E-mart is pursuing an offline expansion strategy on several fronts at once, including new store openings, stronger delivery services and space redesigns. As e-commerce gains ground in the grocery market, the retailer is stepping up efforts to sharpen the competitiveness of its core offline business.
E-mart will open a new store in the Chungcheong region around the end of the year, industry sources said on the 26th, with Cheongju seen as the leading candidate site. The company already runs its Cheongju store in the city's Seowon district, but it is reviewing the new opening after concluding there is additional demand given the area's underlying population and urban development, sources said. Cheongju is regarded in the retail industry as a market with solid underlying demand, home to industrial complexes for companies such as SK hynix (000660.KS) and LG Energy Solution (373220.KS).
Separately from this opening, E-mart is also taking part in the development of a site in Cheongju Technopolis. The Technopolis land, which E-mart acquired in two rounds in 2017 and 2022, is currently being developed into a mixed-use shopping mall.
This opening comes about a year and six months after the E-mart Food Market store in Godeok opened last April. For the hypermarket sector as a whole, the last new store was a Lotte Mart in Guri in June of last year. Among the three major hypermarket operators, E-mart is the only one opening a new domestic store this year. The investment in offline assets comes as hypermarkets' foothold in the retail market narrows — Homeplus, which is undergoing corporate rehabilitation, has seen its store count shrink from 117 last year to 67. E-mart will also open a Traders store in Uijeongbu this year.
The company is also strengthening its delivery services. E-mart plans to expand its quick commerce service, currently offered at about 110 stores, to all 132 stores by the end of the year. E-mart's quick commerce takes orders through SSG.com's instant delivery service "Barokwik" and through Baemin, then packs and ships goods from the stores. In areas where quick commerce delivery is not available, stores run their own short-distance delivery systems.
Quick commerce has also gained momentum across the group. No Brand, a private-brand specialty chain, launched its service through Baemin at four directly operated stores in late April and grew to 100 stores within a month, with plans to reach 150 by year-end. Adding E-mart Everyday and E-mart24, every retail channel except the warehouse discount chain Traders has entered the quick commerce market.
On top of this, the company is putting weight behind store renovations and an advertising business that uses store space. After converting four discount stores into the Starfield Market format in the first half, it will overhaul three more, including its Wolgye store, in the second half. It is also seeking a new revenue source through an online-offline integrated retail media network (RMN) business that uses signage inside Traders stores.
The company is increasing investment because it has concluded that shoring up the competitiveness of its offline stores alone can draw enough consumer demand even as e-commerce expands. At the Eunpyeong and Geomdan stores, whose renovations were completed this April, sales rose 9.4% and 20% respectively over about four months from May through August 12, compared with the same period last year. Sales at the Pungsan store, revamped on June 25, also rose 17% from July through the 12th of this month. At the Ilsan, Dongtan and Gyeongsan stores, which were converted to the Starfield Market format last year, visitor numbers and sales growth in the second quarter reached 79.5% and 42.4% respectively, compared with the first half of last year.
A recovery in overall earnings has also helped. On a standalone basis, E-mart's total revenue in the second quarter was 4.4428 trillion won ($3.2 billion), up 3.5% from a year earlier, while operating profit rose 64.1% to 25.6 billion won. Same-store sales growth in the second quarter was 3.8% at E-mart and 4.7% at Traders. Same-store growth is a key retail-industry gauge of whether a company can grow without adding stores.
Growth accelerated further in July, with same-store growth of 8.6% at E-mart, 8.5% at Traders and 12.5% at Everyday. "Solid sales momentum should continue in August and September, helped by the base effect from last year's livelihood-recovery consumption coupons and the Chuseok holiday effect," said Jung Jin-young, an analyst at Kyobo Securities. "We also expect a knock-on benefit from the closure of some Homeplus stores."
"In the second half, we will continue our innovation in pricing, products and space to further raise the competitiveness of our core business and our market dominance," an E-mart official said. "We will seek out new business opportunities and build a foundation for medium- to long-term growth."
