HomePlus Express, a store-format supermarket (SSM) under NS Home Shopping, aims to make a comeback through "expansion of its franchise business." The strategy involves shifting from its existing system centered on direct-operated stores to one focused on franchises, aiming to expand into local markets and achieve economies of scale.
According to industry sources on the 29th, NS Home Shopping has begun internal discussions to prepare a medium-to-long-term business plan for HomePlus Express. The outline of the business plan is expected to be revealed as early as next month.
It is reported that NS Home Shopping is working on strategies regarding staffing and organizational restructuring of support departments for HomePlus Express, as well as business expansion. In particular, plans to shift from a direct-operated system to a franchise-centered system are reportedly being considered as a key issue.
HomePlus Express currently operates 268 stores, primarily in the Seoul metropolitan area. About 80% of these are direct-operated stores. In contrast, GS Daepres, the No.1 SSM, operates more than 80% of its total 596 stores as franchises.
An operation strategy centered on franchises requires additional management capabilities, including operating a dedicated franchise organization, educating store owners, and managing stores. Brand trust can be affected depending on the operational level of each store, and conflicts over franchise fees may also arise. Nevertheless, an operation system centered on franchises has the advantage of securing stable profitability and high scalability. It allows for securing a revenue base through franchise fees, and the investment burden required for new store openings is relatively low. Another strength is that it facilitates site acquisition, enabling faster expansion of stores.
HomePlus Express plans to realize economies of scale by shifting its operation system to be franchise-centered. To this end, it is expected to consider not only converting some direct-operated stores in the Seoul metropolitan area into franchises but also expanding franchises centered on local regions.
The shift of HomePlus Express to a franchise-centered model is also drawing expectations in terms of on- and offline synergy effects with NS Home Shopping. Although NS Home Shopping specializes in fresh food home shopping, it has been vulnerable in related sales due to delivery limitations. Utilizing the offline distribution network of HomePlus Express can complement such weaknesses. This includes using HomePlus Express stores as quick commerce hubs for home shopping products, as well as expanding business through pre-order services and subscription models.
An industry official stated, "Stabilizing HomePlus Express is the top priority, but in the future, a strategy centered on franchise business will be necessary in line with industry trends," adding, "The synergy effect with NS Home Shopping is expected to be significant."
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