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The merged corporation ‘GS Retail’ plans to launch in July next year
Waiting for online and offline synergy
Strengthening competitiveness to survive in the fierce distribution market
25 trillion won target in driving amount by 2025
GS Retail and GS Home Shopping merge to become a mega retail company.
GS Retail and GS Home Shopping announced at the board meeting held on the 10th that they unanimously decided the agenda for the merger of the two companies. The surviving subsidiary after the merger is GS Retail. The merger rate is 1 to 4.22 shares. For each GS Home Shopping share, 4.22 new GS Retail shares are allocated. The merger is expected to conclude in July 2021 through various procedures, such as a review of the business combination by the relevant authorities and a general meeting of shareholders of the two companies scheduled for May next year.
It is explained that the merger decision is a preventive measure to ensure an advantage in the fierce competition to survive in the domestic and foreign distribution markets through the combination of GS Retail, which has strengths in offline distribution, and GS Home Shopping, which has strengths in online mobile commerce.
○ Secure the strongest distribution network … A new distribution dinosaur appeared with ’15 trillion won ‘If the merger is successful, it will be reborn as a single distribution company combining online and offline transactions with assets of 9 trillion won, an annual handling amount of 15 trillion won, and 6 million transactions per day. GS Retail’s network of 15,000 stores nationwide, TV home shopping with a cumulative audience of 30 million, and mobile shopping apps with 18 million members are expected to create synergy. In particular, GS Group emphasized that the combination of the two companies will result in the emergence of a commercial operator with the strongest distribution network in the entire national distribution industry. In the domestic distribution industry, Lotte Shopping (approximately 33 billion won), the annual sales of E-Mart (approximately 19 billion won), and Naver Shopping and Coupang (approximately GS Retail assesses itself with the potential of target the strongest in the distribution industry in all indicators in the coming years.
This merger is significant because it maximizes the purchasing power and sales power of the two companies, and because the two companies with different core competencies in the online and offline business are mutually seeking a breakthrough in growth, said GS Group. .
In detail, GS Retail has an offline distribution network that includes more than 15,000 GS25 convenience stores nationwide, 320 GS The Fresh supermarkets, and 6 hotels (Grand InterContinental, etc.). While it has achieved an average growth of 10% in the last five years through active expansion of stores, it has been looking to secure further growth advances focused on online commerce due to the stagnation of the number of stores, the intensification of competition and the spread of remote consumption.
GS Home Shopping is the first TV home shopping company to introduce itself in Korea and is rated number one in the industry. Along with the decline in the viewer population, the company tried to convert the mobile commerce business, but as large-scale foreign capital and large offline operators entered the online commerce market one after another, competition intensified, focusing on countermeasures and finding new engines of growth.
○ “The combination of online and offline distribution channels is a global market trend”
GS Retail, created by the merger, will accelerate the digital transformation of offline distribution channels, such as convenience stores and supermarkets, through online commerce capabilities, and will be an opportunity to dramatically improve home shopping by television and the competitiveness of mobile commerce through GS Retail’s store network and logistics infrastructure. Expected.
The distribution channels that combine online and offline are the latest market trends. Global online mall Amazon is promoting the expansion of offline stores such as Amazon Go, Amazon Fresh, and Whole Foods. Promotion of offline integration.
In terms of ensuring customer and product diversity, we can also expect synergy, GS Group said. Based on the existing membership members of the two companies, the number of GS Retail and GS Home Shopping members reached 14 million and 18 million, respectively. Even taking into account the duplicate members, it is about 26 million. It is considered possible to improve customer satisfaction by providing an integrated online and offline shopping experience for a large number of members. In addition, shopping from home, which has strengths in fashion, life and health, and convenience stores and supermarkets that are advantageous in handling fresh food, are expected to have complementary effects.
According to the GS Group, the merger decision was made carefully while confirming the possibility of synergy through collaborative and pilot projects. Since the beginning of this year, the GS Distribution Council, in which senior executives of the two companies participate, has operated regularly and cooperative tasks have been derived and implemented. The wines for sale in the GS 25 store were ordered through the GS Home Shopping mobile app, and the GS Home Shopping food items were delivered the same day using the GS Retail Cold Chain Network and jointly planned products were introduced. .
○ Realization of ‘Offline Commerce Technology Leader’ … 25 trillion won target in handling amount by 2025
GS Retail, the merged corporation, plans to integrate channels and strengthen consumer service and competitiveness with the goal of becoming an “integrated offline commerce platform that leads the consumer lifestyle.”
In particular, it is a strategy to achieve a ‘commerce technology leader’ by combining the IT infrastructure and data capabilities of GS Home Shopping and GS Retail, and to evolve into a comprehensive full-film business by combining logistics infrastructure and delivery insights. . In accordance with the implementation of the integrated strategy, the goal of achieving 25 trillion won in management amount by 2025 has also been set. The plan is to grow by an average of 10% or more per year of the estimated amount of I handled 15 billion won this year. The mobile commerce plan is to increase the amount from KRW 2.8 trillion to KRW 7 trillion (depending on the amount handled).
Heo Yeon-soo, Vice President of GS Retail, said, “The two companies have increased their competitiveness in the online and offline distribution markets by sharing the GS value of Value Number One. We will work together to create great value.”
Ho-sung Kim, President of GS Home Shopping, said: “GS Home Shopping has pioneered the television home shopping market for 25 years since its founding and has been transformed with the history of home shopping. , popularizing multimedia shopping, converting mobile commerce and strengthening digital capabilities. We look forward to the GS Home Shopping DNA expanding to a broader base. “
Journalist Min-beom Kim from Dong-A.com [email protected]
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