Shinsegae Group has jumped into the artificial intelligence (AI) data business. Shinsegae Group said on the 16th (local time) in San Francisco that it plans to establish a joint venture with tech company ReflectionAI and build a 250-megawatt (MW) AI data center.
This is the largest among data centers being pursued in Korea. Shinsegae Group will be in charge of providing the site and construction of the data center, and ReflectionAI will handle design and operations. The location, timing, and investment amount for the data center have not yet been finalized.
The retail industry is paying attention to the fact that Shinsegae Group has put forward AI as a pillar of its business. Other retailers are investing to the extent of improving business efficiency by using AI. Chair Chung Yong-jin of Shinsegae Group was said to have judged that AI is an important tool that will change the business landscape and that the company must move preemptively in response. An industry official said, "Chair Chung often said AI is innovation in itself and that you should not approach it with the idea of making small improvements."
It may be early, but there are growing expectations for changes that could come if Shinsegae Group aggressively moves into the AI data business. Shinsegae Group can immediately earn rental income. Because a data center is a kind of infrastructure, it can be leased out for profit. More important than rental income is that Shinsegae Group has laid the groundwork to counter the AI e-commerce market, represented by Naver or Coupang. Until now, Shinsegae Group has not grown in the e-commerce market compared with Naver or Coupang. This was partly due to government regulations on traditional offline retailers, but it was also because it lacked data compared with Naver and a logistics system compared with Coupang.
However, it now has the potential to rise to a position where it can stand shoulder to shoulder. That could happen if Shinsegae Group achieves AI-based retail innovation by combining its offline footholds with commerce data, consumer information, and more using AI. It is also possible to build an AI agent service that proposes and curates products optimized for consumers and handles payment and delivery.
It could also generate revenue by providing customized AI solutions. The data center Shinsegae Group is trying to build this time is a "full-stack AI factory" that can provide cloud services as well as user-customized AI solutions. Full-stack AI is a service that provides everything from the infrastructure needed for AI to the technology and software at once. This means Shinsegae Group can provide infrastructure related to AI operation services to client companies and secure AI technology fees and operating income.
The retail industry believes Shinsegae Group is taking such an aggressive stance because retail growth has stagnated. In other words, under the existing playbook—such as increasing domestic store profitability, targeting overseas markets, and responding to the e-commerce market at current levels—it is difficult to find new growth drivers. The combined sales of Shinsegae Group's six listed companies in 2024 were 39.244 trillion won, a slight decrease from 2023 (39.471 trillion won).
Inside Shinsegae Group, there are expectations that the "E-MART 2.0" catchphrase, which has been put forward with each attempt at change, will be fully realized. Last year, Chair Chung also joined hands with China's Alibaba to respond to the e-commerce market. A Shinsegae Group official said, "If you list what can be done with an AI data center, it all connects back to strengthening our core business competitiveness," adding, "You can see this as the signal flare for a full-fledged push of the E-MART 2.0 project."