Emart offers early retirement program amid mounting losses

An Emart store [JOONGANG PHOTO]

Emart, Korea's largest hypermarket chain, is encouraging workers with 15 or more years of service to retire early in a scheme to slash the workforce following its first annual operating loss last year.

The decision marks the first time Emart has implemented a company-wide voluntary retirement program since its establishment in 1993, as the firm continues to lose ground to e-commerce players like Coupang and Market Kurly.

Emart encouraged to workers to resign from its Sangbong branch in eastern Seoul and Cheonan Pentaport branch in South Chungcheong, both of which are facing closure, earlier this year.

The new voluntary retirement scheme offers 24 months' worth of salary and an additional allowance of 25 million won ($18,620), in addition to statutory severance pay, in exchange for their early retirement.

Emart's move reflects broader challenges facing the company. Its workforce shrank by 1,100 employees last year, bringing the total to 22,744. Its branches decreased from 158 in June 2019 to 155 by the end of 2023.

The company reported its first consolidated annual operating loss, including that its troubled affiliate Shinsegae E&C, of 46.9 billion won in 2023. The chain's standard revenue fell 2.1 percent to 16.55 trillion won and operating profit plummeted by 27.4 percent to 188 billion won,

"Emart, which is the leading hypermarket chain, seems to be feeling the heat of its performance crisis," an industry insider said. "It seems like a measure aimed at efficiently managing its workforce and quickly restoring competitiveness."

Emart's struggles mirror those of other Korean retailers in the face of the turbulent business landscape exacerbated by the Covid-19 pandemic and the growing prominence of e-commerce platforms.

Lotte Mart closed twelve underperforming stores in 2020 and has since implemented three rounds of voluntary retirement programs.

BY CHOI SUN-EUL, CHOI EUN-KYUNG AND SEO JI-EUN [seo.jieun1@joongang.co.kr]