[Asia Economy Reporter Jo In-kyung] The distribution industry, which has undergone a major transformation both online and offline due to COVID-19, is focusing on high-intensity restructuring and workforce optimization. Under the judgment that survival is no longer possible with the past method relying on the domestic economy, there is an analysis that this sense of crisis is driving changes to transform into a younger organization that can compete with online platforms and the global market, and respond to customers in their 20s and 30s who have emerged as the main consumers.
◆ Lotte Department Store, Following Voluntary Retirement with New Graduate Recruitment
Lotte Department Store concluded voluntary retirement for 545 employees with over 20 years of service by the end of last month, and just a week later, on the 8th, began the 2021 second half open recruitment for new university graduate employees, aiming to hire at least 100 people. The reason Lotte Department Store is not only letting go of senior employees through the largest restructuring in its history but also conducting large-scale new hiring simultaneously is because the focus is on 'generation change' rather than simple downsizing.
This reflects the heightened sense of crisis inside and outside the department store, especially after COVID-19. For several years, Lotte Shopping, including Lotte Mart and supermarkets, has struggled with poor performance, and while the distribution market rapidly shifted from offline to online during the COVID-19 pandemic, e-commerce businesses like Lotte On have fallen behind despite large investments without significant results.
A Lotte official explained, "Because there are many senior employees, there was a strong internal voice of self-reflection that the organization’s vitality was declining. The voluntary retirement was also carried out as a 'workforce rebuilding' measure to resolve serious personnel stagnation and fill those positions with younger employees."
Professor Oh Se-jo, Emeritus Professor of Business Administration at Yonsei University, said, "The distribution industry is sensitive to trends and flows, and now the business itself has become very complex and diverse, requiring multifaceted competition. With the increased uncertainty in the distribution environment after COVID-19 and the upcoming with-COVID era, they must have concluded that the current workforce structure is absolutely impossible to survive."
◆ Shinsegae and Hyundai Department Store, Recruiting External Talent and Young Professionals
The same sense of crisis applies to competitors like Shinsegae. In early last month’s regular executive board meeting, Shinsegae Group recruited many executives from outside to strengthen online business and promote new business. Both the department store and Emart divisions appointed new faces in areas such as DT (Digital Transformation), strategy, new business, and planning, demonstrating their will for change and renewal. At the same time, 14 affiliates including Shinsegae, Emart, SSG.com, and Starbucks Korea are selecting new talents through open recruitment.
Hyundai Department Store Group is also actively appointing young talent. In the group’s regular personnel announcement on the 5th, while maintaining the current president-level structure, 56 executives were promoted or transferred, with a statement to "speed up change and innovation." They also hired Park Cheol-kyu, former head of Samsung C&T’s fashion division, as president of Hansome’s overseas fashion division, marking the first time an external executive was brought in at the president level. GS Retail is also encouraging voluntary retirement among some managers with over 20 years of service, and promotions of key executives are being discussed for the year-end personnel reshuffle.
◆ "Beyond Generation Change, a Survival Strategy"
For distribution companies, workforce reorganization is not just a uniform generation change but also a survival strategy to quickly respond to the phased return to normal life (with COVID-19 era). To respond to rapidly changing consumer trends and satisfy the needs of the MZ generation (Millennials + Generation Z), which has emerged as the main consumer force, management believes young employees must take the lead.
Representative examples include Lotte Department Store’s 'Millennial Trend Table (MTT) team,' composed of employees aged 24 to 39, proposing various ideas, and GS Retail’s 'New Product Planning Team,' made up solely of MZ generation employees, leading the entire process from product planning to selection, marketing, and sales.
Professor Seo Yong-gu of Sookmyung Women’s University’s Business Administration Department pointed out, "As the share of e-commerce transactions in the distribution market rapidly increases, the boundary between distribution and IT industries has become blurred, changing the identity of the business. The workforce needed has changed according to the industry development cycle, and since the hegemony of the consumer market has shifted to young people in their 20s and 30s, the distribution industry workforce that must engage with them must also change."
Professor Oh Se-jo said, "Creating attractive brands and authentic content targeting MZ generation customers, who are sensitive to YouTube and SNS trends, can only be led by the generation that directly enjoys that culture. Amid rapid changes, it is time for each distribution company to establish new visions and strategies and fill their organizations and workforce accordingly."
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