‘Customers vanished overnight’: Homeplus closures hit small shops

The fallout from Homeplus’ decision to suspend operations at dozens of stores is spreading beyond the retailer itself, with small business owners inside the affected branches reporting plunging sales and growing uncertainty over their livelihoods.

The major supermarket chain, currently under corporate rehabilitation proceedings, began temporarily suspending operations at 37 of its 104 stores on Sunday as part of its "emergency restructuring plan" that seeks to concentrate resources on profitable locations.

Homeplus said tenant businesses inside the affected branches, such as restaurants, pharmacies and cafes, could continue operating normally, but many tenants said customer traffic had all but disappeared after shoppers assumed the entire complexes had closed.

“Normally by noon, we are busy with shoppers coming to eat after grocery shopping, but today we haven’t had a single customer,” said a restaurant owner surnamed Kim, who operates a restaurant inside the Junggye branch.

“We opened here because of the supermarket traffic. If this shutdown continues, it will be difficult to survive,” he told The Korea Herald. “People see the news and think the whole place is closed, so they stopped coming.”

Several tenants also criticized Homeplus for giving little advance notice. An eyewear shop owner in Busan wrote on social media that he first learned of the closure through news reports rather than directly from the company.

“This is a huge issue because our main customer base disappears overnight, but we didn’t even have time to prepare,” he wrote.

Homeplus said the temporary closures would remain in place until July 3, the deadline for submitting its rehabilitation plan. The company said it no longer had the financial capacity to maintain all 104 stores after ongoing sales declines and supply disruptions caused by reduced deliveries from vendors.

The suspended locations include branches in Seoul, Busan, Daegu, Incheon, Gyeonggi Province, North and South Gyeongsang provinces, and other regions.

Though the retailer recently completed the sale of its Homeplus Express supermarket business division, industry officials said the company would only secure around 120.6 billion won ($81 million) in liquid assets from the transaction, with the funds expected to arrive in about two months.

Homeplus said employees at suspended stores would receive temporary leave allowances equivalent to 70 percent of their average wages, while some workers could be reassigned to other branches.

Labor unions and political groups warned that the temporary shutdowns could lead to broader restructuring and eventual permanent closures.

The Democratic Party of Korea’s Euljiro Committee and a joint committee formed to address the Homeplus issue held a press conference at the National Assembly on Monday, calling on the company to reverse the suspension plan.

“Homeplus must withdraw the suspension of operations at 37 stores and come up with a normal rehabilitation plan,” said Rep. Min Byung-duk, head of the committee. “The government also needs to actively intervene in resolving this crisis.”

Kim Byung-kook, head of an association representing in-store merchants, said tenants were being forced to bear losses on investments, key money deposits and unsold inventory without realistic compensation measures.

Homeplus labor unions also warned they could launch another hunger strike beginning May 14 unless creditors and outside managers intervened in the restructuring process.

Homeplus entered court-led rehabilitation proceedings in March last year and has been seeking to offload the supermarket division to secure operating funds. The Seoul Bankruptcy Court has set July 3 as the deadline for submitting the retailer’s rehabilitation plan.