[Asia Economy Reporter Yuri Kim] As the distribution environment rapidly shifts to an online-centered structure, major distribution companies are accelerating efforts to improve their offline operations. While restructuring their workforce through voluntary retirement programs, they are also aiming to enhance profitability by closing offline stores and renewing stores with a focus on 'experience.'
◆ Lotte Department Store's Voluntary Retirement for the First Time in 42 Years: 'Workforce Restructuring'
Lotte Department Store is implementing a voluntary retirement program targeting employees with over 20 years of service, who make up more than 40% of the total staff. Applications will be accepted for two weeks until the 8th of next month, with conditions including payment of 24 months' wages (base salary + position allowance) and a severance bonus of 30 million KRW. Additionally, up to 32 million KRW will be provided for children's education expenses.
Applicants will be granted a paid 'Restart Leave' for one month in November and will receive reemployment training for four months. Employment placement and startup support programs, career planning consulting, and financial, health, and psychological counseling programs will also be offered.
This is the first time since its founding in 1979 that Lotte Department Store is conducting a voluntary retirement program, marking 42 years since its establishment. As of the first half of this year, Lotte Department Store has approximately 4,700 regular employees, with about 2,000 having over 20 years of service. The department store explains that this decision aims to transform into a younger organization in line with changing times. As the consumption environment shifts to an online focus, offline stores are evolving by adding experience to sales, and workforce restructuring must be efficiently rebuilt to align with this trend.
The reduced workforce through voluntary retirement will be replenished with new hires. Lotte Department Store plans to select internship candidates linked to recruitment in regional areas in the second half of the year. Following about 50 interns in the first half, a similar number will be recruited in the second half, with at least 100 new hires expected this year.
Lotte Group has continued organizational flexibility through restructuring. Lotte Hi-Mart accepted voluntary retirement applications last March from employees aged 50 and over with more than 25 years of service, and in February, Lotte Mart conducted its first voluntary retirement program targeting employees with over 10 years of service in its 23-year history, resulting in about 90 employees leaving.
◆ Emart Reorganizes Specialty Store Business: "Selection and Concentration"
Emart plans to extensively reorganize its offline specialty store business by the end of this year. This includes Electromart (electronics), Mollis (pet supplies), Toy Kingdom (toys), and PK Market (premium groceries). The reorganization will involve evaluating business viability, closing stores that are individually located in places like Starfield if necessary, and opening required stores during Emart renovations.
Since CEO Kang Hee-seok took office in 2019, Emart has been continuously optimizing inefficient stores and renovating locations. Businesses such as Pierrot Shopping and Boots have been closed, and Emart stores are being renewed with a focus on strengthening groceries, reducing non-food items, and introducing experience-oriented stores like Electromart and Toy Kingdom. After the May renovation last year, which included Electromart at the Wolgye branch, customer visits increased by 32%. Emart stated, "We plan to strengthen Emart's profitability by reorganizing specialty stores based on business viability."
Meanwhile, efforts to strengthen the online sector are ongoing. In June, Emart acquired an 80% stake in eBay Korea for approximately 3.44 trillion KRW. Earlier in March, it conducted a 250 billion KRW equity swap with Naver, continuing online-offline collaboration such as launching regional specialty products through Food Window.
A regular personnel reshuffle and organizational restructuring are expected early next month. An industry insider said, "If organizational restructuring such as downsizing offline specialty stores occurs, a large-scale personnel reshuffle is likely. The movement to improve the offline structure of major distribution companies will continue for the time being."
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