Homeplus shortens supplier payment cycle to up to 3 times a month

Homeplus is introducing a payment settlement cycle of up to three times a month in an effort to rebuild trust with its suppliers.

According to industry sources, Homeplus began paying most suppliers every 10 to 30 days when it resumed operations on Aug. 13. Only a select group of fresh-food suppliers were given a settlement period of up to 60 days — a marked improvement from the previous three-month cycle the retailer had applied to fresh-food payments.

Homeplus also paid some suppliers an upfront sum of 100 million won ($73,600) each before receiving stock for the reopening. The move reflects the company's ambition to build a Korean equivalent of Trader Joe's, centered on groceries and backed by faster payment terms. Stores have since been restocked with a substantial volume of fresh produce, prepared foods and other grocery items.

However, supplier anxiety remains high given the scale of outstanding payments Homeplus has yet to resolve. The retailer still owes 503.2 billion won in unpaid supplier fees, and some vendors are said to be carrying tens of billions of won in uncollected receivables.

Meanwhile, the Seoul Bankruptcy Court approved Homeplus's restructuring plan on Wednesday as the company continues to undergo court-led rehabilitation proceedings. Homeplus is pursuing a strategy to reinvent itself as a Korean-style Trader Joe's. As part of that effort, it has begun converting multi-floor stores into single-level layouts and reducing total floor space to around 3,300 square meters per store. The company also plans to narrow its product range to groceries and fast-moving daily necessities while raising the share of private-label goods.

Skeptics abound, however. Competition in the private-label segment of South Korea's hypermarket industry is already fierce. E-mart operates the No Brand and Peacock labels, while Lotte Mart runs the "Oneul Joheun" and "Yorihada" brands. Homeplus's own private label, Simplus, has drawn criticism for weak competitiveness and low consumer preference, and its lineup currently spans only around 1,000 products.