New Shinsegae Co. CEO putting customers first
Published: 27 Jun. 2010, 22:17
Chung Yong-jin
Aside from his role as the company’s top executive, Chung is also the second-largest shareholder of its parent, Shinsegae Group, behind his mother, Lee Myung-hee. That gives him the lion’s share of power over the company on both a strategic and day-to-day basis, meaning he can pretty much call all the shots if he wants.
But Chung says he doesn’t intend to run the business that way.
“Though Shinsegae is now owner-managed, that doesn’t mean I’ll start acting alone,” Chung, who also serves as vice chairman of Shinsegae Group, said in an exclusive interview recently with Forbes Korea. “I plan to manage Shinsegae by implementing new core values revolving around customers, brands and design.”
Chung, who is also the heir apparent of Shinsegae Group, Korea’s No. 2 retailer, expressed great pride in the company’s history of ethical management, saying “about half of the increase in Shinsegae’s stock price can be attributed to it.” During the interview - his first since being named CEO of the company - Chung touched on his vision for the company, his leadership style and Shinsegae’s competitors.
Q. What are your investment plans?
A. The short-term plan is to invest in our online retail arm - Shinsegae Mall and E-Mart Mall - without hesitation, and foster it as a new growth engine. We must seize the lead in the booming online market by forging a clear distinction from our competitors. But I do not think the online market will be Shinsegae’s only vision. It’s a growing sector, but I don’t believe the future of Shinsegae depends on online shopping.
How will Shinsegae change under your leadership?
I’d like to inherit and adapt the business ethos of my forebearer [Lee Byung-chul, the founder of Samsung Group and Chung’s maternal grandfather] for the current business climate. The foremost value is that the customer comes first. I always reflect on how he would have led the retail business. My grandfather is both my starting point and my goal. Shinsegae is poised to pursue fresh challenges and creative endeavors. Our corporate culture is also set to transform.
What needs to be changed in regards to corporate culture?
Until last year, I often heard people say “as an organization, Shinsegae is more Samsung-ish than even Samsung,” and in truth, I enjoyed it. However, it means that while Samsung is changing, we remain the same. Shinsegae is still all about management and efficiency, still a top-down organization. I seek to make it a lateral organization of freely exchanged ideas, and opinions discussed and shared. Voices of lower-ranking employees should be heard, but there are a lot of filters in place.
Your “Twitter management” concept is a popular topic.
The appeal of Twitter is that it breaks down the barriers between management and the customer and allows the sharing of our thoughts. In the beginning, I got a lot of questions asking whether it was really me [laughs].
Before Twitter, there was no way to communicate directly with the customer. And it has brought results. For example, a customer requested the installation of Wi-Fi networks in our stores, saying he’d like to surf the Web for free while he waited for his wife. If Wi-Fi becomes available in our stores, we can heed the customer’s opinions in real time, understand how many customers are visiting how often, staying how long and buying what items. So we are hurrying to install Wi-Fi. It will be available in a few test stores in early August.
How do you plan to target the Chinese market?
It is the world’s biggest market and the most difficult to succeed in. The current strategy is to enter second and third-tier cities to pre-empt the markets, then wait for those markets to grow. After holding on for a while, it is our plan to garner a bigger slice of the pie by acquiring companies eliminated from the competition. Rather than simply leasing store space, we are leaning toward the more permanent option of 50-year, long-term leases.
What’s your view on Lotte Shopping, your competitor?
Shinsegae is ahead of other firms in the concentration of our strength, management and efficiency. Lotte seeks to add more stores, but we focus on developing separate, large department stores like our Centum City branch. Ours is a strategy of scale and of efficiency. There are pros and cons to every approach, but Shinsegae is currently leading in the growth rate for department stores.
Your take on the super-supermarket (SSM) issue also differs.
Other firms are competing to go ahead regardless of social consensus, but Shinsegae sees it differently. I believe our job is to use the buying power of E-Mart as leverage, to provide small and medium-sized tradespeople with merchandise at a cheaper cost than previous wholesale prices, and - by passing on our business know-how - help them to compete against neighboring SSMs. If a lot of merchandise is sold, Shinsegae’s buying power will grow and small and midsized merchants will gain both competitive ability and a larger profit margin.
Your counterpart at Lotte could be considered Shin Dong-bin, the vice chairman of the company. Do you see each other occasionally?
Shin is the elder brother of the industry. He sometimes calls me and Chung Ji-sun, the Hyundai Department Store chairman, to get together. But we just eat and drink. We don’t talk about retail at all.
Why do such industry rivals meet, if not to talk shop?
The meetings are to ensure smooth communication between us, so we can compete in good faith. It could be compared to a hotline of a sort, utilized when business has stalled and communication breaks down between our respective personnel.
What is Shinsegae’s long-term vision?
Our vision is to become the company customers love most. I believe material goals such as “a few hundred stores” and “100 trillion won [$82.3 billion] in revenue” can’t be long-term visions.
If a company is beloved by customers and considered the best brand, numerical indicators will follow of their own accord.
By Lee Pil-jae [joyce@joongang.co.kr]
with the Korea JoongAng Daily
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