Lotte Group Transitions from BU to HQ System... Department Store Head Appointed from Shinsegae Background

Executive Personnel Changes on the 25th... Lotte Shopping Vice Chairman Kang Hee-tae Retires
Restructured into Four Divisions: Distribution, Chemicals, Food, and Hotels

[Asia Economy Reporter Jo In-kyung] Lotte Group is taking a drastic measure to abolish the Business Unit (BU) organization it has operated for the past four years and switch to an industry group (HQ·HeadQuarter) system. Additionally, for the first time, an external figure has been appointed as the CEO of Lotte Department Store.

According to the distribution industry on the 24th, Lotte Group will hold a board meeting on the 25th and change the operation method of dividing affiliates into four BUs?distribution, chemical, food, and hotel & service?into four HQs (distribution, chemical, food, hotel). Affiliates not included in these HQs, such as Lotte Information & Communication, Lotte Members, and Lotte Rental, will be managed separately.

This is the first time in four years since the 2017 organizational restructuring that Lotte Group is abolishing the BU system. The existing organizational structure has been criticized for having too many stages in the decision-making process of each affiliate, which lowers business execution power within the group. It is reported that Chairman Shin Dong-bin specifically instructed to improve this issue.

Accordingly, there will be significant changes in the positions of the four BU heads who previously held concurrent roles in business management. Currently, Vice Chairman Kang Hee-tae, who is both the head of the Distribution BU and CEO of Lotte Shopping, is expected to step down, taking responsibility for the continued poor performance and sluggish online business. Until now, President Lee Bong-cheol has been responsible for the Hotel & Service BU, President Kim Gyo-hyun for the Chemical BU, and President Lee Young-gu for the Food BU.

The overall management of each HQ will be handled by Lotte Holdings, as was the case under the BU system. Lotte Holdings representatives Song Yong-deok and Lee Dong-woo are expected to be reappointed.

Jung Joon-ho, CEO of Lotte GFR, is strongly rumored to be appointed as the CEO of Lotte Department Store. Jung, who comes from Shinsegae International, joined Lotte in 2018. If appointed, he will be the first external figure, not originally from Lotte, to lead Lotte Department Store.