E-commerce Offensive by Yongjin Hyung, Aggressive M&A Moves

Baseball Team and W Concept Followed by eBay... Shinsegae Group Expands Business Across All Fronts
5 Million Members of Popular 2030 Fashion Platform Absorbed into Shinsegae Customers
SSG Landers Anticipated to Create Synergy with Retail... Full-Scale Plan to Exit Retail Sector Underway

[Image source=Yonhap News]

[Asia Economy Reporter Jo In-kyung] Chung Yong-jin, Vice Chairman of Shinsegae Group, has acquired the online platform specializing in women's fashion, ‘W Concept (DoubleU Concept Korea)’. This follows his bold mergers and acquisitions (M&A) moves this year, including the surprise acquisition of the professional baseball team SK Wyverns for 135 billion KRW and forming an alliance with Naver through a 250 billion KRW equity swap.

But it doesn't stop there. Emart is currently considering acquiring an additional 50% stake in Starbucks Korea and has actively entered the bidding for eBay Korea, valued between 4 trillion and 5 trillion KRW. Shinsegae is also pushing for the entry of its integrated online mall, SSG.com, into the open market. This marks the beginning of a race to expand scale to secure competitiveness in the rapidly changing distribution market and to capture the fast-growing e-commerce market.

Acquisition of W Concept to Expand 2030 Female Customer Base

On the 2nd, SSG.com announced that it had signed a stock purchase agreement to acquire all shares of W Concept from the private equity fund IMM Private Equity and ISE Commerce, the largest shareholders of W Concept. The acquisition amount is reported to be between 260 billion and 270 billion KRW.

In the previous preliminary bidding, numerous competitors engaged in distribution or platform businesses, including Musinsa, Lotte, CJ, and SK, participated. W Concept hosts a large number of domestic emerging designer brands that offer excellent quality at relatively affordable prices, making it overwhelmingly popular among women in their 20s and 30s. Sales were 52.6 billion KRW in 2019, and transaction volume is estimated to have increased from 200 billion KRW in 2019 to over 250 billion KRW in 2020.

SSG.com plans to absorb W Concept’s 5 million members as new customers for Shinsegae while opening new sales channels by showcasing W Concept’s brands in department stores, outlets, and marts. To maintain W Concept’s core competitiveness, it will continue to operate as a separate platform after the acquisition. A company official explained, "We plan to enhance delivery efficiency by integrating Shinsegae Group’s logistics system and promote integrated online and offline marketing so that tenant brands can also be introduced through Shinsegae’s offline channels."

Chung Yong-jin’s Vision Beyond Distribution

On the 30th of last month, Vice Chairman Chung officially launched the new professional baseball team SSG Landers, aiming for synergy effects with his core distribution business. The team will face the Lotte Giants in the opening game of the regular season at Incheon Munhak Stadium on the 3rd. Shinsegae and Lotte are engaged in a subtle rivalry, each launching large-scale discount events centered around Emart and Lotte Mart, respectively.

He is also showing strong enthusiasm for the acquisition of eBay Korea, expected to be worth up to 5 trillion KRW. If Emart succeeds in acquiring eBay Korea, which operates Gmarket, Auction, and G9, the online transaction volume of Shinsegae Group, including SSG.com, will reach around 24 trillion KRW, making it competitive with Naver and Coupang in the e-commerce market.

Industry insiders interpret Shinsegae Group’s aggressive moves as reflecting Vice Chairman Chung’s awareness that the rapidly changing distribution market environment cannot be missed. In his New Year’s address earlier this year, he emphasized, "This year, when the market competition environment is rapidly reorganizing due to COVID-19, can actually be an opportunity," and stressed, "We must find new opportunities amid the current crisis."

An Emart official explained, "Since there are limits to the existing business centered on large marts, we are constantly seeking new growth engines that can create synergy with other affiliates within the group and are boldly realizing them."