Loss-making Gmarket joins Shinsegae’s job cut spree

Gmarket Inc. will cut jobs for the first time since it was acquired by South Korea’s retail giant Shinsegae Group in 2021, joining the group’s workforce reduction rush this year under the leadership of its new chief striving to turn around the retail group grappling with losses at its key units.               

According to sources in the Korean retail industry, Gmarket announced a companywide early retirement program on Friday morning. Full-time workers who have worked for the company for two years or more are eligible for voluntary redundancy.  

The company will also aid anyone seeking a new job with a job search support program.

This is Gmarket’s first layoff since the Korean retail giant acquired eBay Korea, the parent of Gmarket and Auction, once the country’s two largest open market platforms.

But this is not the first job cut at Shinsegae Group companies this year.

In July, SSG.COM, Shinsegae’s online shopping platform, also launched a voluntary redundancy program, the first of its kind since it was spun off from E-Mart Inc. in March 2019.

E-Mart, a unit of Shinsegae and Korea’s top hypermarket chain, also let go of its employees in the spring of this year for the first time since its inception 31 years ago after suffering its first annual loss last year.

GROUPWIDE RESTRUCTURING

Gmarket also suffered years of loss-making.

The open market platform posted a cumulative loss of 100 billion won ($75.7 million) for two years since 2022. In the first half of this year, it logged an operating loss of 22.1 billion won.

The company attributed challenging retail market conditions to the job cut and vowed to restore competitiveness that will be sustainable through the restructuring.

Gmarket’s Chief Executive Chung Hyung-kwon, who newly joined Shinsegae in June from Alibaba, expressed regret over the latest development at the company.  

“We have been constantly challenged by shifting market rivalries and drastic changes in the business landscape over the past few years,” Chung said in a letter to Gmarket employees on Friday.

“We have concluded that it is inevitable to make fundamental changes to overcome such challenges and ensure a sustainable business structure.”

With Gmarket joining its sister companies in Shinsegae Group’s job cut wave, the groupwide restructuring is expected to gain traction, industry observers said.

MORE RESHUFFLES AND JOB CUTS AHEAD

Since his rise to chairmanship of Shinsegae Group in March, Chairman Chung Yong-jin has been striving to overhaul the group’s business reeling from falling sales and profit amid growing competition from e-commerce players like Coupang Inc. and Naver Corp. as well as Chinese rivals AliExpress and Temu.

The leader of the country’s largest retailer and grandson of late Samsung Group founder Lee Byung-chul is said to be aggressively seeking to revive the group’s mainstay businesses, including E-Mart, this year.

After his inauguration as Shinsegae chairman earlier this year, Chung already replaced key units’ CEOs during rare mid-year reshuffles.

In September last year when he was Shinsegae vice chairman, Chung also carried out one of the group’s most radical executive reshuffles, replacing CEOs of its two business pillars – E-Mart and Shinsegae Department Store.

“As Chairman Chung is strongly determined to transform the group this year, Shinsegae is expected to continue revamping throughout this year,” said an official from the Korean retail industry.

The company’s anticipated annual executive shakeup next month is expected to hint at the group’s future restructuring plans.

Write to Hyun-jin Ra at raraland@hankyung.com

Sookyung Seo edited this article.