A retail giant with room to grow

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A retail giant with room to grow

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“Faces inside Korea’s conglomerates” is a weekly series about key figures in major conglomerates to help readers understand Korea’s business world.

For many Koreans, the Shinsegae name conjures up images of modernity in the retail sector, especially in terms of high-end department stores.

The story of the Shinsegae Group started with Japan-based Mitsukoshi Department Store (now Shinsegae Department Store’s main branch) back in 1930.

The store became the group’s business benchmark. After Korea gained independence from Japan in 1945, the store - Korea’s first modern department store - changed its name to Dongwha Department Store.

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Visitors on Jan. 15 walk toward Suzhou, China’s E-Mart, the latest branch to open overseas. Provided by the company

In 1963, the store was bought by the Samsung Group and renamed Shinsegae Department Store during the same year. (Shinsegae means “new world” in Korean.)

Shinsegae separated from Samsung to become an independent conglomerate in 1991. It has now grown to the 16th-biggest business group in Korea as of 2008 (excluding public enterprises) with accumulative revenue of 14 trillion won ($10.1 billion).

In 2008, the group saw sales total 10.85 trillion won and operating profit of 840 billion won.

The group has 15 subsidiaries under its belt that span from retail and food to construction. Its core business, however, remains retail, including Shinsegae Department Store and discount store E-Mart.

The Shinsegae Group claims a long list of firsts in its work to raise Korean retailers to fit 20th-century standards.

For example, in 1967, the company held Korea’s first official “bargain sale” in a retailer, and in 1969, the department store started Korea’s first department store credit card system by issuing 300 Shinsegae credit cards to select VIP customers.

It opened Korea’s first discount store, E-Mart, in Dobong District, northern Seoul in November 1993.

The jaebeol, having been a part of Samsung Group for almost three decades, has an integral connection to Korea’s top conglomerate.

Shinsegae Group Chairwoman Lee Myung-hee is also the daughter of the late Samsung Group founder Lee Byung-chull.

Lee Byung-chull reportedly told Lee Myung-hee before her first day of work in 1979 as head executive at Shinsegae Department Store’s marketing division to put her trust in whomever she employs.

“Don’t employ a person you can’t trust, but once you hire them, trust them wholly,” he said.

This strategy, of placing day-to-day responsibility in the hands of actual chiefs of business operations, has served the Shinsegae Group well throughout the years.

For example, Lee Myung-hee rarely signs company documents except for the yearly personnel administration forms. Her son Chung Yong-jin, vice chairman of the Shinsegae Group, takes a similar management stance.

But Chung isn’t confined to the company’s boardroom. He is known as the company’s public face, hardly ever missing the opening of a new Shinsegae branch.

After graduating from Brown University in 1994, he was appointed head executive of Shinsegae’s strategic planning division. In December 2006, he became group vice chairman along with Koo Hak-su.

Koo, Shinsegae Group CEO and vice chairman, is the group’s actual “business” mind, in charge of all of Shinsegae’s major operations.

He has the firm support of Lee Myung-hee and Chung Yong-jin.

Koo started his career at Samsung Group in 1972, working his way up through numerous subsidiaries including Samsung Electronics, Cheil Industries and Samsung C&T Co.

After being appointed Shinsegae Group CEO and vice president in 1999, he has overseen everything the group has done since its post-IMF era including its opening of overseas retail branches in Russia and China.

One of Koo’s biggest accomplishments was buying a huge amount of land in 1998, right after the Asian financial crisis when land prices nationwide plummeted, to expand the group’s discount store business, E-Mart.

Along with Koo, Hur Inn-chul, Shinsegae Group executive vice president, and Seok Kang, Shinsegae Department Store division CEO, hold the helm at Shinsegae. Hur started his career at Samsung C&T in 1996 and was promoted to executive vice president of the group in 2006. One of his biggest accomplishments at Shinsegae was the purchase of Walmart’s Korean branches in 2006.

Shinsegae’s founding business unit and its core up to the present, Shinsegae Department Store, is led by Seok Kang. The department store is the nation’s biggest as of 2008.

Besides maintaining sales and the high reputation of Shinsegae Department Store’s main branch in northern Seoul, Seok also opened the Gangnam branch to massive success.

Last year, the branch saw total sales of 804.2 million won, ranking as the second-most profitable department store branch in Korea, after Shinsegae’s main branch in Jung District.

Shinsegae E-Mart CEO Lee Kyung-sang is responsible for one of the group’s most global projects.

E-Mart currently has 120 branches in Korea and 19 in China. Its Korea market share is 34 percent at present (Lotte Mart is No.1) but the company plans to expand this business and said that by 2012, it will operate around 160 branches in Korea alone.

The discount store unit has been aggressive in taking E-Mart branches overseas during the last couple of years.

The first E-Mart outside Korea as well as the first local retail store overseas opened in Shanghai in 1997. At present there are 19 overseas E-Mart branches, including 10 in Shanghai, one in Beijing, three in Tianjin and two in Wuxi.

Choi Byung-ryul, Shinsegae Food CEO, is one of the representative “self-made” businessmen climbing the ladder of success with only a high school diploma.

Leading the group’s construction unit is Park Young-chul, Shinsegae E&C CEO, who started his career at Samsung Engineering.

Kim Hae-sung, Shinsegae International CEO, is noted to have an excellent sense of the global market, especially in the fashion and trend sectors.

He was a chief manager of Shinsegae Department Store’s fashion division before being appointed CEO of Shinsegae International in 2005.


By Cho Jae-eun Staff Reporter [jainnie@joongang.co.kr]
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