Homeplus to Waive 'Mixed Fees' for Small Business Owners Until Year-End

Lee Nak-yeon, leader of the Democratic Party of Korea (third from the left), along with Park Hong-bae, Supreme Council Member of the Democratic Party of Korea, Kim Jong-min, Supreme Council Member of the Democratic Party of Korea, Lee Dong-joo, Responsible Member of the Democratic Party of Korea, Lim Il-soon, President of Homeplus, and small business tenant landlords (from the left) are taking a photo after discussing the exemption of mixed fees in front of the party leader's office at the National Assembly in Yeouido, Seoul on the 5th.

[Asia Economy Reporter Seungjin Lee] Homeplus announced on the 5th that it will waive mixed commission fees until the end of the year to support small business tenant owners who have been hit in sales due to the novel coronavirus infection (COVID-19).

This decision was made through consultations with the Euljiro Committee, which proposed measures for coexistence with small businesses. Homeplus made this decision with the intention of overcoming the difficult times together, as both companies and self-employed individuals are struggling due to the decrease in customer traffic caused by the spread of COVID-19. Following last year's sudden unconditional conversion of all non-regular contract employees to regular positions, this time Homeplus is taking a step toward coexistence targeting small business owners operating in its shopping mall.

The mixed commission contract is a type of ‘incentive’-linked contract method where a fixed rent is charged if the sales of the leased store are low, and a sales-linked commission is applied if sales are high, with a reduced commission rate on excess sales. Due to the advantage of reducing operational burdens as business improves, there was high demand from small business owners in food and beverage and living sectors, which have large sales fluctuations. Currently, about 600 leased stores have such contracts.

However, since the COVID-19 outbreak, not only has customer traffic at large marts sharply declined, but sales at leased stores have also dropped drastically. Accordingly, as soon as the spread of COVID-19 began in February and March, mixed commissions were waived and only fixed-rate rent was applied. Additionally, in April and May, mixed commissions were waived for kids cafes and health clubs, which had difficulty operating due to social distancing measures, and during the companion sale period in June and July and until August, mixed commissions were waived to support coexistence with tenant owners.

Homeplus recorded a net loss of about 530 billion KRW last year, directly affected by the offline distribution industry recession and the spread of COVID-19, and recently faced difficulties to the extent of deciding to securitize assets of about three stores to overcome the crisis. Nevertheless, Homeplus judged that coexistence with tenant owners who trusted and joined Homeplus is more important, and plans to waive mixed commissions and participate in the so-called ‘Good Landlord’ movement.

Meanwhile, at the ‘Coexistence Flower Attachment’ event held at the Democratic Party of Korea’s representative office in the National Assembly on the same day, Homeplus President Ilsun Lim, Democratic Party leader Nak-yeon Lee, and Democratic Party Supreme Council member Hong-bae Park attended.

Homeplus President Ilsun Lim said, “Due to COVID-19, the difficult situation for everyone working at large marts has been prolonged, leading to this decision. As a company that has valued coexistence with its members through employment security activities such as unconditional conversion to regular positions, Homeplus will continue to do its best to help all those related to Homeplus, including small business tenant owners, overcome these difficult times.”

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