Homeplus has decided to close 37 stores nationwide, marking a significant restructuring for a company that once played a major role in South Korea's retail industry. The closures will affect over 3,500 employees, and the repercussions will extend to local economies and partner businesses.
However, this situation should not be viewed solely as a crisis for Homeplus. The underlying issues are much deeper. The troubles facing Homeplus are indicative of a broader crisis in offline retail and symbolize the changes in industrial structures in the digital age.
Homeplus has not collapsed; rather, the offline-centric retail model is under threat. Customers have shifted away from physical stores, and the market has moved online.
Just two decades ago, hypermarkets were a symbol of consumer culture in South Korea. Families would visit these stores on weekends to buy groceries, browse electronics, dine, and watch movies. The competition was about securing larger spaces and better locations.
However, consumer behavior has changed. People no longer drive to stores for shopping; instead, they can order products with just a few taps on their smartphones, with options for early morning, same-day, or instant delivery becoming commonplace.
The focus of consumption has shifted from offline stores to online platforms. Leading this change is Coupang, followed by Naver Shopping, Kurly, AliExpress, and Temu. These companies have not just sold products; they have transformed consumer lifestyles by integrating logistics, data, platforms, and artificial intelligence.
In contrast, traditional retailers have relied on large stores and real estate assets for growth. What was once a strength has now become a financial burden. While the market has evolved, their business models have remained stagnant, leading to the current crisis.
Interpreting Homeplus's troubles solely as a management failure is misleading. The hypermarket sector has long faced restrictions such as mandatory closing days, limited operating hours, and site regulations. While these policies aimed to protect traditional markets, they have significantly altered the competitive landscape with online platforms.
Offline retailers have been constrained by regulations while online businesses have thrived. The COVID-19 pandemic further accelerated the shift to online shopping, with consumers prioritizing delivery speed over store size.
Ultimately, Homeplus is a result of these changes, not the cause. In the 1990s, traditional markets struggled against department stores, which later faced competition from hypermarkets in the 2000s. Now, hypermarkets are being outpaced by online platforms. This is a natural phenomenon in the shifting dynamics of the industry.
This trend is not unique to South Korea. Globally, companies like Walmart, Tesco, and Carrefour once dominated retail, but now Amazon leads the market.
What is unfortunate is that the costs of this transformation often fall on the most vulnerable. The thousands of employees affected by these closures are not responsible for the changes in the retail environment. They are the frontline workers who have supported the company by serving customers and stocking shelves. Yet, they bear the brunt of the corporate crisis.
While voluntary retirement and employment stability support programs have been proposed, there are concerns about the actual implementation of these measures, given uncertainties surrounding funding and creditor support.
Companies may struggle to adapt to market changes, but minimizing the social costs that arise during this process is their responsibility. Large corporations, in particular, must prioritize worker protection and community support during crises. Corporate social responsibility is not just about making donations during prosperous times; it is about how to protect employees in times of crisis.
That said, it is not necessary to declare the end of the offline era. However, it is clear that survival will not be possible through past methods. Physical stores must evolve from mere sales spaces to places that offer experiences. Retail companies must also transition from being store-centric to leveraging data and platforms.
Today, competitiveness is defined not by the number of stores but by customer data, not by the size of buildings but by the efficiency of logistics, and not by location but by technology. AI will further accelerate this change, enabling companies that analyze consumer preferences, predict inventory needs, and optimize logistics to gain a competitive edge.
This serves as a warning for all industries, including manufacturing, finance, media, broadcasting, and education. Customers are constantly evolving, and technology is changing even faster. The issue lies not in market changes but in the speed of corporate responses. The fundamentals are customer focus, the principle is adaptability to change, and the common understanding is that only those companies preparing for the future will survive.
The closure of 37 Homeplus stores is not merely a restructuring announcement; it is a signal of the transition from an offline-centered economy to a platform-centered economy. What we need now is not to lament the past but to prepare for the new era. This is the most significant lesson that Homeplus has imparted.
* This article has been translated by AI.
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