‘Three Chairmen Under One Roof...’ Under General Chairman Lee Myung-hee, Chung Yong-jin of ‘E-Mart’ and Chung Yoo-kyung of ‘Shinsegae’

[Korea Financial Times, Park seulgi] Three Chairmen, ‘New’ Shinsegae. Shinsegae General President Chung Yoo-kyung has been promoted to chairman of Shinsegae Corporation. This completes the three-chairmen system, with Shinsegae General Chairman Lee Myung-hee, Chairman Chung Yong-jin in charge of E-Mart, and Chairman Chung Yoo-kyung in charge of Shinsegae Department Store. Going forward, Shinsegae Group will strengthen its competitiveness by separating the department store and e-mart divisions.

On the 30th, Shinsegae Group announced, ‘General President Chung Yoo-kyung will be promoted to chairman of Shinsegae.’ The company explained that the move was made to strengthen responsible management and lay the foundation for the separation of affiliates.

With this appointment, Shinsegae Group will be reorganised from its previous system centred on Chairman Chung Yong-jin to a two-axis system centred on department stores and E-mart. The strategy is to enhance the competitiveness of each company and draw synergies from them.

‘This year, as the successful turnaround in terms of strengthening profitability by restoring competitiveness in the main business is becoming visible, we decided it was the right time to start the separation, which has been under the water,’ the company said.

◆ Chung Yoo-kyung to skip vice chairman and become chairman...to lead Shinsegae

With this appointment, Chung Yoo-kyung skipped the vice chairman position and became chairman. From a ‘reclusive executive’ to a ‘hot’ chairman in no time.

Since being promoted to general manager in December 2015, Chung has focused on securing the competitiveness of the department store business. Last year, she led the department store division to double its sales and profits compared to 2016.

‘We need to clearly set business performance targets and rally the organisation's capabilities,’ she said. He ordered employees to ponder and analyse deeply to set clear goals and execute them quickly. In particular, the ‘Landmark Strategy’ for the first store in each region has been successful.

The ‘Landmark Strategy’ aims to develop a dominant No. 1 store in each local shopping district, and focused on building a representative department store in each shopping district, centred on Shinsegae Gangnam, Centum City, Daegu, Daejeon, and Gwangju. As a result, Shinsegae Gangnam became the first department store in Korea to achieve the ‘3 trillion won club’ in annual transaction value, and Centum City, the world's largest department store, became the first department store outside the Seoul metropolitan area to exceed KRW 2 trillion. This year, it is expected to rank third in Korea in terms of transaction value.

Department stores in Daegu, Daejeon, Gwangju, and other commercial centres also saw sales and profits more than double from 2016.

Chairman Chung Yoo-kyung also worked to enhance Shinsegae's brand value. In the fashion sector, she introduced Korea's first editorial shop ‘Wunder Shop’ to introduce cutting-edge fashion, art, and culture, serving as an incubator for new brands.

It also established the Shinsegae Korean Food Research Institute as an investment to improve the quality of food culture. In addition to this, the company has endeavoured to improve the cultural discernment and level of the regions entering Shinsegae through art, art and cultural management.

Chairman Chung Yoo-kyung plans to create an infrastructure for future vision and growth. To this end, Shinsegae International will open up domestic and overseas luxury markets and lay the foundation for globalisation with its own brand development business in fashion, beauty, and lifestyle. It will also build a portfolio to secure various targets, including the acquisition of global luxury cosmetics Swiss Perfection, Poiret and premium herbal cosmetics, and Amuse.


◆ ‘Separately and together’...Shinsegae Group begins new ‘brother and sister management’

In 2011, General Chairman Lee Myung-hee split E-Mart and department stores into two companies and established a ‘brother-sister management’ system, with Chairman Chung Yong-jin in charge of E-Mart and Chairman Chung Yoo-kyung in charge of department stores. Since then, Shinsegae has been preparing for the separation by creating a department store division and an e-mart division in 2019 so that Shinsegae and E-Mart can act as de facto holding companies. Lee Myung-hee remains the head of Shinsegae Group as group chairman.

In 2020, General Chairman Lee transferred 8.22% of his shares in both E-Mart and Shinsegae to Chung Yong-jin (then vice chairman) and Chung Yoo-kyung (then executive president). This gave Chairman Chung Yong-jin 18.55% of E-Mart's shares and Chairman Chung Yoo-kyung 18.56% of Shinsegae's shares, making her the largest shareholder of E-Mart and Shinsegae, respectively. Lee holds a 10% stake in both E-Mart and Shinsegae.

E-Mart's major affiliates, of which Chairman Chung Yong-jin is the largest shareholder, include SSG.com, G-market, SCK Company (Starbucks), E-Mart 24, Shinsegae Properties (Starfield), Shinsegae Food, and Chosun Hotels & Resorts. Shinsegae, of which Chairman Chung Yoo-kyung is the largest shareholder, is engaged in the department store business and includes Shinsegae DF (duty-free shop), Shinsegae International (fashion and beauty), Shinsegae Central City, Shinsegae Casa, and Shinsegae Live Shopping.

In March this year, Chairman Chung Yong-jin was promoted from vice chairman to chairman after 18 years. This is likely due to the fact that E-Mart lost money for the first time in its history last year and decided that it needed to make quick decisions through strong leadership.

Since his promotion, Chairman Chung Yong-jin has cut off all his favourite social media and golfing activities and has been working around the clock to revive the crisis-hit group. In March, E-Mart held the first voluntary retirement for its employees since its founding, while also merging with E-Mart Everyday. In addition, the company reportedly banned employees from playing golf using company money and minimised the use of corporate cards by executives to reduce unnecessary spending.

As a result of these efforts, E-Mart posted sales of KRW 14.26 trillion in the first half of this year. This was down 1.0 per cent from the same period a year earlier, but it was said to have fared well in a difficult business environment. Operating profit for the same period was KRW 12.5 billion, an increase of KRW 51.9 billion.

Shinsegae Group hopes that the promotion of Chairman Chung Yoo-kyung will further strengthen the competitiveness of its department store business.

‘We will seek new growth centred on the two pillars of department stores and Imatra,’ the company said, adding, ’Starting with this appointment, we plan to gather the group's capabilities to ensure a smooth separation of the divisions in the future.’

Park seulgi (seulgi@fntimes.com)