[People人] Emart, the Path to Regrowth as a 'Place to Stay' Not Just a 'Place to Sell'

Kang Hee-seok, Emart CEO, Utilizes Consultant Experience for On-site Management
Storytelling-type Store Renewal Achieves 58% Sales Increase in 2 Months
Withdrawal of Pierrot Shopping and Boots, Focus on No Brand for 'Sorting the Wheat from the Chaff'

[Asia Economy Reporter Lim Hye-seon] Chung Yong-jin, Vice Chairman of Shinsegae Group, ordered, "Find the original competitiveness of Emart," and Kang Hee-seok, CEO of Emart, who was recruited externally (photo), is breathing new life into the large discount stores whose growth momentum had stalled. Kang, a former consultant, combines his management philosophy that "knowledge beats experience" with on-site management, gradually producing results and putting Emart back on the path of growth.

Stores Where Consumers Want to Visit

With online platform sales surging, many say the heyday of large discount stores is over. While competing retailers are rushing to reduce offline stores, Emart is increasing investment in offline stores. CEO Kang judged that demand for offline stores will not disappear, so competitiveness must be enhanced. He identified 'grocery' and 'price' as Emart's strengths. He diversified grocery varieties and enhanced price competitiveness with items like 'ultra-low price' wine. Stores were transformed into storytelling-type stores, providing various information such as product history, explanations, and recipes.

Experience spaces were expanded in renovated stores. Since his appointment, CEO Kang has remodeled four stores: Gangneung, Chuncheon, Suncheon, and Wolgye. He ordered the creation of spaces where customers can stay longer rather than just places to sell goods. After Wolgye was remodeled in May, sales increased by 58% over the same period last year for two months. Thanks to the sales increase in renovated stores, the rate of Emart's negative growth is gradually slowing. In the second quarter of this year, when the domestic retail industry struggled due to the COVID-19 pandemic, Emart's existing store growth rate was -1.2%. Considering last year's -3.4% and the first quarter's -2.4%, this is a meaningful figure. It is the result of focused efforts.

Traders is embarking on full-scale expansion. Traders' sales increased by 20.2% year-on-year in the first half of this year. Operating profit also slightly increased. Following the opening of three stores last year?Wolgye, Bucheon, and Myeongji?the Anseong store will open next month. CEO Kang, seeing Traders' growth, has planned to open six more stores by 2023. Traders' overwhelming competitiveness lies in 'price.' By reducing operational distribution stages, it strengthened fresh food competitiveness, which accounts for 40% of total sales. To enhance expertise, Emart integrated the overseas purchasing departments of Emart and the warehouse discount store Traders. The sourcing headquarters has about 100 personnel. They introduce products from around the world to consumers.

For specialty stores, profitability was thoroughly evaluated to separate the wheat from the chaff. Pierrot Shopping and Boots chose bold withdrawal, but investment in No Brand is not spared. Total specialty store sales in the first half increased by 12.1% year-on-year to 586.2 billion KRW. Operating losses decreased to 25.1 billion KRW from 40.5 billion KRW last year. No Brand recorded its first quarterly operating profit of 2.5 billion KRW in Q1. Operating profit increased to 5.5 billion KRW in Q2, entering a growth phase.

E-Mart Wolgye Branch.

Investing in Customers and Employees Without Considering Costs

Right after the COVID-19 outbreak, in February, CEO Kang told executives, "The safety of customers and employees is the top priority," and instructed, "Do not just follow the Korea Disease Control and Prevention Agency guidelines; create Emart's own best quarantine guidelines." Emart was the first large discount store to install 'Customer Safety Guards' at checkout counters, customer service centers, and gift certificate shops. Antibacterial films were attached to shopping cart handles and elevator buttons, and temperature measurement devices were placed at store entrances. Since February, masks have been provided free to employees. Thorough disinfection activities are conducted daily at customer convenience facilities, carts, employee lounges, parking lots, and checkout counters. Emart has spent tens of billions of KRW on quarantine over five months.

CEO Kang emphasizes 'communication' to employees. He often talks about the importance of two-way communication between the field and headquarters. If distribution and production do not move organically, gaps arise, directly affecting profits. CEO Kang regularly holds meetings with employees to share his management philosophy. Recently, he mentioned 'structuring of thinking' to employees. He urged, "In distribution, many things are done by intuition, but please perform tasks based on clear (objective) standards."

This content was produced with the assistance of AI translation services.