"Discounts No Longer Work": Homeplus Sees Sharp Drop in Visitors and Disappearance of Tasting Corners [Report]

Declining Sales Lead to Halt in Manufacturer Promotions
Failure to Reach Rent Adjustment Agreement, 17 Store Contracts Terminated
Union: "Livelihoods of Workers and Store Tenants at Risk"
Employees Closely Watching Rehabilitation Plan Announcement on June 12

On the afternoon of May 19, signs announcing discounts on watermelons, other fruits and vegetables, and processed foods were posted throughout a Homeplus store in the Seoul metropolitan area to mark the third anniversary of Homeplus's specialty food store, Homeplus Mega Food Market. Despite changing its promotional themes weekly and continuing its discount events since the start of corporate rehabilitation proceedings on March 4, the store remained quiet.

A female employee, who has worked at this store for nearly 20 years as a dispatched worker from a partner company, said, "The number of visitors has clearly decreased compared to the past," adding, "It seems that online orders are helping to maintain sales to some extent." She also noted, "Products whose supply had been suspended for a while, such as Seoul Milk, are being restocked, but the quantities appear to be limited depending on payment situations." She continued, "Perhaps because sales performance here has fallen short of expectations, manufacturers are now sending the dispatched workers who used to handle in-store tasting events to other places, such as Emart."

In fact, employees running tasting corners, commonly seen at large competitor supermarkets, have disappeared from this store.

A Homeplus store in Seoul. Photo by Yonhap News Agency

Nearly 80 days after Homeplus entered rehabilitation proceedings, uncertainty has grown among employees and throughout the company. The company recently attempted to renegotiate excessively high rents with landlords of a total of 61 leased stores but failed to reach an agreement.

As a result, with court approval on May 15, Homeplus decided to terminate contracts with 17 stores. Since the number of stores is a core factor in generating sales for large supermarkets, this decision is inevitably expected to lead to a decline in sales performance. However, Homeplus stated that it would continue negotiations with landlords until the very end, even after giving notice of contract termination. The company also emphasized that even if agreements are not reached, employees assigned to the affected stores will be transferred to nearby locations and given a certain amount of encouragement payment to help them adjust, making it clear that there will be no forced restructuring.

In front of the MBK office in Gwanghwamun, Seoul, members of the Mart Industry Union Homeplus Branch held a press conference urging the normalization of Homeplus and shouted slogans. Photo by Yonhap News

Employees had vaguely hoped that a more concrete solution would emerge by June 12, when MBK Partners, the private equity fund (PEF) manager and Homeplus's largest shareholder, and the company are due to submit a corporate rehabilitation plan to the court. One cashier said, "Contrary to outside concerns, there have been no issues so far with sensitive matters like salaries or severance payments," and added, "Although the supply of some products was temporarily suspended at times, there have been no disruptions to operations." He also said, "Even if contracts for some stores are terminated, the company explained that employees will be reassigned to nearby areas and there will be no restructuring," predicting, "There shouldn't be any problems with the transition."

However, even among employees, there were differing views regarding the company's future survival. An employee responsible for product displays said, "They say there will be a concrete announcement on June 12, but we have no idea what form it will take or what it will contain," expressing frustration.

The Homeplus labor union has been intensifying its criticism and urging MBK and management to resolve the situation. In particular, the union pointed out the termination of contracts for 17 stores, emphasizing that thousands of workers and store tenants are now facing unemployment and threats to their livelihoods. Choi Cheolhan, Secretary General of the Homeplus Branch of the Mart Industry Union, said, "Both of the stores in Cheonan are among the 17 stores whose contracts have been terminated," and asked, "Where are the employees who worked there supposed to go now?" He argued, "In this situation, the company's promise of job security is nothing more than an empty gesture with no basis in reality."