Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
Retail business groups go into emergency mode
By Kwak Yeon-soo
Lotte Group Chairman Shin Dong-bin
By Kwak Yeon-soo
Lotte, Shinsegae, CJ reshuffle executives, overhaul organizations
Lotte, Shinsegae and CJ are shifting to emergency mode, carrying out executive reshuffles and setting detailed contingency plans in a pre-emptive move to brace for a prolonged business slowdown, according to industry officials Sunday.
Their moves come as faltering profits of key affiliates are hitting companies' bottom lines amid the deepening economic downturn, officials said.
Lotte Group, Korea's fifth-largest conglomerate, went into emergency mode in November in an attempt to seek a major breakthrough amid dwindling profits due to stiff competition with e-commerce platforms.
Lotte Group Chairman Shin Dong-bin approved a slew of new CEOs, business unit heads and executives on Dec. 19, one of the largest senior official reshuffles in its history.
Along with the shakeup in its top management, the group has reshuffled nearly 100 senior executives and presidents of more than 50 subsidiaries.
In reorganizing its units, retail subsidiaries including Lotte Department Store, Lotte Super, Lotte Mart, Lotte e-Commerce and health and beauty store LOHB's will be managed under Lotte Shopping.
“Chairman Shin's drastic executive reshuffle, along with restructuring retail business division, reflects his intention to make the group a game changer,” a Lotte Group official said.
Lotte Corp. CEO and Vice Chairman Hwang Kag-gyu said the emergency mode is necessary to keep its businesses in line and minimize fallout.
“Amid economic uncertainties, we need to prepare for the future by exercising aggressive frontline management,” Hwang said during a regular CEO-level meeting held on Oct. 31.
In the third quarter, Lotte Shopping, which runs the department store, supermarket and other retail units, saw its operating profit fall by 56 percent year-on-year, to 87.6 billion won ($75.2 million).
Shinsegae Group Vice Chairman Chung Yong-jin
Shinsegae, another leading retail giant in the country, is considering closing some of its money-losing businesses while focusing on core and lucrative areas to enhance profitability.
Shinsegae's supermarket affiliate E-mart announced, Friday, it would close down Pierrot Shopping stores amid sluggish consumption, high rental costs and other unfavorable conditions.
“We've been drawing up survival plans in order to maximize profits and efficiency,” an E-mart official said.
E-mart logged an operating profit of 116.2 billion won ($97.2 million) in the third quarter of this year, compared to 194.6 billion won a year earlier.
The money that will be saved from the cost-cutting efforts will be used to find new cash cows.
The discount chain adopted a price-cutting strategy in August, and the decline in overall sales has been slowing as a result.
E-mart said it plans to maintain an ultra-low-price strategy to draw more customers, both online and offline.
Shinsegae Group also announced management changes as well as a variety of business reform activities, which includes dividing food and housing goods categories.
CJ Group Chairman Lee Jay-hyun
CJ Group has been operating in emergency mode since October to better cope with the fallout from the deepening economic woes.
Unlike its rivals and, CJ Group has not announced its personnel reshuffle yet, despite its long-standing tradition of conducting management changes in November.
This reflects that Chairman Lee Jay-hyun has been paying more attention to streamlining its business structure and improving its financial soundness.
Earlier this month, CJ Group announced it would send about 200 employees to its affiliates, as part of ongoing efforts to improve its deteriorating performance.
“We expect to operate in emergency mode by the first quarter of next year,” a CJ official said. “It's part of our efforts to boost competitiveness amid market uncertainty.”