Homeplus under pressure again...

Date : 08 November 2017

Homeplus has been fined KRW500 mn (US$450,000), one of the largest corporate fines in the South Korean history, after providing overstating profit forecasts to its convenience store franchisees.

Deeper concerns at network level

Homeplus are still recovering from overall sluggish sales, which triggered Tesco to sell its shareholdings to MBK Partners in 2015. Since 2012, total sales growth has been stagnant, with hypermarket sales falling year on year. Their 365 Plus convenience store chain has seen moderate growth, but now the retailer is accused of providing misleading information to attract potential franchisees. With small format stores growing strongly across the country, this is a setback to their wider public appeal and recovery.

What next?

Ecommerce in South Korea is another fast-growing channel, with mobile transactions rapidly rising and popular with Korea's increasing number of single and two-person households. We have seen retailers like E-Mart shift their focus on private labels and driving profitability through online sales. Homeplus' online sales account for a small proportion of their total sales. Now that both their hypermarket and convenience formats are under pressure, will they focus on their online portal to drive growth and better serve shopper missions?