2009 Sustainability Report PDF

2009 Sustainability Report
2009 Sustainability Report

Respect for human beings,
environment-friendly and affluent cultural activities.
This is the future Lotte pursues.
1 Sogong-dong, Joong-gu, Seoul, 100-721 Korea Tel 02∙771∙2500

Readers’Guide
1. Guidelines for Preparation of the 2009 Report

This report was prepared under the Sustainability Reporting Guidelines by Global Reporting Initiative (G3). This report includes all G3 profile notices,
and covers the public notices of management methods by the index class and G3 key performance indicators (KPI) according to the principle of
significance to the fullest possible extent.
2. Content and Scope of the 2009 Report

This report contains the entire range of the economic, environmental, and social perspectives of Lotte Department Store. The contents of this
report are applicable to the head office and 29 branches (including Young Plaza and Outlet) of Lotte Department Store. Included among the 29
branches, as announced, are Star City, Outlet in Kwangju, and Outlet in Kimhae opened in 2008. However, it is announced that Lotte Department
Store, as the subsidiary company of Lotte Shopping Co. Ltd., has adopted the guidelines used by Lotte Shopping Co. Ltd., for the company overview,
IPO related matters and financial affairs related matters, while some part of overseas activities is included as well.
3. Applicable Period of the 2009 Report

This report covers the period from January 1st 2008 through December 31st 2008, and includes part of sustainability management activities
executed in the first half of 2009 according tothe going concern principle. For this reason, this report is titled “2009 Sustainability Report.”
Regarding the numerical values and graphs, the trend can be analyzed by basically suggesting the prior three-year data. For reference purposes, it
is announced that the preceding Lotte Department Store’s Sustainability Report is the “2007 Report.”
4. Verification of the 2009 Report

All information contained in this report was verified by Solability, an independent outside inspection agency, and the verification results are included
in the inspection statement of a third party.
Additional information on the 2009 report

For any further information or details about this report, please contact the following.
CSR, Management planning team, Planning division, Lotte Department Store

ㆍAddress : #17th Floor, Lotte shopping center building 1 Sogong-dong, Jung-gu Seoul, Korea
ㆍPhone : 02-2118-2030~3
ㆍFax : 02-2118-2280
ㆍEmail : aoii@lotteshopping.com
ㆍWeb : www.lotteshopping.com, www.lottegreen.co.kr
03_ Lotte Department Store’s Management 43_ UN Global Compact
Lotte Department Store Philosophy 44_ Status of Employees
Sustainability 04_ CEO’ s message 45_ Developing Talent and Competence
05_ Corporate Overview Think 49_ Performance-based Incentive Program
Management 06_ Organization Management 50_ Respecting Employee Rights
Society
07_ Corporate Governance 52_ Work & Life Balance
09_ Ethical Management 53_ Open Management through Communication
11_ Analysis of Market Environment 54_ A Win-Win Labor-Management Relationship
12_ Brand Competitiveness 55_ Partnership Management
13_ Participation of Stakeholders 57_ Self-Compliance withFair Trade Regulations
15_ Risk Management 59_ Social Contribution Activities
17_ Status of Sustainability Management 65_ Together with Local Communities
71_ Environmental Value Management

21_ Economic Performance Index
73_ Green Company
22_ Becoming the Top Global Distribution
76_ Green Partnership
Enterprise
Think 77_ Green Product
25_ Business Diversification Strategy Think
Economy 79_ Green Campaign
27_ Management Innovation Activities
Environment 82_ Execution Results of Lotte Green Fund
83_ Key Data of Environmental Management
31_ Realization of Value MD

