Yeon-soo
E-mart is slimming down its operations by closing down unprofitable specialty stores amid sluggish consumption, high rental costs and other unfavorable conditions, according to industry officials Wednesday.
E-mart is considering closing down Pierrot Shopping store in Myeong-dong, the main shopping district in downtown Seoul, due to high rental costs and fierce competition with Daiso.
The country's No.1 discount store chain opened Pierrot Shopping in Korea in 2018, but ended up downscaling due to deteriorating profits.
“We're considering closing the Pierrot Shopping store in Myeong-dong in order to enhance the profitability of specialty stores,” an E-mart official said.
In July, it shut down Pierrot Shopping stores in Nonhyeon and Uiwang, citing “less-than-satisfactory” profits.
The company has already decided to close its Pangyo branch of Electro Mart, which retails tech gadgets.
E-mart has also closed 18 out of 33 outlets of health & beauty store Boots, including ones near the bustling Hongdae and Sinnonhyeon areas in Seoul.
E-mart opened Boots in Korea in 2017 to challenge Korea's No. 1 brand Olive Young run by CJ Group, but ended up closing unprofitable stores.
E-mart CEO Kang Heui-seok / Courtesy of E-mart
Analysts said the company's moves are intended to reduce losses and focus on restructuring under the new CEO.
For the first time in its 26-year history, E-mart named an outsider Kang Heui-seok as its new CEO, in November.
“E-mart will accelerate is business transformation under Kang's leadership, as the CEO has extensive retail experience and ability to drive growth” an HI Investment & Securities analyst said.
“The company will seek to recover its profitability by minimizing unprofitable businesses and focusing more on the online sector, SSG.com.”
E-mart logged 116.2 billion won ($97.2 million) in operating profit in the third quarter of this year, compared to a 194.6 billion won operating profit a year earlier.
The discount chain has been adopting a price-cutting strategy since August, and the decline in sales has been slowing as a result.
E-mart said it plans to maintain an ultra-low price strategy to draw customers who have many other shopping options, both online and offline.