It was confirmed on the 2nd that the creative directors (CDs) hired to lead store renewals at Lotte Department Store, including the Gangnam branch in Seoul, have all left the company. The plan, rolled out three years ago right after CEO Jeong Jun-ho, formerly of Shinsegae, took office in 2022 and brought in figures such as CD Kwon Kyung-ho under the banner of becoming the "No. 1 department store in Gangnam," appears to have fallen through.
According to the retail industry, Lotte Department Store recently ended its contract with CD Kwon Kyung-ho, who had been advising the Gangnam branch MD task force (TF). Kwon, who served as CEO of Hong Kong's "Joyce Boutique" and oversaw the launch of the imported select shop "BoontheShop" at Shinsegae International, was personally recruited by CEO Jeong to execute the "No. 1 in Gangnam" strategy. Hiring a CD for store-level renewal was the first such move in the history of the department store industry.
Another CD brought in by CEO Jeong in 2023 also ended their contract along with Kwon. An industry official said, "Lotte Department Store has called off its experiment of recruiting external talent for the Gangnam branch renewal." Lotte Department Store said, "They had signed service contracts with the company. They recently chose to end their contracts for personal reasons."
Initially, Lotte sought to transform the Gangnam branch into a "new luxury department store" that proposes a youthful sensibility and lifestyle, like "Ginza Six" in Tokyo, Japan, or "SKP-S" in Beijing, China. To that end, it announced it would invest more than 1.4 trillion won over two years and appointed seven executives from Shinsegae, Louis Vuitton, Balenciaga and Givenchy.
However, in 2024, An Seong-ho, an associate managing director formerly of Shinsegae, stepped down, and Lee Hyo-wan, who had been recruited as head of MD Division 1 after serving as the head of Givenchy Korea, also resigned midterm. External hires, including CDs, have left the company one after another.
Sales at Lotte Department Store's Gangnam branch stand at around 245 billion won, a large gap compared with rivals in the same trade area. While Shinsegae Department Store's Gangnam branch easily surpasses 2 trillion won in sales and Hyundai Department Store's Trade Center branch is in the 1 trillion won range, Lotte's Gangnam branch trails even regional hub stores such as the Jeonju branch (about 270 billion won in sales) and the Changwon branch (about 260 billion won).
Until the early 2000s, Lotte aimed to be the "No. 1 department store in Gangnam," but its position weakened as Shinsegae and Hyundai sequentially opened mega-sized stores. It repeatedly failed to attract luxury brands, and the current in-store lineup is centered on "masstige" (a portmanteau of mass and prestige) labels such as Omega, Max Mara and Tory Burch.
Lotte Department Store said it would change its fundamentals through the Gangnam branch renewal, but with investment timelines delayed or derailed, it still has not emerged from sluggish performance. Although construction was originally targeted for 2024, the plan was postponed due to the group's deteriorating liquidity and difficulties in attracting luxury brands.
Following the delay of the Gangnam branch renewal, Suwon Time Villas, into which more than 100 billion won was invested, is reportedly seeing lower store traffic and customer dwell time compared with competing channels such as Shinsegae Starfield Suwon.
CEO Jeong began his career at Shinsegae in 1987, served as head of the overseas fashion division at Shinsegae International and head of the duty-free division at the Chosun Hotel, and joined Lotte GFR as CEO in 2019. A retail industry official said, "As the personnel recruited by CEO Jeong have resigned one after another, there is talk that Lotte may be reverting to a traditional 'pure-blood' stance," adding, "Leadership is being put to the test."