Outside Director Lineup
Lotte Shopping Fills Board with AI Experts: A Signal of Strategic Transformation?

[비즈한국] The composition of corporate boards is changing. There is a clear trend of replacing outside directors, once criticized as mere "rubber stamps" for major shareholders, with hands-on experts. This shifted lineup serves as a clear indicator of a company’s future direction and its current crises. BizHankook examines the changes in the outside director lineups of major companies and provides an in-depth analysis of their future blueprints and underlying intentions.

AI and Branding Experts Replace Professors and Bureaucrats

Lotte Shopping held its 56th Annual General Meeting of Shareholders at the Lotte Retail Academy in Yeongdeungpo-gu, Seoul, on the 20th. All six agenda items, including the appointment of new directors and changes to the articles of incorporation, were passed as proposed. The two newly appointed outside directors are Woo Mi-young, an internal business trainer at Amazon Web Services (AWS), and Park Se-hoon, an advisor at Morgan Stanley.

Outside Director Woo Mi-young is an expert in the digital and AI sectors with experience at various global IT companies. Born in 1967, she served as the Asia and Korea country manager for Dell Software, vice president of the Enterprise division at Microsoft Korea, and CEO of Adobe Korea. Since 2022, she has been working as an internal business trainer at AWS, supporting companies in their digital transformation and the strengthening of their AI utilization capabilities.

Outside Director Park Se-hoon is a branding expert with a career spanning domestic retail and financial marketing. Born in 1967, he worked as a consultant at McKinsey before becoming the marketing division head at Hyundai Card, where he collaborated with Hyundai Card Vice Chairman Ted Chung to launch the "M Card" series. Later, in his early 40s, he became the CEO of Hanwha Galleria452260, where he demonstrated his influence by leading the renewal of the Apgujeong luxury hall. Recently, he has been credited with adding a financial perspective through his work as an advisor at the global investment bank (IB) Morgan Stanley.

Last year, Lotte Shopping’s board of outside directors included Shim Soo-ok (Professor at Sungkyunkwan University Graduate School of Business), Cho Sang-chul (Attorney at Bae, Kim & Lee), Han Jae-yeon (Chairman of BnH Tax Accounting), as well as Cho Hyun-geun (CEO of Pulmuone Waters), Hiroyuki Kanai (CEO of Tokiwa Corporation), and Jung Chang-gook (CFO of Ecobit). The structure was balanced with high-ranking officials from the prosecution and the National Tax Service, executives from global consumer goods companies, and financial experts. This composition was considered a typical stable board focused on risk management in legal, tax, and financial areas.

The atmosphere has changed this year. With the expiration of the terms of three outside directors—Shim Soo-ok, Cho Sang-chul, and Han Jae-yeon—the positions have been filled by new faces. The addition of Director Woo marks the first time that IT and AI expertise, previously absent, has been represented on the board, while Director Park is credited with strengthening brand strategy and customer experience innovation. While the previous board focused on risk management, the recent reshuffle is interpreted as shifting the center of gravity toward business transformation and growth strategy.

Clear Limitations of Traditional Retail, New Strategy Seeking Intensifies

Such changes are not unrelated to the reality faced by Lotte Shopping. Lotte Shopping has been experiencing a prolonged downward trend in sales. Last year's revenue was approximately 13.7384 trillion won, down from 13.9866 trillion won in 2024 and 14.5559 trillion won in 2023. In particular, the sluggishness in the Mart and Super division (approximately 38%), which accounts for the largest share of revenue among all business groups, continues. Last year, sales in the Mart and Super division were approximately 5.1513 trillion won, a decrease from the previous year, and the operating profit also turned from a surplus to a deficit.

As Lotte Shopping’s core businesses, such as department stores and marts, have reached a mature stage, expanding their scale is not easy. Although the company continues to invest in the online sector, the results have fallen short of expectations. "Lotte ON," which Lotte Shopping has cultivated as an integrated platform, is considered to have failed to secure a clear competitive edge in the e-commerce market. Currently, the e-commerce business unit accounts for only about 1% of total revenue and has been in deficit since its performance disclosure in 2019.

The industry interprets this change in the outside director composition as a sign of Lotte Shopping’s heightened sense of crisis. The decision to include IT/AI experts on the board for the first time and recruit a brand strategist simultaneously suggests a judgment that a breakthrough is difficult to achieve using existing methods.

A notable aspect is that the board composition itself has effectively been reorganized around hands-on professionals. Including Directors Woo Mi-young and Park Se-hoon, all five outside directors—also including Cho Hyun-geun, Hiroyuki Kanai, and Jung Chang-gook—share the commonality of having experienced management and strategy in the corporate field. This is interpreted as an intention to derive more realistic strategic discussions and actionable alternatives by placing individuals with actual business operating experience at the forefront.

Another point of note is that most of them are not from traditional retail backgrounds. The board has been reorganized into a structure that weighs data, branding, global business, and financial capabilities more heavily than retail operations experience. This reveals that Lotte Shopping is contemplating a new strategy rather than sticking to traditional retail methods.

Lotte Shopping has previously announced a strategy to make this year a turning point for growth. Kim Won-jae, CEO of Lotte Shopping, stated at the shareholders' meeting on the 20th, "We intend to make 2026 a crucial turning point for strengthening business competitiveness and establishing a foundation for sustainable growth," adding, "We will make endless efforts to discover new future growth engines while simultaneously improving profitability.".