85_ Inspection Statement of a Third Party
33_ Customer-centric Management
87_ GRI INDEX
35_ Competitive Quality of Service
36_ Communication with Customers
Think
37_ Product Safety Control APPENDIX
Customer 39_ Customer Information Protection
40_ Safe and Pleasant Shopping Environment
2009
Sustainability Report
■■
Management Philosophy of Lotte Department Store
■■ 2009 Sustainability Report
Management Philosophy
Company Motto: Customers are the owner of our company
Management Goals: The 21st century world-class distribution enterprise pursuing respect for all mankind,
eco-friendliness, and cultural life
Mission: - Contribute to economic development of our society through righteous management
- Increase quality of life through superior products and services
- Create a corporate culture with mutual aid and growth
Working Attitude: Work with customer-centric thinking and Act with passion
Slogan Always with you _ Always with our customers
2009 Catchphrase : START 2009
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CEO’message
Sustainability Management
CEO’s message
We will be the global top-ranked
distribution enterprise with fulfillment
of social responsibility.
Lotte Department Store set the management goal of making all stakeholders enjoy a better
quality of life, and has made every effort to achieve healthy corporate growth with righteous
management.
This year is the year with the profound meaning as the 30th founding anniversary of Lotte
Department Store. Lotte Department Store, leading the advancement of Korean distribution
industry through continuing change and innovation, is starting to take the leap to the global
top-ranked distribution enterprise beyond the domestic territory. In defining‘the global top-
ranked distribution enterprise’which we pursue, it is the company, based on sustainable
management strategies, coming to maturity and fulfilling social responsibility, where everyone
wants to join to work, in other words it is to become‘an esteemed enterprise.’
To accomplish these visions, Lotte Department Store will focus attention on the requests of all
stakeholders including customers, employees, cooperative firms, shareholders, local
communities, and government, and will fulfill our corporate responsibility faithfully.
In the early this year, Lotte Department Storeas the first domestic distribution enterprise was
placed on the list of Dow Jones Sustainability Asia/Pacific Index (DJSI). It is the initial indication
that the sustainability management achievements of our company have won recognition in the
global standard evaluation criteria. Lotte Department Store is taking one step further to be a
global top-ranked distribution enterprise by putting our corporate-level resources and
capabilities on sound and sustainable management. We will be a role model in sustainability
management of distribution business through sincere fulfillment of social responsibility, and
make every effort to be an enterprise with respect and recognition worldwide.
Thank you.
August 2009
CEO of Lotte Shopping Co., Ltd.
President Chul-Woo Lee
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Corporate Profile
Company Overview
Company Name: Lotte Shopping Co., Ltd. (Lotte Department Store is a business division of
Lotte Shopping Co. Ltd.)
Foundation Date: November 15th 1979
Address: 1 Sogong-dong, Jung-gu, Seoul, Korea
Business Area: Large scale retail trade
Key Products: Clothing, Miscellaneous Goods, Housewares, Sporting Goods, Children’ s Goods,
