Lotte Chairman Shin pushes for big restructuring with closure of 200 retail stores
Lotte Chairman Shin pushes for big restructuring with closure of 200 retail stores
  • Lee Jun-sung
  • 승인 2020.03.06 12:52
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Lotte Group Chairman Shin Dong-bin

Lotte Group Chairman Shin Dong-bin said, "We will strengthen convergence with the Internet in the retail business, which is the flagship of the group, and focus our efforts on hotel and petrochemical businesses in overseas markets."

In an interview with the Nihon Keizai Shimbun (Nikkei) on March 5, Shin said, "We will abandon all our experience of success in the stores," adding that the company will restructure its stores in the largest scale ever.

The company plans to close about 20 percent (200 stores) of its large discount stores, specialty stores and department stores without profitability within this year.

Nikkei explained that Lotte's pillar is a retail business in Korea, accounting for about 40 percent of the group's total sales, but its operating profit at Lotte Shopping, the core of Lotte Group, has dropped by one-third over the past five years due to a prolonged slump in consumption in the Korean market and fierce competition with Internet shopping malls.

Nikkei said Shin, who faces such a situation, believes that the existing management methods no longer work, and is pushing to strengthen the Internet business as a solution.

"We will unify our Internet business and create a structure where all products can be received at nearby (Lotte) stores," Shin said. Regarding the change of 40 percent of the group's top executives to younger people in January, Shin explained its personnel management background, saying, "Many people think of it as a focus of operating (offline) stores like in the past, while calling for digitalization."

In the hotel sector, we will double over the next five years to 30,000 rooms worldwide, including acquisition and merger, Shin said. "In June, we will open a luxury hotel in Seattle, the U.S., and are also considering in Britain." 

He also said, "There are only Tokyo Kinshicho and Lotte Arai resorts in Niigata Prefecture in Japan, but we will actively increase the number of hotels in Tokyo over three to four years. I am also thinking of a resort hotel.”

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