Homeplus to Close 2 More Stores... "Unemployment Crisis" vs "100% Job Succession"

Union "Mass Unemployment Crisis Expected... Government Must Intervene"
Homeplus "Prolonged Poor Performance... 100% Employment Succession"

Large supermarket chain Homeplus is facing conflicts with the labor union as it closes some stores as part of efforts to improve profitability. While the union argues that the increasing number of store closures could lead to a large-scale unemployment crisis, Homeplus maintains that employment stability is its top priority.

According to the Homeplus branch of the Mart Industry Labor Union on the 18th, Homeplus informed employees via the company intranet on the 16th that it plans to close the Dongcheongju and Ansan Seonbu stores due to lease contract expirations. The Homeplus management explained that the decision to close these stores was due to prolonged poor performance resulting in accumulated operating losses and the expiration of lease contracts.

Union: "Concerns over mass unemployment of employees and partner companies... Condemning MBK focused on sales"

A member of the Mart Industry Union Homeplus Branch is holding a solo protest in front of the Homeplus Chuncheon store.
[Photo by Mart Industry Union Homeplus Branch]

With this, 11 out of Homeplus’s total 129 stores are set to close. According to the Homeplus union, including Dongcheongju and Ansan Seonbu stores, the following 11 stores have confirmed closures: Gwangju Gyerim, Naedang, Dongdaemun, Busan Banyeo, Bucheon Sangdong, Bucheon Sosa, Seodaejeon, Suncheon Pungdeok, and Anyang (listed in alphabetical order).

The union also claims that additional closures cannot be ruled out. According to the union, 16 stores have lease contracts expiring between 2027 and 2028. Among these 16 stores, Bucheon Sangdong has already been confirmed for closure.

As Homeplus continues to close stores, the union argues that a mass unemployment crisis will occur among employees, partner companies, and tenants. The union expressed concern, stating, "If Homeplus continues to reduce its size by closing stores, it will lead to a mass unemployment crisis affecting direct employees, partner and outsourced workers, and tenant business owners who rely on Homeplus for their livelihoods."

The union points to the largest shareholder, private equity firm MBK Partners, as the cause of these successive closures. MBK Partners acquired Homeplus from the UK’s Tesco in 2015. The union claims that this downsizing is part of a plan to resell Homeplus before 2025, the 10th year since acquisition, and that MBK is solely focused on paying high dividends promised to investors.

The union also called for government intervention in Homeplus’s repeated store closures. It emphasized, "Homeplus is a company nurtured by the people and plays an important role in the national economy and employment. To prevent mass unemployment and protect citizens’ livelihoods, the government must conduct a thorough investigation and intervene in Homeplus’s management situation."

Ahn Soo-yong, head of the Homeplus branch of the Mart Industry Labor Union, stated, "If the government or the National Assembly just watches MBK’s behavior, it could lead to a mass unemployment crisis. From now on, there must be investigations into MBK and systems established to regulate private equity funds."

Homeplus: "100% employment succession... Some closed stores to reopen"

[Image source=Yonhap News]

Homeplus immediately rebutted the union’s claims. In a statement issued under the company’s name, Homeplus said, "The union is distributing misleading materials that treat lease contract terminations, which the company has not reviewed, as facts, causing anxiety among employees and damaging the company’s image."

Homeplus reiterated that employee job security is its top priority. The company emphasized, "The principle of prioritizing employment stability is an unchanging promise. Unlike other companies undergoing company-wide restructuring, Homeplus has never implemented artificial restructuring or voluntary retirement, including for stores undergoing asset securitization or lease contract terminations."

For employees at stores scheduled to close, Homeplus promises employment succession and will implement an 'Employment Stability Support System.' This system helps smoothly reassign employees working at closing stores. Employees at these stores submit a list of preferred stores for reassignment after three or more interviews.

If there are no Homeplus stores where employees wish to be reassigned, they can be placed at Homeplus Express, a corporate supermarket (SSM). The system also includes severance payments for employees working at stores scheduled to close. Homeplus and the union agreed in the 2024 wage and collective bargaining negotiations to expand the employment stability support system, previously applied only to asset securitization stores, to stores with lease contract terminations.

Homeplus explained that store closures are part of efforts to escape deficits. The company stated, "The union’s incorrect claim that the number of stores will continue to decrease, destabilizing employee employment, is unfounded. Closing chronically unprofitable stores improves profitability, and funds secured through asset securitization will be used to expand investments in the high-growth Homeplus Mega Food Market and online sectors, as well as improve financial structure."

Among the 11 stores decided for closure, some were closed due to accumulated deficits. Homeplus said, "Both Dongcheongju and Ansan Seonbu stores have been operating at a loss for a long time, and there is no reason to forcibly extend their lease contracts." It added, "Recently, lease contracts for World Cup, Myeonmok, Byeongjeom, and Yeongdo stores, whose leases have ended or are about to end, were actively extended through negotiations with landlords considering the growth potential of surrounding commercial areas."

Among the stores scheduled to close, seven will reopen after redevelopment is completed. The stores planned for re-entry are Bucheon Sangdong, Dongdaemun, Naedang, Busan Banyeo, Gwangju Gyerim, Suncheon Pungdeok, and Bucheon Sosa. However, Dongcheongju, Ansan Seonbu, Seodaejeon, and Anyang stores will close permanently without reopening.

Regarding the union’s claim that 16 stores have lease contracts expiring after 2027, Homeplus explained, "Decisions on store lease renewals have not been made yet, as various factors such as surrounding commercial areas are considered."

Meanwhile, Homeplus and the union are also in conflict over the company’s plan to sell Homeplus Express. The union criticized the sale as a 'secretive split sale' and demands concrete employment guarantees in the event of a sale. Homeplus responded that the sale is aimed at improving business capabilities and financial structure and will proceed on the premise of securing employees’ job stability.