Food, etc.
Capital: KRW 145.2 billion (Lotte Shopping Co.,Ltd., as of December 2008)
Number of Employees: 6,004 (full-time, and non-regular workers at Lotte Department Store)
Number of Stores: 29 (including Young Plaza and Outlets)
Store Status
Lotte Department Store opened its 19,000 square meter main store in Sogong-dong in December 1979. Since then, Lotte Department Store
has founded and is currently operating 25 department stores, 2 Young Plaza, and 2 Outlets with a total store area of 800,000 square meters.
[Key Status by Stores] - As of December 2008
(Unit: persons, m2, # of vehicles)
Number of
Number of
employees
Branch Location OpeningDate customers Store Area Available Parking
(including
per day
co-workers)
Main Sogong-dong, Jung-gu, Seoul 1979.12.17 5,716 106,301 64,982 2,702
Jamsil Jamsil-dong, Songpa-gu, Seoul 1988.11.12 3,770 54,593 49,108 4,087
Yeongdeungpo Yeongdeungpo-dong, Yeongdeungpo-gu, Seoul 1991.05.04 2,548 21,166 32,445 1,206
Cheongnyangni Jeonnong-dong, Dongdaemun-gu, Seoul 1994.03.18 1,420 26,000 16,324 345
Busan Main Bujeon-dong, Busanjin-gu, Busan 1995.12.08 4,339 55,563 46,416 2,629
Gwanak Bongcheon-dong, Gwanak-gu, Seoul 1997.10.31 1,216 11,000 21,712 592
Gwangju Daein-dong, Dong-gu, Gwangju 1998.09.18 2,184 21,374 28,430 1,448
Bundang Sunae-dong, Bundang-gu, Seongnam-si, Gyeonggi-do 1999.04.01 1,890 16,671 27,875 1,318
Bupyeong Bupyeong-dong, Bupyeong-gu, Incheon 1999.08.27 1,252 9,880 15,481 540
Ilsan Janghang-dong, Ilsan-gu, Goyang-si, Gyeonggi-do 1999.10.15 1,966 14,295 26,632 884
Daejon Goejeong-dong, Seo-gu, Daejon 2000.03.17 2,046 19,467 31,700 1,447
Gangnam Daechi-dong, Gangnam-gu, Seoul 2000.06.16 1,794 25,988 26,099 641
Pohang Haksan-dong, Buk-gu, Pohang-si, Gyeongbuk 2000.12.08 1,490 10,075 20,992 840
Ulsan Samsan-dong, Nam-gu, Ulsan 2001.08.24 1,909 29,519 30,803 1,446
Dongnae Oncheon-dong, Dongnae-gu, Busan 2001.11.02 1,966 17,717 31,041 1,678
Changwon Sangnam-dong, Chanwon-si, Gyeongsangnam-do 2002.02.28 2,126 21,200 26,096 1,053
Anyang Anyang-dong, Anyang-si, Gyeonggi-do 2002.05.10 1,724 20,000 24,506 800
Incheon Guwol-dong, Namdong-gu, Incheon 2002.08.23 1,709 21,410 32,576 753
Nowon Sanggye-dong, Nowon-gu, Seoul 2002.09.03 2,979 44,580 33,630 1,073
Daegu Chilseong-dong, Buk-gu, Daegu 2003.02.27 2,477 23,613 33,854 1,055
Sangin Sangin-dong, Dalseo-gu, Daegu 2004.02.20 1,606 9,196 22,347 635
Jeonju Seosin-dong, Wansan-gu, Jeonju-si, Jeonbuk 2004.05.28 1,985 19,599 23,262 882
Mia Mia-dong, Gangbuk-gu, Seoul 2006.12.20 1,692 18,775 27,240 552
Centum City U-dong, Haeundae-gu, Busan 2007.12.07 1,917 14,294 32,911 1,279
Star City Jayang-dong, Gwangjin-gu, Seoul 2008.10.30 1,120 15,000 25,410 629
Young Plaza Daegu Sail-dong, Jung-gu, Daegu 2007.08.22 379 2,590 7,200 92
Young Plaza Cheong Ju Nammunno 2-ga, Sangdang-gu, Cheongju-si 2007.02.23 420 3,900 6,221 192
Gwangju Outlet Pungam-dong, Seo-gu, Gwangju 2008.10.24 730 21,760 17,554 1,305
Tourism and Exhibition District, Jangyu-
Gimhae Outlet 2008.12.17 824 10,451 26,843 2,000
myeon, Gimhae-si, Gyeongsangnam-do
Total 57,194 685,977 809,689 34,103
* Number of co-workers has been included in the employees per branch in consideration of creation of local employment
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Organization Management
01
Lotte Department Store Organization Management
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Corporate Governance
Establishment of a Transparent and Reliable Corporate Governance Structure

