Shinsegae to initiate group-wide overhaul

[Photo by MK DB]

South Korean retail giant Shinsegae Group is set to begin a group-wide business restructuring aimed at closing underperforming businesses in response to the increasing online transition in the retail industry.

According to industry sources on Sunday, the group’s flagship E-mart Inc. consolidated its pet product specialty store business into the fashion and tenant business division, while reducing the number of specialty stores to 25 from 36 in 2018. The decision is believed to stem from a decade-long struggle for the pet business to become significantly profitable.

E-mart also downsized its golf equipment specialty stores as demand for golf products wanes amid the economic downturn. Industry insiders speculate that may divest its assets, including low-profit E-mart stores and golf courses, to streamline its operations.

E-mart reported its first-ever operating loss of 46.9 billion won ($35.2 million) in 2023, which prompted immediate action. Although the decline is largely attributable to a substantial loss of 187.8 billion won from subsidiary, Shinsegae Engineering & Construction, E-mart‘s sole profits also have declined by more than 60 percent over the past five years to 188 billion won in 2023 from 489.3 billion won in 2018. Against this backdrop, Shinsegae Group Vice Chairman Chung Yong-jin highlighted profitability improvement as the top priority in management during his 2024 New Year’s address.

The push to streamline operations is expected to spread across the retail sector, with Lotte Group also targeting underperforming ventures to focus on growth sectors. While it looks to sell the cash machine business unit of Korea Seven Co., the operator of the Seven Eleven convenience store chain, Lotte Group is also pushing for the sale of low-profitability assets, including mart and department store branches alongside golf courses and resorts.