Lotte’s shopping complex and hotel in downtown Seoul / Korea Times file
Outside figures named to lead key positions
By Yi Whan-woo
Lotte Group carried out a massive reshuffle of top executives, Thursday, in what is seen as a desperate bid to tackle its declining dominance in shopping, lodging and other major businesses that face a rapidly changing landscape in the digital era.
Jung Joon-ho, new head of Lotte’s retail-related businesses / Courtesy of Lotte Group
It also announced plans to overhaul its business structure, scrapping the division of its units into the four categories of retail, hotel and services, food, and petrochemicals, with multiple affiliates under their respective wings.
Instead it introduced so-called headquarters-based structure aimed at managing affiliates in a more flexible and resilient manner. There are now six of these headquarters, up from the original four with the addition of the construction and rental businesses.
In a regular year-end reshuffle of 38 affiliates, the conglomerate promoted Lotte GFR CEO Jung Joon-ho as head of the retail headquarters.
A global retail export, he built his career at P&G, working at its U.S. headquarters and regional offices in Korea and Southeast Asia, as well as Malaysia-headquartered travel retailer DFI.
He then led Homeplus, a discount retail chain store operated by Shinsegae Group, before joining Lotte as the head of GFR in 2019.
He replaces Kang Hee-tae who has been in charge of Lotte’s retail-related business units.
The unit consists of seven companies ― Lotte Department Store, Lotte Mart, Lotte ON, Lotte Super, Lotte Home Shopping, Lotte Hi-Mart and Korea Seven ― that collectively form the broader Lotte Shopping group with Kang having been its vice chairman.
Meanwhile, Lee Bong-chul, who oversaw the group’s hotel- and services-related units, is replaced by Ahn Se-jin, an outside figure who was previously CEO of the Nolboo franchise restaurant chain.
Ahn Se-jin, new head of Lotte’s hotel- and service-related businesses / Courtesy of Lotte Group
The units to be held by him include Lotte Hotel, Lotte Duty Free and Lotte World, all affiliated with travel and leisure activities that were severely hit by the COVID-19 pandemic.
Ahn worked on growth engines at LG and LS, before being appointed in 2018 to head Nolboo controlled by Morgan Stanley Private Equity.
Kim Gyo-hyun, who headed the chemical business unit, has been promoted to vice chairman and will manage the chemical headquarters.
The remaining headquarters will be led by former business unit chiefs, or outside figures.
Industry sources view this year’s reshuffle as “far more unconventional” than last year when 13 top executives were replaced.
The newly appointed CEOs are mostly in their 50s and are relatively young, representing a departure from the previous standards adopted by Lotte, which, after being founded in 1967, has been known for its conservative corporate culture, including its criteria for promotion eligibility.
For instance, Chung is 56 years old, while Kang Hee-tae is 62 and Lee Bong-chul is 63.
Regarding the scope of the reshuffle, the sources said it is as broad as the one in 2020.
The fact that an outside figure took over a key position is also surprising, according to the sources.
“It can be said Chairman Shin Dong-bin held the CEOs of the poorly performing affiliates accountable through the reshuffle,” a market observer said. “The case is especially noteworthy considering Lotte has been slow when it comes to reform, overhaul and other measures related to innovation.”
A Lotte public relations staff member explained the newly-adopted headquarters system will facilitate decision-making.
“It is designed for each headquarters to actively intervene in the future-oriented strategies of the affiliates,” he said.Internet Explorer Channel Network