The retail and food sectors are increasingly adopting voluntary retirement programs to restructure their workforces. Following Emart24's decision to extend its retirement program to include mid-level managers, Lotte Hi-Mart and Lotte Chilsung Beverage have also initiated similar programs. This trend reflects a broader effort to enhance operational efficiency amid declining consumer spending and changing market conditions.
According to industry sources, Lotte Hi-Mart announced its voluntary retirement program to employees on November 5, marking its first such initiative in four years. The application period runs from November 9 to 18. Employees aged 50 and older can receive up to 30 months' worth of base salary, while those under 50 can receive up to 24 months' worth. Additionally, the company will provide a reemployment support fund equivalent to three months' salary and educational assistance for employees' college-age children.
Despite a recovery in sales, Lotte Hi-Mart continues to struggle with profitability. In the third quarter of this year, the company reported sales of 654.5 billion won, marking an increase for the first time in five quarters. However, operating profit fell to 5.5 billion won, a 70.9% decrease. Cumulative operating profit for the first three quarters shifted from a profit of 18.4 billion won last year to a loss of 8.4 billion won this year, impacted by reduced demand for large appliances.
Emart24 began accepting applications for its voluntary retirement program, termed 'Career Renewal,' from October 28 to November 4. Initially launched in December for senior managers, the program has now expanded to include mid-level managers. Participants can choose between career redesign assistance or support for opening an Emart24 store. Those opting for career redesign will receive a special retirement payment of up to 24 months' salary in addition to their legal severance pay, while store founders can receive up to 12 months' worth of special retirement pay and startup costs.
Lotte Chilsung Beverage announced on November 2 that it would implement its second voluntary retirement program since 2025, targeting employees born before the end of 1981 or those with over ten years of service. Eligible employees will receive a severance payment based on their length of service, ranging from 20 to 24 months' salary, along with reemployment support. This move is seen as a strategy to enhance operational efficiency amid a shrinking domestic liquor market and rising cost pressures.
Even companies with improved performance are not exempt from this trend. Lotte Department Store implemented its first voluntary retirement program in five years in September, offering 40 months' worth of base salary and reemployment support to employees with over 20 years of service. The company plans to continue hiring new staff alongside this initiative.
In the third quarter of this year, Lotte Department Store reported sales of 808.1 billion won, a 5.7% increase from the same period last year, with operating profit rising by 35.7% to 112.9 billion won. Despite these positive results, the department store is restructuring its workforce to streamline operations and attract new talent, contrasting with Lotte Hi-Mart's focus on addressing declining profitability.
An industry insider noted, “While the reasons for voluntary retirement programs vary by company, they all share common challenges related to managing fixed costs like labor and improving organizational efficiency. However, the short-term financial burden of severance payments and the potential loss of skilled workers raise questions about whether these workforce restructurings will lead to actual productivity gains.”
* This article has been translated by AI.
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