Crisis-Breaking Strategies for Electronics Retailers: ElecLand's 'Customer Attraction' and HiMart's 'Efficiency'

Distinct Corporate Identities Revealed in Structural Reforms
Expansion of Paid Membership Stores by Electron Land
Hi-Mart's Efforts to Streamline Inefficient Stores

On the 22nd, E-Land Electronics opened its third paid membership store, ‘LAND500,’ in Jeungpo-dong, Icheon-si, Gyeonggi Province. The store spans approximately 300 pyeong over two floors and offers around 500 products at online lowest price levels. Having previously launched paid membership stores in Jakjeon-dong, Gyeyang-gu, Incheon last month and Tanbeol-dong, Gwangju-si, Gyeonggi Province this month, E-Land Electronics plans to gradually expand the LAND500 stores in the future.

Its competitor, Lotte Hi-Mart, recently closed its Sangok branch in Bupyeong-gu, Incheon. Although the Sangok branch was located in a prime area just a 3-minute walk from Sangok Station on Seoul Subway Line 7, Lotte Hi-Mart decided to merge it with the nearby Bupyeong Lotte Mart branch due to unprofitability. In addition to the Sangok branch, Lotte Hi-Mart continues to reduce underperforming stores, including the Munsan branch in Paju-si, Gyeonggi Province.

The exterior view of LAND500, the third paid membership store opened by E-Land on the 22nd in Jeungpo-dong, Icheon-si. [Photo by E-Land]

Amid the global economic downturn and a decrease in real income, the two major domestic home appliance retailers, both facing deteriorating performance, are seeking breakthroughs through different strategies. While E-Land Electronics is focusing on ‘customer attraction’ through paid membership stores, Lotte Hi-Mart is emphasizing ‘efficiency’ by consolidating stores, highlighting a stark contrast in their approaches.

According to industry sources and the Financial Supervisory Service’s electronic disclosure system, both E-Land Electronics and Lotte Hi-Mart posted poor results last year. E-Land Electronics’ sales dropped 17.6% year-on-year to 722.9 billion KRW, and its operating loss widened to 10.9 billion KRW. Similarly, Lotte Hi-Mart’s sales fell 14% year-on-year to 3.3368 trillion KRW, with an operating loss reaching 52 billion KRW.

This year, both E-Land Electronics and Lotte Hi-Mart have begun structural reforms to recover from their sluggish performance. The core of these efforts is E-Land Electronics’ use of paid membership stores to attract customers, and Lotte Hi-Mart’s focus on improving efficiency through store consolidation.

These strategies are both led by their respective CEOs. In December last year, facing worsening results, both companies replaced their top executives as a measure to overcome the crisis. The newly appointed CEOs were Kim Chan-su for E-Land Electronics and Nam Chang-hee for Lotte Hi-Mart.

CEO Kim joined E-Land Electronics in 2010 and has worked across key departments including marketing, online sales, and product divisions. Just before his appointment as CEO, he served as the head of the new business division (executive director), showing an active approach to discovering new business opportunities. Industry insiders expect E-Land Electronics to expand its LAND500 stores to more than 10 this year, considering that the paid membership store is CEO Kim’s primary core strategy.

Exterior view of Lotte Hi-Mart headquarters located in Daechi-dong, Gangnam-gu, Seoul. [Photo by Lotte Hi-Mart]

CEO Nam is regarded as a distribution expert with extensive experience at Lotte Mart and supermarkets. Known for his efficiency-focused style, it is said that the group entrusted Lotte Hi-Mart to CEO Nam as a ‘firefighter’ to improve profitability. Given his expertise in restructuring, the industry expects continued reduction of inefficient stores and consequent workforce cuts within Lotte Hi-Mart this year. In fact, as of last month, the number of Lotte Hi-Mart stores nationwide was 377, down 14 from 391 before CEO Nam’s appointment.

However, despite these structural reforms by both companies, the prevailing view is that immediate performance recovery will be difficult. An industry insider said, “Home appliance retailers have been directly hit by consumption stagnation caused by high inflation and high interest rates, as well as a decline in moving and wedding-related purchases due to sluggish real estate transactions. Unless external factors such as interest rates change, fundamental performance improvement seems unlikely.”

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