Lotte Shopping Co., Ltd., which was listed simultaneously in Seoul and London in 2006, is striving to establish world class corporate governance that is both
transparent and sound. Lotte Shopping board of directors is currently comprised of a total of 11 people including 6 non-standing directors (NSD). The board of
directors manages the auditing committee responsible for auditing works within the board of directors and the NSD recommendation committee.
Directors are comprised of 4 CEOs including president and CEO Chul-Woo Lee and 1 standing director. Non-standing directors are comprised of former 6 persons
including Lotte Group staff Jeon-Woong Kang, Professor Sung-Kyu Sohn of Yonsei University, President Seung-Hee Jwa of Gyeonggi Research Institute, former
MOCT (ministry of construction and transportation) vice minister Sae-Ho Kim, attorney Se-Ri Yoon from Yulchon Law Firm, and Dean Jong-In Limof Korea
University’s Management Information Graduate School. The NSDs provide monitoring and consulting for Lotte Shopping’s management activities.
Lotte Shopping Board of Directors

1. Composition of the Board of Directors
The board of directors is comprised of 11 directors appointed in the general shareholder meeting according to the articles of association and board of directors
regulations. The appointed directors serve for a term of 2 years. Currently, managing director Chul-Woo Lee is serving as the chairman of the board according to
the article 5 of the board of directors’regulations. For reference purposes, Lotte Shopping has adopted clause 3 article 16 of Securities and Exchange Act 191,
clause 4 article 5 of 54 the same act, and clause 2 and 3 article 6 of enforcement ordinance 37 of the same act. The pay cap of the directors must be approved in the
general meeting.
2. Rights of the Board of Directors

The board of directors may, if necessary, summon related staff and employees and/or outside personnel to conduct a hearing of the said persons’opinion
regarding the performance of the executive staff. The board of directors may also seek consulting from a professional. The board of directors may also demand the
submission, investigation, and explanation of related data in case of potential wrongful conducts including the violation of laws and articles of association in the
execution of duties. The board of directors may request suspension and/or alteration of the said work (articles 13 & 14 of the board of directors’regulations).
3. Process for Generating the Board of Directors’ Opinion

The board of directors convenes once a month in principle. The formation and resolution of the board of directors are determined by the presence of the majority of
the directors and the approval bymore than half of the directors present, respectively. Furthermore, all directors may attend via communication methods capable
of simultaneously transmitting audio and video. In this case, the applicable director is considered to have attended the board of directors in person. The board of
directors’decision making authority may not be executed by proxy and members with vested interest in particular matters may not exercise voting rights (articles 7
& 9 & 10 of the board of directors’regulations).
4. Auditing Committee and NSD Recommendation Committee

Lotte Shopping holds the NSD Recommendation Committee and the Auditing Committee according tothe Securities and Exchange Act to supervise the
management’s management capability and expertise related to the transparency of enterprise, and economic, environmental, and social activities of the
enterprise. NSD is striving to enhance the transparency of management through recommendation of NSD candidates that represent the shareholders’profits.
[2008 Lotte Shopping Board of Directors Pay]

(Unit: 1,000 KRW)
Category Total Payment Number of Persons Average Payment per Person Amount Approved in General Meeting
Directors 3,452,500 4.5 Registered Directors 767,222
NSD 135,000 3.5 NSD 38,571 11,000,000
Auditors 131,000 3.5 NSD / Auditors 37,429
Payment for board of directors is defrayed within the payment cap for directors approved in the general meeting. The amount approved in the 2008 general meeting
was KRW 11 billion. The actual payment was KRW 3.718 billion.
NSD Qualifications
Lotte Shopping Co., Ltd., has adopted clause 3 article 16 and clause 4 article 5 of Securities and Exchange Act 191 and 54, respectively, as well as clauses 2 and 3 of
clause 6 of enforcement ordinance 37.
7
01
General Shareholder Meeting

