Shin Dong-bin returns to Lotte Shopping to revive retail business after five years

Shin Dong-bin, chairman of Lotte Group, returned as an internal director of Lotte Shopping on the 24th after five years. As the main business in the institutional sector struggles, industry attention is focused on whether Chairman Shin can revive the retail business.

Lotte Group held its regular shareholders' meeting at Lotte Mart Max in Yeongdeungpo, Seoul, on the morning of the same day and passed a resolution to appoint Chairman Shin as an internal director of Lotte Shopping. Chairman Shin currently serves as an internal director at four companies: LOTTE Corporation, LOTTE Chemical, LOTTE Wellfood, and LOTTE Chilsung Beverage. This marks his return to Lotte Shopping as an internal director after five years.

◇ Chairman Shin Dong-bin returns after five years… Will he revive the retail business?

Chairman Shin had resigned in March 2020 before the expiration of his term as an internal director of Lotte Shopping due to being criticized for excessive concurrent positions in affiliate companies by the National Pension Service and others. Concerns have also been raised about his return because he was convicted on charges of corruption and breach of trust related to past national scandals.

However, given the financial crisis facing Lotte Group, a recovery in existing core businesses is necessary for performance restoration. It is seen as a critical time when quick decision-making through Chairman Shin's return as an internal director is essential. When an owner participates in the board of directors as a registered officer, it accelerates investments and business initiatives, enabling accountable decision-making.

Lotte Group is in a dire crisis with liquidity concerns emerging last year. During the Value Creation Meeting (VCM) held earlier this year, Chairman Shin said, "Last year was the most difficult year in the history of the group," adding, "We are implementing various measures such as the sale of tangible assets and asset revaluations to quickly regain market trust, but fundamentally, we must enhance the core competitiveness of our businesses to improve revenue."

Lotte Shopping's performance is also struggling. Last year's revenue was 13.9986 trillion won, down 3.9% from the previous year. Operating profit recorded 473.1 billion won, a decrease of 6.9% from the previous year. Revenue for Lotte Shopping has consistently decreased from 15.5811 trillion won in 2021 to 15.4760 trillion won in 2022 and 14.5559 trillion won in 2023.

◇ Aiming to regain competitiveness through new businesses like Time Villas Gunsan and ZETTA app

Industry insiders predict that Chairman Shin's return to Lotte Shopping will accelerate progress toward achieving goals across various business sectors, including department stores, marts, and e-commerce.

Lotte Shopping presented six core strategies: rebuilding market leadership in key department store areas, establishing Korea's grocery number one, transforming e-commerce strategy, initiating turnaround for subsidiaries, retail tech transformation, and aiming to become Southeast Asia's premium shopping destination.

Lotte Department Store aims to dominate the shopping mall market through the renewal opening of the future-oriented shopping mall Time Villas Gunsan, and plans to build a strong competitive edge in key locations such as the Jamsil and main stores through large-scale renovations.

The mart and supermarket division will enhance product competitiveness, reduce purchasing costs, and innovate the quality of fresh food to streamline domestic operations and accelerate expansion into overseas markets. Alongside the launch of the new ZETTA app for marts, they plan to proceed as scheduled with the first customer fulfillment center (CFC) opening in Busan in 2026, providing a differentiated shopping environment in the domestic online market.

The e-commerce division aims to strengthen commerce capabilities, focusing on fashion and beauty categories, and foster sales growth through the functionalities of the Gateway platform, including Lotte Town. They aim to continuously improve profitability through fixed cost and organizational efficiencies, seeking to secure growth drivers and achieve the goal of turning a profit ahead of schedule.

◇ This year's revenue target set at 14 trillion won, operating profit at 600 billion won

Kim Sang-hyun, vice chairman and general head of Lotte Distribution, told reporters that they will "work hard for customers and raise sales and profits," adding, "All sectors, including department stores, marts, and e-commerce, will continue to strive to regain competitiveness through the promotion of new businesses this year."

Kim noted that based on profitability improvements through the restructuring of existing businesses and business structures, which have been ongoing since the launch of the distribution sector, they will push ahead with strategies to become the customer's first shopping destination as quickly as possible. He mentioned strengthening internal capabilities and improving profitability through restructuring business foundations and pursuing a strategy for mutual growth of sales and profits based on financial soundness.

He further stated that to overcome the growth limitations of the domestic market and the slowing consumer demand, they plan to establish a local operating subsidiary in Singapore to actively cultivate overseas business and will review development projects focused on overseas complexes and shopping malls based on the successful model of Westlake while expanding exports of private brand products to the U.S., Singapore, and Southeast Asia.

Lotte Shopping has aspirations to achieve revenue of 20.3 trillion won and operating profit of 1.3 trillion won by 2030. Initially, they set targets for 2025 to achieve revenue of 14 trillion won and operating profit of 600 billion won, and for 2026, revenue of 15.2 trillion won and operating profit of 800 billion won.