Jeong Yong-jin’s “Determined Resolve” Proven by Results… E-commerce Still Has a Long Way to Go

[Korea Financial Times, Park seulgi] Emart posted a surprise performance in the first quarter of this year. The foundation for this result was the comprehensive profitability improvement efforts and strengthening of core business competitiveness that have been pursued since last year. In the still-stagnant retail sector, Jeong Yong-jin, Chairman of Shinsegae Group, is credited with successfully implementing strong structural reforms. However, the continued sluggishness of SSG.com and Gmarket, which are responsible for e-commerce, remains a disappointment.

Emart announced on the 12th that its consolidated operating profit for the first quarter of this year reached KRW 159.3 billion, a 238.2% increase compared to the same period last year. Net sales amounted to KRW 7.2189 trillion, up 0.2% year-on-year.

This marks the first time since 2017, in terms of consolidated quarterly results, that Emart’s operating profit has more than tripled compared to the same period of the previous year. The company explained, “Strengthening core business competitiveness through continuous innovation and a profitability-focused management strategy proved effective.”
A major factor behind this achievement was Chairman Jeong’s “determined resolve.” In 2023, Emart recorded a deficit for the first time since its founding. Taking responsibility, Chairman Jeong initiated an emergency management system, even giving up his favored activities such as social media and golf.

He personally managed group and affiliate issues, actively communicating with the CEOs of each affiliate. He also implemented a performance-based personnel system for affiliate CEOs, following the principle of “reward and punishment.” In April last year, the CEO of Shinsegae Engineering & Construction was replaced, followed by the replacement of the CEOs of SSG.com and Gmarket in June.

The strict standards also applied to Chairman Jeong himself. Emphasizing “responsible management,” he received an annual salary of about KRW 3.6 billion last year, a 2.4% decrease from the previous year. Shinsegae Group stated, “He reduced his salary to set an example in overcoming the difficult business environment.” When receiving shares from his mother, Lee Myung-hee, the group’s chairwoman, Jeong also purchased them with his own funds, reaffirming his commitment to responsible management.



Harsh structural reforms were also carried out. Last year alone, two rounds of voluntary retirement were implemented to improve workforce efficiency. Additionally, the corporate supermarket Emart Everyday was merged, and profitability was improved through integrated purchasing and logistics. In terms of strengthening core business competitiveness, new concept stores such as “Starfield Market” and “Emart Food Market” were introduced, and efforts were made to open new warehouse-style discount stores, Traders, which are highly demanded by customers.
As a result, offline performance saw significant improvement. On a separate basis (Emart, Traders, No Brand, Emart Everyday), total sales reached KRW 4.6258 trillion and operating profit was KRW 133.3 billion, up 10.1% and 43.1% year-on-year, respectively. Notably, operating profit was the highest for the first quarter in seven years since 2018.

Traders, the warehouse-style discount store, played a significant role in driving this year’s performance as well. Looking at gross profit, Emart discount stores saw only a 0.3% increase, while Traders grew by 9.9%.

However, SSG.com and Gmarket remain Chairman Jeong’s “sore spots.” These are the companies where he replaced CEOs through frequent personnel changes last year. Currently, SSG.com is led by CEO Choi Hoon-hak, known as a marketing expert within Shinsegae Group, while Gmarket is headed by CEO Jeong Hyeong-kwon, an e-commerce expert formerly with Alibaba.

In the first quarter of this year, SSG.com’s sales were KRW 356.8 billion, down 13.7% from the same period last year, and its operating loss expanded by KRW 4.2 billion to KRW 18.1 billion. Gmarket’s sales also fell by 21.4% to KRW 200.6 billion, and its operating loss increased by KRW 3.6 billion to KRW 12.1 billion.
The decline in sales was due to weakened consumer sentiment caused by high inflation. For SSG.com, the grocery sector, which focuses on direct purchasing, was particularly affected, while Gmarket saw a decrease in transactions for high-involvement products with high price sensitivity, impacting sales.

The increase in operating losses for both companies was attributed to expanded investments in delivery services.

SSG.com focused on strengthening delivery services this year, including seven-day-a-week delivery, same-day delivery, and guaranteed delivery, while expanding its delivery coverage to major metropolitan areas such as Seoul, the capital region, Chungcheong, Busan, and Daegu, which led to a wider deficit.

Gmarket saw a similar trend. Marketing activities and investments related to launching new services such as “Star Delivery” increased overall costs, resulting in greater operating losses.

Although both companies posted weak results, this is explained as a proactive investment to respond to fierce market competition. SSG.com stated, “We plan to grow into a highly trusted platform for all generations based on differentiated product competitiveness, delivery, and specialized services covering various categories.”

Gmarket explained, “In the second quarter, we will accelerate cooperation with key brand companies and sellers, and strengthen the ‘Seller Star Delivery’ service, which applies guaranteed delivery to general goods (3P), to enhance our competitiveness as an open market platform.”

Park seulgi (seulgi@fntimes.com)