The general shareholder meeting is a necessary standing institution comprised solely of shareholders and is the highest voting authority of the corporation that
votes on the matters provided in the laws and articles of associations. Voting by general shareholder meeting is limited to matters provided by commercial law
and/or articles of association (article 361 of commercial law) as well as matters provided by special laws. The general shareholder meeting serves as a venue for
conveying the shareholders’opinion to the board of directors.
1) The Right of Shareholder’s Proposal_ Persons possessing greater than 3/100 of total stocks issued (clause 2 of commercial law 363) and/or in case
of Lotte Shopping, persons possessing greater than 5/1,000 of the total stocks issued(must possess shares
for more than 6 months after exercising this right according to clause 14 of securities and exchange act 191),
may propose specific matters to be adopted as the objectives of the general shareholder meeting.
2) Shareholder’s Voting Rights_ Shareholders may attend the general meeting in person or by proxy and may participate in discussions, make inquiries,
and vote according to the voting rights (number of shares).
Periodic general shareholder meetings shall convene within 3 months of each settlement terms. Special general shareholder meetings are convened on demand as
necessary or through voting by the board of directors. Once the convening of general shareholder meeting is decided, Lotte Shopping notifies the shareholders of the
meeting by making a public announcement regarding the date, time, and purpose of the meeting on the Financial Supervisory Service electronic announcement site
2 weeks prior to the meeting and by announcingthe general shareholder meeting on The Korea Economic Daily and Maeil Business Newspaper on two or more
occasions. 1 voting right is provided for 1 share of stock. Also, voting rights may be executed through a proxy should attendance of a given shareholder shall prove to
be unfeasible. Generalresolutions require the majority of votes of the shareholders in attendance and greater than 1/4 of the totalissued stocks to pass. Special
resolutions require greater than 2/3 of the votes of the shareholders in attendance and greater than 1/3 of the total issued stocks.
[Status of Share Ownership of the Largest Shareholder and Interested Parties]

- as of December 31st, 2008
Share Ownership Share Ownership

Category Relationship % stake Category Relationship % stake
(number of shares) (number of shares)
Shin Dong Bin Said Person 4,237,627 14.59 Lotte Data Communication Co. Affiliated Company 1,515,653 5.22
Shin Dong Ju Relative 4,235,883 14.58 Lotte Chilsung Beverage Co. Affiliated Company 1,237,272 4.26
Shin Gyuk Ho Relative 426,511 1.47 Lotte Engineering and Construction Co. Affiliated Company 300,019 1.03
Shin Young Ja Relative 228,962 0.79 Lotte Hotel Busan Co. Affiliated Company 246,720 0.85
Lotte Hotel Co. Affiliated Company 2,697,201 9.29 Total ownership of largestshareholder and interested parties 20,139,843 69.34
Fuji Film Co. Affiliated Company 2,474,543 8.52 Urisaju 230,648 0.79
Lotte Confectionary Co. Affiliated Company 2,474,543 8.52 Domestic and foreign investors 8,672,883 29.86
Total Stocks Issued 29,043,374 100.00
Protection of Shareholder Rights

Lotte Shopping has installed an IR team with the sole responsibility of answering to investors. The IR team serves as a messenger that notifies the shareholders of
the latest company information and collects and relays shareholders’ opinion to the management. In particular, the quarterly conference call provides a forum for
domestic and foreign shareholders and top level management to analyze performance and exchange opinion on the way ahead. Furthermore, the IR team is taking
the initiative in protecting the shareholders’ rights by collecting shareholder opinion through various channels such as the IR homepage. Shareholder opinions
collected in this manner are directly conveyed to the managing senior director and the board of directors.
[Status of Hosting the Board of Directors and Attendance Rate of NSD]
Count 1 2 3 4 5 6 7 Total Rounds of Hosting

Date for meeting 08.01.24 08.02.14 08.03.07 08.04.23 08.05.21 08.06.25 08.07.30 14 times
Attendance 4/4 5/5 6/6 6/6 5/6 6/6 6/6
Count 8 9 10 11 12 13 14 Average attendance rate
Date for meeting 08.08.27 08.09.19 08.10.06 08.10.29 08.11.20 08.12.18 08.12.26 93%
Attendance 5/6 6/6 5/6 5/6 6/6 5/6 6/6
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Ethical Management
Lotte Department Store is promoting the observation of legal responsibilities and ethical conduct by all employees in order
to meet the“ “Global Standard” ”and to establish itself as a world class distribution enterprise. Lotte Department Store is
striving to fulfill the corporate social responsibility through management of an organization solely responsible for the
systematic implementation of moral management, distribution of guidelines, and continued prevention activities.
Enactment of Ethical Action Standards and Detailed Guidance

