이 기사는 2021년 09월 29일 08:07 thebell 에 표출된 기사입니다.

Lotte Department Store is offering its first-ever voluntary early retirement as part of efforts to restructure its retail business amid fast-changing business environment.

South Korea’s retail giant Lotte Shopping, which operates the department store chain, will be accepting applications from employees who have worked there for more than 20 years until October 8. Around 2,000 employees, or 40% of the total 4,700 department store chain employees, meet this qualification.

The voluntary retirement is expected to be a significant variable in operating department stores because even half of the eligible workers accounts for 20% of the total department store employees. The company, however, said the likelihood of an exodus of employees is low.

“Although there are around 2,000 employees who meet the qualification for the voluntary retirement, the actual number of applicants is expected to be much smaller than this,” said an official at Lotte Shopping. “Regarding the decrease in workforce, I understand that the human resources organization is preparing a plan to relocate internal employees.”

Lotte Shopping is carrying out an unprecedented restructuring program in a bid to revamp its workforce to make it more efficient. The company has had more than two-thirds of its total employees in traditional offline channels, which need be improved in terms of efficient allocation of human resources.

Lotte Shopping had 25,860 employees working as of June this year, of which 4,728 employees, or 21.74%, worked for the department store division and 11,900 employees, or 54.71%, worked for the discount store division. There were 5,124 employees who worked for the supermarket and e-commerce business, accounting for 23% of the total.

The company generated revenue of 5.22 trillion won ($4.41 billion) and an operating profit of 20.6 billion won in the first half on a consolidated basis from the department store, discount chain, and supermarket and e-commerce businesses. More than 80% of the total revenue came from offline channels, including department stores and discount stores, with its e-commerce division accounting for less than 20% of the total revenue. Given that the e-commerce division's revenue is less than 100 billion won, it has limited impact on the Lotte Shopping’s overall business.

The company had generated revenue by deploying its employees mainly in offline channels. This time, however, Lotte Shopping is offering its voluntary retirement in hopes to adapt to the fast-changing business environment amid the expansion of the e-commerce business.

Lotte Shopping's uniqueness is also related to the launch of the early retirement scheme. The company has carried out a strategy of opening many department stores in the Seoul metropolitan area and other provinces. According to Lotte Shopping's investor relations (IR) data for the second quarter, it had 62 department stores in Korea alone, including 27 department stores located in outlets and shopping malls.

This shows a stark contrast to its rivals Shinsegae Department Stores and Hyundai Department Stores, which have 11 and 16 department stores, respectively.

“Lotte Department Store has increased revenue by opening many small and medium-sized stores in rural areas, but I understand that the efficiency is gradually declining as the market environment changes,” said an industry source. “Lotte Shopping has its own situation in which it has no choice but to offer voluntary retirements, unlike other retail companies.”

In its voluntary retirement plan, Lotte Shopping is trying to put more focus on relocating employees instead of laying them off. After the voluntary early retirement program, the company plans to hire new employees for its e-commerce business, which will act as its new growth engine.

Earlier this year, Lotte Shopping’s discount chain accepted voluntary retirements from its employees who had worked there for more than 10 years, with only about 80 employees applying for the program. (Reporting by Hyo-beom Lee)