Shinsegae, Lotte, and now GS
Counterattack in e-commerce offline expansion
Securing customer DB big data competitiveness
[Asia Economy reporters Minyoung Cha and Seungjin Lee] Following Shinsegae and Lotte, major distribution companies such as GS Retail are making every effort to strengthen their online competitiveness. They are accelerating the launch of integrated online and offline systems while simultaneously conducting intensive restructuring for fundamental organizational improvement.
Looking at the distribution industry trends on the 11th, the merger absorption of GS Home Shopping by GS Retail stands out first. By merging the customer databases (DB) that were previously separated, they will be able to secure vast big data rapidly emerging in the online commerce market. GS Retail and GS Home Shopping have 14 million and 18 million membership subscribers respectively, and even after excluding overlapping customers, they can enjoy a net inflow effect of 26 million members. Additionally, GS Retail, which focuses on convenience stores, has a customer base mainly in the 10-20 age group, while GS Home Shopping’s main channel targets the middle-aged 40-50 age group, resulting in a DB evenly distributed across all age groups as a result of the company integration. The over 30 million TV viewers of GS Home Shopping, not included in the count, are a bonus. GS Retail aims to complete the merger by July next year and achieve a transaction volume of 25 trillion won by 2025.
An industry insider said, "In the online era, an integrated DB containing customers and their consumption behaviors becomes the most important asset," adding, "It has become one of the core competencies for enhancing personalized shopping services and product competitiveness, and it is the greatest competitive advantage for traditional offline-centered distributors to catch up with online leaders."
Shinsegae and Lotte also face the biggest challenge in securing customer DBs and big data. Shinsegae recently established a Data and Infrastructure Headquarters at SSG.com. The inaugural head is Executive Director Yuseong Jang, a PhD in computer engineering and an AI (artificial intelligence) expert. Executive Director Jang is responsible for strengthening synergy through big data analysis of integrated online and offline customer DBs.
Lotte Group is conducting offline store restructuring and workforce adjustments, but is increasing new hires for its integrated online mall, Lotte On. Recently, Lotte Shopping Vice Chairman Heetae Kang launched a direct data governance task force (TF) and appointed Executive Director Youngsun Yoon from Lotte Information & Communication as Chief Data Officer (CDO).
Professor Yonggu Seo of Sookmyung Women’s University’s Department of Business Administration evaluated, "In e-commerce, the change is so rapid that it can be described as shifting from the passenger seat to the driver’s seat in a car," adding, "With the expansion of omnichannel services such as live commerce and online-to-offline (O4O) services, large distribution companies are feeling a sense of crisis and an internal consensus has formed that they must now face change, leading to successive transformations."
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