Lotte Department Store relocating its merchandise division

Industry

Published: 07 Mar. 2022, 19:43 Updated: 07 Mar. 2022, 20:26

Lotte Department Store relocating its merchandise division

Shared workplace provider WeWork's building in Gangnam District, southern Seoul. Lotte Department Store announced Monday that it will relocate its merchandise divisions to Gangnam. [WEWORK]

Lotte Department Store is relocating its merchandising divisions from a building in Jung District, central Seoul, to Gangnam District in southern Seoul in May.

CEO Jung Jun-ho, who took the position in November, aims to shake up the old corporate culture through the relocation, the department store said Monday.

Lotte Department Store, operated by Lotte Shopping, plans to move its merchandising head office and some 230 employees in the MD1 and MD2 divisions to a WeWork office in Samsung-dong, Gangnam District, in mid-May.

The department store's MD1 division deals with overseas luxury brands, while MD2 division oversees general fashion, private labels and foods.

The merchandise department is where the company's core decisions are made — it sets business strategies, decides which boutiques would enter the department stores and launches large-scale promotional events.

Jung will work at both the previous office in Jung District and the new Gangnam office, according to the Lotte Department Store.

"Trend setters such as luxury brands, fashion and beauty companies, designers and entertainment agencies are in Gangnam," said a spokesperson for Lotte Department Store.

"The goal is to boost work efficiency at the upscale district."

Jung, the first CEO from outside the company, is leading the company's change and reforming Lotte Department Store's workplace culture.

Since last December, he recruited several major executives from outside, something the company has traditionally been wary of doing. Jung himself formerly worked at Shinsegae Department Store and Shinsegae International, and appointed Lee Hyo-wan, former General Manager of Givenchy Korea, to head its MD1 division.

Jin Seung-hyun, former director of Balenciaga Korea's retail division, was named head of the luxury and contemporary designer division. Kim Ji-hyun, former marketing head at Louis Vuitton Korea, joined the department store as the head of its marketing and communication division.

"Whether the recruitment is internal or external, the goal is to change the workplace culture by abolishing preference toward insider recruitment," said Jung.

"If anything, it is rather odd that outside recruitment is still considered an issue in these days."

The working process will change as well.

In the department store's Gangnam workplace, the CEO's office will be set up like a reception room without a desk to encourage communication. Employees, as well as those in leadership positions, will not be designated a desk but be free to sit wherever they want. However, working spaces of employees and those in division head positions and above will be separated so that young employees won't feel pressured while working.

Lotte Department Store's first project following the reform is to move its Gangnam branch upmarket.

As the pandemic-driven "revenge shopping" — seeking comfort by purchasing goods while social activities were restricted due to the Covid-19 — boosted demand for luxury goods, the high-end items became key profit drivers.

Lotte Department Store has been lagging behind in the luxury sector compared to its competitors.

In 32 Lotte Department Store branches across the country, there were 67 boutiques of top 10 luxury brands in March, a grouping by market research company Kantar. Brands such as Louis Vuitton, Chanel, Hermes, Gucci and Rolex are part of the group.

Shinsegae Department Store had 168 luxury boutiques in its 13 branches.

For the three major high-end handbag brands — Hermes, Louis Vuitton and Chanel — Lotte had one Hermes boutiques, seven Louis Vuitton boutiques and two Chanel boutiques, while Shinsegae had eight Hermes, 18 Louis Vuitton and nine Chanel boutiques. Shinsegae had 10 Rolex boutiques, three more than Lotte.

An anonymous luxury industry insider said that "Shinsegae is a step ahead of Lotte in luxuries" and that "Shinsegae Department Store maximized synergy with its luxury fashion brand BoonTheShop and other Shinsegae subsidiaries such as Shinsegae International."

According to the industry insider, "the leader's experience and initiative are the most important factor in pushing the luxury business forward," adding that CEO Jung's experience in overseas fashion business will have a positive impact on the department store.

Lotte Department Store plans to completely redecorate its Gangnam branch in Daechi-dong.

Lotte Department Store's branch in Daechi-dong, Gangnam District, southern Seoul [LOTTE DEPARTMENT STORE]

The construction is slated to begin next year, and the detailed plan is currently under discussion. The department store will focus on fewer categories and brands, while enhancing the service quality.

"A significant change is needed," said Jung, emphasizing that Lotte Department Store will strive to "be acknowledged for the products and services based on favorable working culture and clear business strategy."

BY LEE SO-AH [shin.hanee@jooongang.co.kr]