[ad_1]
GS Retail and GS Home Shopping will merge next July. It is interpreted as a strategy to respond to the offensive of ‘digital dinosaurs’ such as Coupang and Naver by integrating affiliates which are the national convenience store (offline) and home shopping (offline) industries. . With the launch of a large retailer with an asset of 9 trillion won and an annual transaction amount of 15 trillion won, there is a possibility that other national retailers will also participate in a merger or alliance to strengthen competitiveness.
GS Retail and GS Home Shopping held a board meeting on the 10th and decided to merge the two companies in July next year. The surviving subsidiary after the merger is GS Retail. This is a method of allocating 4.22 new GS Retail shares for each GS Home Shopping share. In fact, the merger is expected to close in July next year after the government’s business combination review and a general meeting of shareholders of the two companies (May next year).
GS Retail has an offline distribution network, such as 15,000 convenience stores, GS25, 320 supermarkets, GS The Fresh, and Grand Intercontinental Hotel. GS Home Shopping operates “channels” such as TV home shopping and mobile commerce. A GS Retail official explained: “The merger between the two companies will establish a strong online and offline distribution network,” and explained that “a preventive measure to ensure a competitive advantage in the survival of the distribution industry “.
Is the perception of fluctuations in the distribution industry noted?
GS Retail and GS Home Shopping ultimately opted for a merger survival strategy. As for the domestic distribution market, given that Amazon and Alibaba dominated the winners in the US and China respectively, it is a strategy based on the judgment that only the first place will survive with great power. It is expected to have a significant impact on the survival strategies of existing distribution giants such as Lotte and Shinsegae.
Fusion experiment from earlier this year
GS Retail has a network of approximately 15,000 stores nationwide, including convenience stores and supermarkets. The number of GS Home Shopping users in the TV sector is about 30 million, and mobile shopping app users are also about 18 million. The effect that GS Group expects is that when the two companies combine, there will be synergy through online and offline integration.
Since the beginning of this year, the two companies have been conducting collaborative experiments on a regular basis, such as regularly operating the GS Distribution Council with senior executives. It is a way to order wines sold by GS25 through the GS Home Shopping mobile application. GS Retail’s fresh food delivery chain was used to deliver food from GS Home Shopping on the same day.
When the merger is completed in July next year, the surviving subsidiary, GS Retail, will have assets of 9 trillion won. The sum of the sales (amount handled for purchases from home) is approximately 15 trillion won. In terms of outward appearance, it is still not as low as Lotte Shopping (worth 33 trillion won), E-Mart (sales of 19 trillion won), and Coupang (transaction amount of 17 trillion won), but GS Group’s calculation is that if synergy emerges between the two companies, it can become the industry leader.
Pay attention to the ‘butterfly effect’ that GS will bring
Logistics is the area where the meltdown effect is expected to appear the most. It is estimated that GS Retail’s nationwide distribution centers (28) and fresh food distribution facilities (20), as well as 15,000 convenience stores, can be used as distribution centers to manage purchases from home for television and mobile app ordering. A GS Retail official explained: “GS Retail has sufficient financial capacity to make additional investments in distribution centers.” The amount of investment available to the two companies is estimated to be approximately 1 trillion won.
Consumers using both companies can also receive integrated services online and offline. Mobile payment and membership services are expected to be provided for GS only. Based on the membership of both companies, GS Retail has 14 million customers and GS Home Shopping has 18 million customers.
The reason why GS Group decided to merge its flagship distribution subsidiaries is because competition in the distribution industry is getting fiercer. Coupang built almost 170 logistics facilities and changed the competitive formula from distribution to fast delivery. Naver recently signed an equity alliance with CJ Group to strengthen the purchasing arena. CJ Logistics and Naver are also expected to make additional investments to strengthen the logistics sector.
“I am against Coupang and Naver”
The biggest downside to ‘digital dinosaurs’ like Coupang and Naver is that they don’t have offline stores. To counter this, a common industry analysis is that existing retailers must equip the strength of offline stores with digital weapons.
Amazon is only expanding its competitive field to offline stores like Amazon Go, Amazon Fresh, and Whole Foods. Alibaba is also focusing on expanding offline stores recently. GS Group believes that in Korea, technology companies and platform companies should preemptively integrate online and offline before entering the offline distribution business. Shinsegae Group also asked Kang Hee-seok, CEO of E-Mart, to act as a representative for SSG.com as a greeting last month. Lotte Group is also working hard to implement an “omni channel” by integrating department stores, shopping malls, supermarkets, convenience stores and online shopping centers into Shopping BU (business division).
Reporter Park Donghui / Kim Kiman [email protected]
