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| People wait in the line to purchase Rolex watches at Shinsegae Department Store in downtown Seoul, Aug. 18. Korea Times file |
By Kim Jae-heun
Korea’s retail giants are accelerating measures to improve their business structures and cope with online shopping trends.
Lotte and Shinsegae are the two major firms battling for the title of the No. 1 retailer here. However, the pandemic has brought strong new rivals onto the scene: Coupang, Naver and Market Kurly. These three online retailers have grown explosively amid the social distancing measures that have forced people to stay home, boosting their sales through online shopping.
Lotte has decided simply to make its staff younger by hiring new workers and dismissing longtime employees. Lotte Department Store, in particular, is well-known for keeping its employees for years. About 2,000 of the company’s 4,700 workers have worked there for over 20 years.
However, maintaining its staff for a long time without deliberately changing the organizational culture has led to the creation of a rigid work environment and a hierarchical corporate culture. Lotte Group Chairman Shin Dong-bin has been expressing concern about this issue and has ordered the company to develop a young and communicative work culture. At the same time, Lotte Group’s retail unit, Lotte Shopping, is currently closing down its stores in order to reduce the rental costs for supermarkets and specific stores that have been suffering consecutive years of sales declines.
“We are opting to reform our company structure with the goal of rebuilding our workforce through new recruitment and preparing for future growth,” a Lotte Shopping representative said.
The other retail giant, Shinsegae, is desperate to grow its e-commerce sector. It took over eBay Korea recently in order to beef up its online sector, together with its e-commerce firm, SSG.com.
Shinsegae needs to increase the number of its fulfillment centers in the country in order to increase its sales volume. It has already secured 3.5 trillion won ($2.96 billion) by selling real estate in Seoul, and it plans to reinvest the funds in eBay Korea and SSG.com.
Shinsegae is also preparing for the initial public offering of SSG.com. The preparations started in August and local securities firms estimate SSG.com’s corporate value to be between 6 trillion won and 10 trillion won.
All of these efforts show how important Shinsegae is taking the transition of its offline businesses to online.
Its acquisition of eBay Korea is still pending approval by the Fair Trade Commission. E-mart is the largest retailer in the country, and it is operated by Shinsegae.
Meanwhile, Shinsegae recently dismissed the general manager of Shinsegae Department Store in Gangnam, over a water leakage incident on Oct. 12. A huge amount of water leaked out of the ceiling into the grocery area located on the building’s basement floor.
The store showed the highest revenue among domestic department stores last year. Shinsegae’s headquarters took instant action to punish the people in charge in order to protect its reputation.
Retail giants make major changes in response to shopping trends
Source: Buhay Kapa PH
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