South Korean retail giant Shinsegae Group conducted a large-scale, earlier-than-usual personnel shakeup following its flagging business showings and losing race against fast-growing retail powerhouses such as Coupang.
Via an executive appointment conducted a month ahead of its usual timing, 9 out of 25 of Shinsegae Group's chief executive officers, or some 40 percent, were replaced.
The reshuffle was made in accordance with Shinsegae Group's new system personnel management system dubbed the "integrated CEO system," in which the group aimed to consolidate organizational capabilities by having one CEO be responsible for the operation of multiple subsidiaries within a closely related business group.
Kang Hee-seok, the former CEO of E-mart -- the nation’s largest discount store chain owned by Shinsegae Group -- was replaced with Han Chae-yang, the former CEO of Chosun Hotel & Resort.
Under the new system, Han's responsibilities will now not only be limited to managing E-mart but will also include heading all of Shinsegae Group's offline retail operations, such as E-mart Everyday and E-mart 24.
CEO of Shinsegae Central City Park Ju-hyung was newly appointed to serve concurrently as the CEO of Shinsegae, the group's holdings company, while CEO of Shinsegae Food Song Hyun-suk was assigned to serve simultaneously as the CEO of Shinsegae L&B. According to the new system, Song will now assume the role of supervising the group's entire food and beverage business.
CEO of Shinsegae Property Im Young-rok was further anointed with the title of CEO of Chosun Hotels & Resort. He will now head the group's real estate development business.
Meanwhile, Lee In-young, CEO of SSG.com, and Chun Hang-il, CEO of Gmarket, were cleared to continue to serve as the heads of each company.
"(Shinsegae Group) has made bold, innovative personnel changes to fundamentally reform and strengthen the competitiveness of the organization, create new results and maximize synergy," said an official from Shinsegae.
"(Shinsegae Group) will continue to strengthen the group's future preparations by initiating performance-based personnel management," he added.
The major personnel reshuffle comes as Shinsegae Group has recently been grappling with lackluster financial results.
In the first half of 2023, Shinsegae's cumulative sales and operating profits suffered on-year decreases of 13.8 percent and 14 percent, respectively, to log 3.1 trillion won ($2.3 billion) and 302 billion won, respectively.
In addition, for the first time, the quarterly sales of Shinsegae's major retail subsidiary, E-mart, were outpaced by those of Coupang during the first quarter, on a consolidated basis. During the period, Coupang logged 7.6 trillion won in sales, while E-mart logged 7.1 trillion won.
"Shinsegae, as with other retail companies, has been suffering from slowed consumption amid the slowdown in the economy. It has also conducted a slew of large-scale mergers and acquisitions since 2021. Shinsegae is currently under pressure to show synergy between the existing and new businesses as soon as possible, and improve its financial results," said an industry official on the condition of anonymity.
"By speedily replacing the heads of its major subsidiaries, it is possible that the group is aiming to quickly prepare for next year's business," they said.