Lotte pushed to leave 2 major stations
4,000 people feared to lose jobs this year
The government has recently demanded Lotte close its stores at Seoul and Yeongdeungpo stations, citing the expiration of a 30-year contract with the retail giant, industry sources said Thursday.
According to the sources, the Ministry of Land, Infrastructure and Transport said possession of the two major train station stores in Seoul will be returned to the state during a meeting with businesses this week.
Hanwha has occupied Seoul Station over the past 30 years. Lotte has leased the space from Hanwha to operate its Lotte Mart outlet and Lotte Mall. The discount store and the mall have grown into one of the most beloved shopping places for tourists from China and Southeast Asia.
Lotte also won the right to operate a department store at Yeongdeungpo Station in 1987, after promising to rebuild the station. In 1991, the group opened Lotte Department Store’s Yeongdeungpo branch, which has attracted customers in southwestern Seoul.
Including 500 Lotte employees, 4,000 people work at Lotte Mart in Seoul Station and Lotte Department Store in Yeongdeungpo Station. Lotte’s tenants and subcontractors hired most of them.
As the land ministry has refused to officially confirm whether it will renew the contract or not, the workers, tenants and subcontractors have been in fear of losing their jobs when the contract expires Dec. 31.
“This is the problem of our type of living,” a Nicole Miller store owner at Lotte Mart’s Seoul Station store said. “As we are facing the problem all of a sudden, we have been confused about what to do.”
A Hang Ten store owner also said most tenants in the outlet have been anxious about the closure.
The government promised to offer guidelines in 2014, so that businesses could address concerns over uncertainty. However, a land ministry official said the government has yet to come up with any measures regarding the issue.
“The Korea Rail Network Authority requested researchers to conduct studies on various scenarios,” the official said. “The ministry will take the best measures, which can enhance welfare for citizens who use the stations.”
Retail industry officials, who have previously suffered from the uncertainty over the selection of duty free operators, complained about another ambiguous government policy. They said not only businesses but also consumers will suffer from the uncertainty.
If the stations belong to the state, the government will likely select companies to run their businesses there. In this case, the operators don’t have the possession and under the relevant law, they cannot run department stores.
Lotte Mart’s Seoul Station store will not be able to avoid a shutdown as the land ministry will also strip Hanwha of possession.
Industry officials said the new operators will not make massive investments, considering they can use the space for up to 10 years. The officials said 10 years is too short a period to recoup investment amid the rapidly changing business environment.
A Lotte Department Store official said the company is mulling various countermeasures for all scenarios, as the government has yet to confirm its official stance.
Against this backdrop, the Seoul Metropolitan Government also removed the Lotte Mart sign on the roof of Seoul Station, citing the retailer violated the regulation that bans businesses from using too much red on their signs.
Saying it is difficult to change the company’s trademark, Lotte Mart has paid a 10 million won ($8,800) fine annually. The local government replaced the Lotte sign with ones promoting Seoul Station and Seoullo 7017 overpass last month. Korea Times intern Rha Hae-sung contributed to this article.