In 2001, Lotte Department Store formulated the “Lotte Shopping Ethical Action Standards” to establish a set of ethical values. Lotte Department Store has further
established the “Detailed Ethical Action Guidance” which serves as the specific standards for action.
Lotte Shopping Co.,Ltd., in order to continue and develop as a word classblue chip company that always accompanies its customers, engages in
righteous thinking, decision making, and action, thereby promoting the mutual prosperity of interested parties, nations, and mankind. To this aim, Lotte
Shopping hereby establishes the ethical action standards to be observed by the society as well as its employees and vows to act upon these standards.
Ethics Executive Office

The Ethics Executive Office conducts business affairs of the ethics committee. Specifically, the Ethics Executive Office carries out domestic and foreign PR works for
moral management, evaluates execution of ethics principles and ethical action standards, and develops an effective ethics and compliance program and ensures
its efficient administration.In addition, it plays the role of a compass to practice corporate ethics by preventing the unethical behaviors through corporate ethics
training.
Moral Management Hotline: Lotte Department Store manages a moral management hotline capable of receiving grievances regarding employee
corruption and wrongful deeds, sexual harassmentand damnification of reputation, unethical trade acts, and suggestions regarding improvements to the moral
management system. (available on the internet homepage).
Various Information Channel

Employees, cooperative firms, and customers have access to various information channels for reporting malpractices and infringement of corporate ethics as well
as proposing suggestions.
1) Internet: Group claims, ethics executive office, encouragements and advice (Product center/ EDI homepage - accessed by cooperative firms)
2) Writing: anonymous and/or signed letters
3) Telephone: Informant directly places an anonymous and/or disclosed call to the MR team.
4) Information Activities: Ethics executive office investigator gathers information from stores, departments in head office, directly managed and cooperative
employees.
9
01
Internal Reporter Protection
The internal reporter protection system has been arranged to ensure the smooth operation of internal reporting system. The reporters’identities are kept
confidential and in no case shall the reporters be placed at any disadvantage and/or discriminated. Following the investigation and confirmation process, persons
found responsible are held accountable for their actions.
Treatment Process of Moral Management Violation

In case of violation against execution of ethics principles and ethical action standards, the person concerned can be punished according to the decision made by the
ethics committee, and the principles about the levels of disciplinary action and penalty follows the corporate disciplinary action related regulations.
Specific Execution of Moral Management and Continued Prevention Activities

Lotte Department Store is practicing moral management through manuals that enable each department and offices to identify and correct the risks involved in the
process of work duties.
1) Identification of Weak Points for each department in the work duties
2) Identification of moral management infringement risks (define key risks for each department)
3) Inspection of current risk management status and the implementation of improvement to remove risks
4) Encouragement ofcontinued implementation of moral management through feed-back resulting from inspection
Prevention Activities of Obstacles to Moral Management

Periodic Inspection
-National Holidays: inspect for receipt of money and valuables, product shipment, gift certificate sales
-Sales: inspect for unfair acts, product preparation, and leaflets/ DM
-Hygiene: inspect for product and hygiene management
-Information Security: inspect for PC security configuration, key document management, etc
Campaign
-Enforcement of positive and sound holiday culture campaign
-Establishment of thorough and prompt procedures for transition
Moral Management Training

-Introduction to moral management, sexual harassment prevention program, work efficiency program, fair trade law training, etc
Clean Management Agreement with Cooperative Firm
Lotte Department Store established a“ “Global Clean Management Agreement” ”and entered into this agreement with all business
partners so that moral management may be rooted in Lotte Department Store’ s cooperative firms. The agreement is comprised of the
firms in agreement to participate in the 10 principles of 4 areas of corporate ethics including human rights, labor, environment, and anti-
corruption. Furthermore, the standard contract includes a clause regarding“ “duties for moral management,” ”mandating compliance
of both parities’duties regarding moral management,transparent transactions, and listing the disadvantages upon infringement.
Political Non-involvement Principle

