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E-Mart withdraws from infant specialty store business, only 4 brands including 'No Brand' remain

[비즈한국] E-Mart139480 is ending its infant specialty store business. With the closure of the ‘Marie’s Baby Circle’ store at Starfield Hanam at the end of this month, only four E-Mart specialty brands will remain. E-Mart is currently reorganizing its specialty store business to improve profitability, with a strategy to concentrate its capabilities on No Brand moving forward.

Even Chairman Chung Yong-jin promoted it personally...

‘Marie’s Baby Circle,’ a specialized infant goods store at Starfield Hanam, will cease operations at the end of this month. When visiting on the 20th, notices stating ‘Operations will end as of February 28’ were posted throughout the store. With the closure approaching, inventory liquidation was in full swing, with items like strollers and car seats being sold at prices lower than the list price, and many shelves were already empty as store cleanup had begun.

One customer who visited the store pushing a baby stroller said, “There had been rumors of closure before, but since the store was still there, I thought it was just a false rumor again,” adding, “I often visited to buy baby supplies, so it’s sad to see the store disappearing.”

Marie’s Baby Circle is a specialized infant goods brand launched by E-Mart in 2016. It is known that the brand was launched after Shinsegae Group Chairman Chung Yong-jin, who had young children at the time, came up with the idea for a one-stop infant supplies store. Leading up to the brand's launch, Chairman Chung showed his enthusiasm by personally introducing Marie’s Baby Circle on his personal social media. The ‘Marie’ in Marie’s Baby Circle was named after a pet dog that Chairman Chung owned.

E-Mart opened the first Marie’s Baby Circle store at Starfield Hanam in 2016 and the second at Starfield Goyang the following year. It seemed to be expanding its store count when it entered Starfield Wirye in December 2018. However, it failed to open any additional stores afterward and instead shifted toward closing them. The Starfield Wirye store closed in June 2020 without even completing two years of operation, and the Starfield Goyang store also ceased operations in August 2021.

With the last remaining Starfield Hanam location closing, E-Mart has completely withdrawn from the infant specialty store business. An E-Mart representative explained, “We are restructuring our specialty store business with a focus on profitability and efficiency. As part of that effort, we decided to end the operation of Baby Circle as well,” adding, “There are no plans for additional openings in the future.”

Industry insiders believe that the profitability of E-Mart’s infant specialty stores has deteriorated due to the impact of the low birth rate. As the low birth rate phenomenon persists, obstetric clinics, daycare centers, and baby photography studios are closing down one after another, and baby clothing brands and toy companies are also experiencing sluggish performance.

Lee Jong-woo, a professor of business administration at Ajou University, analyzed, “The baby product market is seeing clear polarization. Customer preference for premium brands is high, and brands with ambiguous positioning are trending toward disappearance. Since Baby Circle lacked a distinct concept, it struggled to garner attention in the market.”

Speeding up restructuring of specialty store business, remaining brands reduced to 4

Since 2019, E-Mart has been restructuring its specialty store business for the sake of ‘business efficiency.’ E-Mart expanded its specialty store business significantly after spinning off from Shinsegae in 2011, but as deficits accumulated, it scaled back its operations. In 2018, the deficit for E-Mart’s specialty store division was 74.1 billion won, and in 2019, it was recorded at 86.5 billion won.

Since starting the business restructuring, the performance of the specialty store division has been on an upward trend. In 2020, the deficit in the specialty store sector was reduced to 34.6 billion won, and in 2022, the business achieved a successful turnaround with sales of 1.0907 trillion won and an operating profit of 16.6 billion won. Last year, the specialty store division’s revenue was 1.0195 trillion won, a 6.2% decrease compared to the previous year, but operating profit increased by 5% to 38.2 billion won.

Entering this year, E-Mart appears to be accelerating the liquidation of underperforming specialty store businesses. E-Mart announced that it would also terminate operations of ‘Wine Club’ at the end of this month. Wine Club is a liquor specialty store that was launched in May 2023. It drew attention for opening a large-scale, approximately 500-pyeong store at Starfield Hanam. In particular, Wine Club drew industry interest as it was the first new specialty brand launched by E-Mart in four years. However, the decision was made to withdraw from the market just two years after its launch. An E-Mart representative stated, “Wine Club is also being closed for the same reason as Baby Circle.”

As the company sequentially clears out low-profit specialty stores, the 16 specialty brands that existed in 2018 have now been reduced to 6: ‘No Brand,’ ‘Electro Mart,’ ‘Molly’s Pet Shop,’ ‘Toy Kingdom,’ ‘Marie’s Baby Circle,’ and ‘Wine Club.’ Once Marie’s Baby Circle and Wine Club cease operations at the end of this month, the remaining specialty brands will drop to 4. E-Mart stated that there are “no plans to withdraw” from the remaining four brands.

E-Mart’s strategy is to boost the profitability of its specialty store business centered around No Brand. No Brand is considered the primary driver of performance improvements in the specialty store sector. Last year, No Brand sales reached 851.2 billion won, accounting for 84% of the specialty store division's revenue. An E-Mart representative explained, “The specialty store business performance is being driven by No Brand. While we are maintaining other specialty brands as well, we will continue the specialty store business with a focus on No Brand.”

Professor Lee Jong-woo noted, “The competitiveness of specialty stores is gradually fading. Specialty stores have the advantage of good product variety, but everything is being replaced by online alternatives. It appears that E-Mart will gradually reduce the scale of its specialty stores and focus on its core business.”