[Exclusive] Hansem's New Director is a Lotte Executive... "Furniture + Home Appliances Synergy"

Lee Hoseol, Executive Director of Lotte Distribution HQ, Joins Hanssem Board
"Collaboration Synergy Between the Two Companies Expected to Increase"
Strengthening B2C Business Using Lotte's Distribution Channels

An executive from Lotte's distribution division will join the board of directors of Hanssem. Following Lotte's equity investment in Hanssem in 2021, collaboration between the two companies has expanded, and this appointment is expected to further advance the structure of their cooperation.

According to the furniture and distribution industry on the 26th, Hanssem plans to approve the agenda to appoint Lee Hoseol, Executive Director of Lotte Distribution HQ's Business Strategy Division, as an outside director at the regular shareholders' meeting scheduled for the 21st of next month. Hanssem stated, "To enhance the synergy of collaboration between Hanssem and Lotte Group, we recommended Executive Director Lee as a candidate for outside director based on the board's decision."

Lotte Hi-Mart Hanssem Gwanggyo Branch. Provided by Lotte Hi-Mart

If Executive Director Lee is newly appointed as a director, he will participate in Hanssem's board while maintaining his duties at Lotte. However, Hanssem has introduced an executive officer system that prevents the board from directly intervening in management. Therefore, it is analyzed that Lee's joining the board will not lead to Lotte's direct involvement in Hanssem's management.

The cooperation between the two companies began in earnest when Lotte, together with IMM Private Equity (PE), acquired shares in Hanssem. At that time, Lotte Shopping and Lotte Himart invested 259.5 billion KRW and 50 billion KRW respectively in a special purpose company (SPC) established by IMM PE. Lotte explained, "We did not acquire management rights directly but made a simple financial investment," adding, "Participation in the board is to strengthen synergy between businesses."

Hanssem is expanding offline stores in department stores, marts, outlets, etc., by utilizing Lotte's distribution network and is also strengthening online promotions. In 2023, Lotte Shopping linked its online platform Lotte ON with Hanssem Mall to launch a delivery service that allows customers to specify the arrival date when purchasing Hanssem products.

They are actively cooperating with Lotte Himart through a 'shop-in-shop' strategy. In July last year, they opened the Lotte Himart Hanssem Gwanggyo store, a home appliance and furniture specialized store, at Hanssem Design Park Suwon Gwanggyo branch, and in November of the same year, they established a Hanssem furniture corner at Lotte Himart Incheon Juan branch.

A Lotte Himart official said, "There is a high demand for purchasing furniture and home appliances simultaneously as the purchase timing is similar," adding, "If this trend continues, furniture and home appliance stores will inevitably expand."

Industry insiders expect Lotte to further strengthen cooperation with Hanssem considering market competition with rivals. While Shinsegae Group operates Casamia and Hyundai Department Store Group runs Livart, Lotte has chosen a strategy to expand its market presence through cooperation with Hanssem without having its own furniture brand.

Hanssem also plans to grow its core B2C (business-to-consumer) business by utilizing Lotte Group's distribution network. In the fourth quarter of last year, sales of key product lines such as kitchens, storage, and hotel beds turned upward, improving profitability. Although Hanssem temporarily lost the top position in the furniture industry to Hyundai Livart, which benefited from a strong B2B (business-to-business) business last year, it maintained the number one spot on an annual basis.

A Hanssem official said, "We plan to continuously expand touchpoints with consumers by utilizing various distribution channels such as our own mall, partner malls, and offline stores," adding, "Growth in the B2C sector will further solidify performance improvement."