Lotte Shopping expresses its political non-involvement principle in clause 18 of ethical action standards stating that Lotte Shopping will not partake in political
affairs.
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Analysis of Market Environment
Status of Department Store Industry

Department stores, in comparison to other distribution businesses, are characteristic in that they are comprised of various assortments of products including
clothing, miscellaneous goods, and foods, etc., and allow one-stop shopping. In addition, department stores takes a part of the metropolitan life that leads the
customers’lifestyle through service facilities including restaurants, cinemas, and entertainment, as well as various cultural programs and events. However, the
market share of department stores remains constantdespite the expansion of low-priced distribution channels. As the atmosphere of consumption recovery has
been on the rise since the 4th quarter of 2004, the department store industry maintains a 3~4% annual growth rate. In 2008, the market size reached KRW 19.5
trillion, a 4.0% increase from the previous year.
[Department StoreMarket Size Changes]

(Unit: KRW trillion)
Category 2005 2006 2007 2008
Market Size 17.2 18.1 18.7 19.5
% Increase 4.2% 5.2% 3.3% 4.0%
*Source: Korea National Statistical Office
[Sales in Retail Market by Business Type in Korea]
Sales Characteristics of Department Store Industry

In the future, existing department stores that firmly established themselves in the market in terms of size and position will continue to experience growth. This is
because the market is limited to new competition, new markets are continuously being created in new towns near Seoul as well as in other regions, and the
enterprises that underwent restructuring are becoming evermore competitive. Although the emergence of new business types including discount stores, home
shopping, internet shopping mall, etc. leads to the intensification of competition, department stores are expected to maintain theircurrent market share due to the
original customer base. Furthermore, department stores will become the predominant figure within the retail industry in terms of profitability.
Lotte Department Store’

s Status in the Industry
Lotte Department Store maintains the highestlevel of market share within the department store industry with 32.1% and 42.7% share in terms of number of stores
and sales, respectively.
[Lotte Department Store: Number of Stores] [Lotte Department Store Sales and Market Share]
(Unit: Stores) (Unit: KRW 100 million)
Category 2006 2007 2008 Category 2006 2007 2008

*Lotte *Lotte
23 24 25 76,507 77,956 83,071
Department Store Department Store
All Department Stores 77 79 78 All Department Stores 181,179 187,102 194,558
Market Share 29.9% 30.4% 32.1% Market Share 42.2% 41.7% 42.7%
*Source: Korea National Statistical Office *Source: Temporary material of Korea National Statistical Office
(Lotte Department Sales has been prepared for Lotte Department Store including Lotte
Department Store in Nowon and Lotte Station Building Co. Ltd.)
*Includes 3 stores under contract management
11
Brand Competitiveness
01
[Composition of Sales by Product Type] [Population and Sales Ratio by Regional Lotte Department Stores]

s Brand Value
Lotte Department Store, since its foundation in 1979, has maintained its status as the representative department store of Korea for 30 years. Lotte Department
Store is enhancing its brand value through differentiated service uniqueto Lotte and competitive MD. In 2004, Lotte became the first in the department store
industry to announce environmental value management and has been engaged in various social contribution activities. Lotte is actively seeking to transform itself
into a corporation that garners the respect of the society. As a result, Lotte Department Store is ranked #1 in brand competitiveness in the annual indexes
published by the Korea Productivity Center (KPC) and the Korea Management Association (KMA). Furthermore, Lotte Department Store is seeking to go beyond
its#1 status in Korea. To this end, Lotte Department Store is actively making advancements into foreign markets to include Russia, China, and Vietnam in order to
secure competitiveness as a global distribution enterprise.
[External Certification relating to Brand Value]
Certification Type Superintendence ExaminationMethods Date of Publication Remarks

