As E-Mart and Lotte Mart prepare large-scale year-end discount events, Homeplus, which is undergoing corporate rehabilitation proceedings, faces uncertainty even over whether it will continue its events. Concerns are emerging that the company may fall behind in the fourth-quarter discount competition, considered a peak season for the retail industry, due to difficulties securing products caused by sluggish sales and financial strain.
According to industry sources on the 13th, Homeplus has not finalized plans for additional large-scale discount events after its special price sale running through the 14th to mark the Hangul Day holiday. Considering that it typically takes anywhere from one month to three months for large supermarkets to prepare major discount events, there is a high likelihood of disruptions in preparations for fourth-quarter events as well. The sustainability of flyer-based promotions, which require relatively shorter preparation periods, also remains uncertain.
The biggest factor making it difficult to sustain discount events is the financial crunch. Homeplus is continuing operations based on 20 billion won in emergency operating funds (DIP). Initially, Homeplus planned to normalize its supermarket operations and repay debts using funds secured through business activities, but its financial situation has worsened as sales have not recovered as expected. It was reported that Homeplus's sales in early this month amounted to only about 30% of its target level.
Difficulties in product procurement have also grown. Initially, Homeplus planned to increase inventory and expand sales through credit transactions, but it is currently receiving products primarily through prepayment and cash transactions. The decline in available funds due to sluggish sales has resulted in constraints on securing products. According to the Homeplus General Labor Union, there were cases where product supply was delayed because payment for deliveries could not be made on time immediately after the Chuseok (Mid-Autumn Festival) holiday.
The issue is how to respond in the fourth quarter. The fourth quarter is a peak season for the retail industry, with concentrated shopping demand from Black Friday, Singles' Day, and year-end holidays. Large supermarkets launch major discount events during this period to secure customers. E-Mart and Lotte Mart have also begun preparing their fourth-quarter discount events centered on 'Gorae-it Festa' and 'Tongkeun Day,' respectively.
On the other hand, if Homeplus fails to sufficiently stock its product lineup, it is highly likely to fall behind in the discount competition with competitors. Previously, during Chuseok as well, the company struggled to secure holiday gift sets and failed to benefit from the seasonal boom. According to iGA Mobile Index, Homeplus's estimated credit and check card payment amount was 40.7 billion won over the two weeks surrounding the Chuseok holiday, from the 13th to the 26th of last month. During the same period, E-Mart's and Lotte Mart's payment amounts were 513.1 billion won and 186.6 billion won, respectively.
The industry is concerned about a vicious cycle in which sluggish sales lead to disruptions in product securing, which in turn exacerbates financial difficulties. Analysts note that it will not be easy to restore competitiveness if securing funds through store sales or mergers and acquisitions (M&A) is delayed.
An industry official said, "The policy for operating Homeplus's future discount events is unclear," adding, "It is also uncertain how long the currently ongoing events can be sustained."
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