What is Homeplus, the major Korean supermarket chain that is in a management crisis? Struggling with the rise of e-commerce

On the 4th of this month, South Korea's major supermarket chain Homeplus began corporate rehabilitation procedures, which are equivalent to corporate reorganization in Japan. Due to factors such as a downgrade in its credit rating, it is finding it difficult to raise funds from the short-term capital market.
South Korea's public broadcaster KBS said, "These measures are being implemented in response to the fact that restrictions on large supermarkets have continued for nearly 10 years, that shopping has shifted to online since the COVID-19 pandemic, and that online retailers, the largest in Japan, have been forced to close their stores.
The report states that the rapid growth of the Chinese online shopping site and the online shopping site "is one of the reasons cited for the decline in sales.
All channels, including online stores, are operating as usual. The fall of the second-largest retailer in the megamart industry has shocked Korean society, and the current distribution industry is expected to remain stable amid the rapid growth of the e-commerce market.
The success or failure of Homeplus's rehabilitation will be an important indicator of the direction in which the megamart industry will change in the future.
The history of Homeplus dates back to 1997, when the distribution division of Samsung C&T, a conglomerate of the Samsung Group, opened its first store in Daegu, in the southeast.
In 2011, Samsung C&T acquired Tesco, a multinational retailer headquartered in the UK.
The company sold its shares. It also began to handle many overseas products. In addition, in 2015, South Korea's largest investment fund, MBK Partners, invested approximately 7.2 trillion won (approximately 74.4 billion won at the current rate).
In 2022, the company also opened a new super-large food specialty store, "Home Plus Mega Food Market," which attracted the attention of consumers.
It was revealed that between 2011 and 2014, the company's then president and executives made profits by selling the personal information of customers who applied for prize events and about 24 million pieces of personal information written on membership cards to insurance companies.
Consumer distrust grew, and consumer groups and others started boycotts. On the 4th of this month, the Seoul Reorganization Court, which specializes in bankruptcy and rehabilitation procedures for companies and individuals, ordered Homeplus to
The company announced that it has begun corporate rehabilitation procedures. The company's credit rating has been downgraded due to a combination of prolonged poor performance and a worsening financial structure. The company said, "In order to reduce the burden of repaying short-term loans, we have begun corporate rehabilitation procedures.
At a press conference held at the company's headquarters in Seoul on the 14th, President Cho Juyeon said, "We apologize to our business partners, store owners, and other customers who have been inconvenienced by this rehabilitation procedure.
"We sincerely apologize to all our creditors and others," he said. As soon as the Seoul Rehabilitation Court began the corporate rehabilitation process for Homeplus, the company received complaints from its business partners, including "payment delays.
In addition, there is a possibility that individual investors who had invested in bonds related to the company will suffer losses of hundreds of billions of won (tens of billions of yen), and some investors have protested.
Furthermore, investors have been outraged by the company's continued issuing corporate promissory notes (CPs) until just before it filed for corporate rehabilitation.
Amid growing concerns that payments to Homeplus's business partners will be delayed, Homeplus's top
On the 16th of this month, the shareholder fund MBK Partners announced that its chairman Kim Byung-ju would use his own money to pay for the delivery so that Homeplus could make the payment smoothly.
The specific amount has not been disclosed. The news agency Yonhap News reported that "the view is that Chairman Kim's latest investment in materials is intended to calm dissatisfaction and opposition from suppliers."
MBK Partners has also come under increasing criticism over Homeplus's corporate rehabilitation procedure. It has been criticized that the company has neglected to make self-help efforts and has applied for rehabilitation procedures too easily.
Chairman Mu emphasized, "Only when the company is properly run through the corporate rehabilitation procedure will it be possible to make payments to creditors."