[BizHanKook] Shinsegae Group has replaced the CEO of SSG.com once again as part of its 2027 annual executive reshuffle. Despite changing leadership every year to revitalize management, SSG.com has yet to show a clear recovery in performance. In this reshuffle, Shinsegae has introduced a joint-CEO system for E-mart and SSG.com to strengthen collaboration. However, as previous attempts at this structure failed to produce significant results, questions are being raised about the effectiveness of this new appointment.
Repeated Management Changes Due to Poor Performance
On the 23rd, Shinsegae Group announced its 2027 annual executive reshuffle. Chairman Chung Yong-jin is stepping into direct management of key affiliates, taking on the role of CEO at E-mart in addition to his position at Shinsegae Property. This follows his June commitment to strengthen responsible management.
Alongside Chairman Chung's increased involvement, leadership at major affiliates has also shifted. Most notable is the change at SSG.com. Shinsegae Group has appointed Kim Hong-keuk, CEO of Shinsegae Casa, as the new CEO of both E-mart and SSG.com. Kim will manage SSG.com while simultaneously serving as a co-CEO with Chairman Chung at E-mart.
With this move, SSG.com is seeing yet another CEO replacement after about a year. Choi Taek-won, who was appointed as SSG.com CEO in September last year, is moving to head the Group Management Strategy Office's management support division.
SSG.com has faced a series of CEO changes in recent years. In March 2023, a co-CEO system with Kang Hee-suk and Lee In-young was introduced, but it shifted to a sole-CEO system under Lee In-young after Kang stepped down that September. However, Lee was dismissed in June 2024, just about nine months into his sole tenure. His total time in office was approximately one year and three months.
His successor, Choi Hoon-hak, did not stay long either. He was replaced by Choi Taek-won last September, about 15 months after his appointment in June 2024. With this latest reshuffle, Choi Taek-won is also stepping down after only 13 months.
The frequent changes are attributed to poor performance. SSG.com's revenue fell from 1.6784 trillion won in 2023 to 1.5754 trillion won in 2024, and dropped further to 1.347 trillion won last year. This represents a decline of about 20% over two years. Operating losses narrowed from 103 billion won in 2023 to 72.6 billion won in 2024, but widened back to 117.8 billion won last year. The company also recorded a net loss of 99.6 billion won last year.
Poor performance has continued this year. SSG.com's revenue for the first half of the year was 633.1 billion won, down 10.5% year-on-year. Operating losses reached 51.4 billion won, an increase of 2.3 billion won compared to the same period last year (49.1 billion won). However, the operating loss for the second quarter was 29.5 billion won, a 1.5 billion won improvement compared to the same period last year, showing a slight reduction in the deficit.
An SSG.com official stated, "Since the beginning of this year, SSG.com has been pushing to restructure its business to focus on core operations and increase profitability. We plan to continue concentrating on strengthening the competitiveness of our core business and improving profitability."
Can 'Troubleshooter' Kim Hong-keuk Create Synergy with E-mart?
The new head of SSG.com, Kim Hong-keuk, is known as a "troubleshooter" within Shinsegae Group. After being appointed CEO of Shinsegae TV Shopping—which had recorded deficits for four consecutive years since its launch in late 2018—he led the company to a profit turnaround in 2020. In 2022, he took over Shinsegae Casa, which had an operating loss of 27.7 billion won, and successfully returned it to profitability by 2024. His track record of turning around struggling affiliates is believed to have influenced this appointment.
Shinsegae Group intends for Kim to manage both E-mart and SSG.com to strengthen collaboration between the two. The goal is to enhance the competitiveness of their online grocery business by combining E-mart’s product competitiveness with SSG.com’s online sales and delivery capabilities.
Shinsegae Group has consistently emphasized collaboration between E-mart and SSG.com. The same reason was cited in 2020 when then-E-mart CEO Kang Hee-suk was appointed to concurrently lead SSG.com. At the time, Shinsegae Group explained, "With a joint CEO, E-mart and SSG.com will think and act in an integrated manner online and offline, significantly strengthening synergies."
However, results were minimal. During former CEO Kang’s tenure, SSG.com expanded delivery capabilities and increased revenue, but could not escape the deficit. Although Kang announced 2023 as the first year for structural profitability improvements, he stepped down in September of that same year without achieving a turnaround.
Some analysts suggest that under Kim Hong-keuk's leadership, the direction of collaboration between E-mart and SSG.com may differ from the past. While the Kang era focused on using E-mart stores as delivery hubs to expand online business, this new strategy is expected to focus on restructuring SSG.com as an "Online E-mart."
SSG.com is shifting its business structure to focus on the online grocery market. In August, the board approved a spin-off of its lifestyle division; in December, the fashion, beauty, and lifestyle businesses will be separated into a new entity, Shinsegae Mall (tentative name).
An SSG.com official said, "By establishing independent decision-making and management systems tailored to the characteristics and growth strategies of each business, we aim to focus more on core operations and respond quickly and flexibly to the rapidly changing market environment. After the split, the surviving entity, SSG.com, will concentrate on strengthening the competitiveness of existing commerce businesses, including grocery-centered online shopping, while the new entity, Shinsegae Mall, will be elevated into a premium e-commerce platform."
There are also suggestions that SSG.com needs to define its role more clearly following the split. Lee Jong-woo, a professor of retail marketing at Namseoul University, pointed out, "Shinsegae Group has multiple online shopping malls, but it is not clearly defined what role each should play. SSG.com also initially pursued an omni-channel strategy connecting online and offline, but did not achieve the expected results. This time, they must first clarify exactly what role SSG.com will play."