Convenience Store-Free CEO Han Chaeyang... 'Unified Emart' Also Faces Survival of the Fittest

Executive Appointment: Song Man-jun Named New Head of Emart24
Han Chae-yang, Who Led Integration, to Serve Only as Emart CEO
Emart "Continues Close Cooperation on Promotions"

Han Chaeyang, CEO of Emart, is drawing attention as the integration of offline retail sectors faces uncertainty following the spin-off of the convenience store business in this year's Shinsegae Group regular personnel reshuffle.

According to Shinsegae Group on the 9th, in last month's personnel reshuffle, Song Manjun, head of Emart PL & Global Business Division, was appointed as the CEO of Emart24. As a result, Han, who was promoted to president, will now be in charge of Emart only. Since being appointed as Emart CEO in the regular personnel reshuffle last September, Han has been leading the integration of the offline retail business divisions.

At the end of last year, the group established the 'Integration Promotion Office,' an organization for the integration of Emart, Emart Everyday, and Emart24, and in fact, merged Emart and Emart Everyday in July this year. Additionally, they have been pursuing plans to merge Emart24 with the corporation.

Han Chaeyang, CEO of Emart [Photo by Emart]

However, with CEO Song taking charge of Emart24, there are views that a corporate merger may be difficult. Until now, CEO Han has been pursuing a strategy to integrate purchasing, operations, and logistics of these three retail companies to reduce cost of goods sold and secure price competitiveness. Last year, Emart recorded an operating loss of 46.9 billion KRW on a consolidated basis, and especially Emart24 posted an operating loss of 23 billion KRW, making profitability improvement a critical task.

However, since convenience stores have different product assortments compared to large supermarkets or superstores, this appears to be an obstacle to corporate integration. An Emart official stated, "Emart and Emart24 plan to continue close cooperation in necessary areas such as promotions and sourcing to create synergy."

In fact, the new head of Emart24, CEO Song, plans to create synergy through a 'No Brand-centered convenience store model.' CEO Song has been a key figure in driving growth, having served as the head of the No Brand promotion team in Emart's merchandise division since 2015 and later as the head of the No Brand business division.

Sung Man-jun, CEO of Emart24. [Photo by Shinsegae]

Previously, Emart24 has been utilizing No Brand products while exploring ways to enhance franchise competitiveness and pursue synergy with Emart. The goal is to emphasize Emart24's uniqueness by making cost-effective No Brand products available not only in large supermarkets but also in convenience stores.

As part of this, Emart24 conducted a No Brand sales test at 10 stores earlier this year, and since April, has applied a 'royalty franchise model' to all newly opened franchise stores. This model, which is based on selling No Brand products, is a fixed-rate franchise model where sales profits based on 19 hours of operation are split approximately 70% to the franchise store and 30% to the headquarters.

The collaboration with No Brand has been successful. The average daily sales of Emart24 stores newly opened this year adopting No Brand increased by more than 50% compared to new stores last year, and the average daily sales of about 160 existing stores selling No Brand products also rose by 7%.

This is also reflected in the performance. Emart24's operating loss in the fourth quarter of last year reached 19.4 billion KRW, but it decreased to 13.1 billion KRW in the first quarter of this year and further dropped to 2.7 billion KRW in the second quarter. An Emart official said, "Emart24 is accelerating efforts to improve its structure with the goal of profitability recovery," adding, "New CEO Song Manjun, an expert in product purchasing and PL planning, plans to strengthen the convenience store model centered on No Brand to further solidify Emart24's unique competitiveness."