"Young Lotte Department Store"... Starting 'Innovation to the Core' in the Second Half of the Year

Targeting Young Generations Including MZ Generation
Full Introduction of 'Young Content'
Major Point Renewal and Drastic Changes
Full-Scale Reform of Wage and Welfare Systems
Boosting Employee Morale Initiated

[Asia Economy Reporter Kim Yuri] Lotte Department Store has begun to actively implement changes to reinvent itself as a ‘young department store’ in the second half of this year. Despite the impact of COVID-19, Lotte Department Store achieved better-than-expected results in the second quarter by undertaking large-scale restructuring and organizational improvement. In the second half, it plans to drive innovation both inside and outside the organization under the slogan of becoming the ‘number one distribution hub.’

◇ "Essence, Not Just Variety"... Full Introduction of ‘Young Content’

According to the distribution industry on the 22nd, Lotte Department Store has recently begun to fully introduce ‘young content’ aimed at younger generations such as the MZ generation (Millennials + Generation Z). This is set not as just one of the department store’s assortments but as an essential direction to establish its identity as a ‘young department store.’ To this end, not only newly opened department stores but also major branches are focusing on major changes through renovations and other efforts.

Dongtan Branch, which celebrated its first anniversary on the 20th, records that customers in their 30s and 40s account for more than 70% of total sales. The average age of purchasing customers in their 30s and 40s at Dongtan Branch is also more than five years younger than the average age of similar customers across all Lotte Department Store branches. This is attributed not only to the large number of young surrounding populations such as newlyweds but also to the fact that luxury goods, fashion, beauty, and experiential spaces were originally targeted at young customers. Above all, cooperation with local communities to lead hobby groups such as running has naturally increased visits to the department store. In response, Dongtan Branch started operating the ‘MZ Hobby Crew’ from the 20th, expanding into various hobbies such as busking and dance.

Major long-established branches in Seoul are also pursuing fundamental changes through recent sequential renovations. Since March last year, the main branch has been undergoing the largest changes since its opening through renovations of the main building, AvenueL, and Young Plaza floors. While strengthening premium product lines such as overseas fashion and contemporary brands, it is also attracting customers by preemptively hosting popular restaurants and famous cafes from social media (SNS). At Jamsil Branch, new types of pop-ups leading trends are continuously being tried. Following an experiential tennis pop-up store that attracted 50,000 visitors in just three days, beauty brand experiential pop-ups such as Est?e Lauder and dessert pop-ups for ‘bread pilgrimage’ enthusiasts seeking delicious bread have been planned consecutively.

Inside WeWork in Samseong-dong, Seoul, where the Lotte Department Store Merchandise Headquarters works.

◇ "Change Starts with Employees"... Wage and Welfare System Reform

To boost the morale of employees who must lead these changes, Lotte Department Store has also begun to reform its wage and welfare systems in earnest. This month, it applied a 5% increase in base salary retroactively, and from the 1st of next month, the revised welfare system will be implemented. This includes new welfare programs rarely seen not only in the distribution industry but also across large corporations. Reflecting the recent increase in unmarried populations, Lotte Department Store decided to provide benefits similar to marriage congratulations to unmarried employees aged 40 and above. They will receive congratulatory money along with five days of paid leave and a companion plant instead of a wreath. Considering the growing number of pet owners, a ‘pet condolence’ system was newly established. To comfort employees who must hold funerals for their companion dogs or cats, one day of funeral leave is provided. The funeral leave also recognizes pets that lived with parents or others and were not cohabiting with the employee.

Additionally, for long-term employees with 10 or 15 years of service, reward vacations will be added alongside existing bonuses. Transportation expenses, previously provided only when metropolitan area residents worked in provincial areas, will also be extended to cover provincial residents working in the metropolitan area. The meal price at employee cafeterias will be raised by an average of 900 won to improve meal satisfaction.

Kim Sang-hyun, Vice Chairman and Head of the Distribution HQ, and Jeong Junho, CEO of the Department Store, have continuously emphasized ‘change starting from employees’ and organizational culture improvement since their appointments. Under the slogan ‘everywhere is my office,’ since March, every Wednesday afternoon has been designated as a day to work freely outside the office as part of organizational culture change for employees. In May, the merchandise headquarters office was relocated from the Sogong-dong headquarters to WeWork in Samseong-dong to foster a proactive work environment in a freer atmosphere. Lotte Department Store stated, “We will continue to focus on changes in the organization and stores starting with changes in employees.”

This content was produced with the assistance of AI translation services.