NCSI (National CustomerSatisfaction Index) KPC/ Chosun Ilbo Survey DEC. 2008 6 consecutive awards
NBCI (National BrandCompetitiveness Index) KPC/ Joongang Daily Survey AUG. 2008 6 consecutive awards
KCSI (Korean CustomerSatisfaction Index) KMA Survey SEP. 2008
Brand Power KMA Survey MAR. 2009 11 consecutive awards
Service Quality Index Korean Standards Association (KSA) Survey SEP. 2008
Korea Service Awards KSA Documents and on-site evaluation JUN. 2008
Brand Star Awards Brandstock / Korea Economic Daily Survey APR. 2009 10 consecutive awards
Institute for Industrial Policy Studies (IPS) Corporate Brand Value Evaluation Results
2008 Lotte Department Store Corporate Brand Value: KRW 127.3729 billion/ ranked #1 among department stores
In terms of financial matters, future value of brand sales calculated based on sales have been discounted to present value. In terms of marketing matters,
calculations have been conducted with brand recognition, brand association, perceived quality, and other assets etc.)
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Always with you
Lotte Department Store’ s underlying principle is the““customer-centric management”

”that pursues customer satisfaction
and trust through true service rooted in unchanging sincerity and honesty.
“Always with…” the Promise of Lotte Department Store

“Always with” of the phrase “Always with you” signifies Lotte Department Store’s role and responsibility. Here, Lotte Department Store promises to stay true to the
4 roles and responsibilities of economic, legal, ethical, and social contribution.

s Economic Responsibilities
Faltering enterprise signifiesthe negligence of the very basic responsibilities of an enterprise and negatively affects local community and national economy.
Corporations, as subjects committed to economic activities must continuously generate profit. Lotte Department Store is fulfilling its economic responsibilities
through its #1 market share in Korea, the largest store network in Korea, retention of the largest number of cooperative firms and buying power, the largest store
area in Korea, and creation of jobs, etc.

s Legal Responsibilities
Corporate status is only recognized when corporations get engaged in fair business activities within the legal framework. This observation of legal requirements
becomes a protective device for the corporation’s stable generation of profits. In September 2001, Lotte Department Store became the first in the distribution
industry to create a team solely responsible for fair trade. Through self-observance of fair trade regulations, continued surveillance and supervision, education, and
evaluation activities, Lotte Department Store is carrying out its legal responsibilities. Lotte Department Store is also fulfilling its legal responsibilities by realizing a
systematic quality control system through hygiene training and distribution of food regulations pocketbooks, etc.

s Ethical Responsibilities
Moral management contributes to the corporation gaining continued trust from the market by enabling the said corporation to get engaged in socially just roles
and/or activities. Since announcing the““Ethical Action Standards””in 2001, Lotte Department Store provided a self report system to raise ethical awareness. Lotte
Department Store has also mandated the preparation of self-pledge and is engagedin campaigns to curb gift exchanges during holidays, friendly words and deeds
campaign, non-smoking campaign, and conservation campaign, etc. to establish the mindset of moral management.

s Social Contribution Responsibilities
Enterprises are run with the purpose of producing products and/or services required by the society through interaction with society. Social contribution is a method
of sustaining the enterprise as a member of the society and is also a social investment and strategy for continued development. Lotte Department Store is fulfilling
its social responsibilitiesthrough donation and volunteer works, support for arts and culture, provision of a source of livelihood for the underprivileged bracket of
society, and environmental value management.
“
“You……”
”With All of You
At Lotte Department Store “You” means more than simply a paying customer. “You” includes internal customers, cooperative firms and shareholders, government and local
communities as well as all key interested parties that surround Lotte Department Store. We are also extending the significance of “You” to include future generations and the
environment.
13
Participation of Interested Parties
01
Interested Parties of Lotte Department Store

Lotte Department Store identifies shareholders, internal constituents, cooperative firms, local community, and the government, etc. as its key interested parties.
Lotte Department Store’s sustainability is an activity to fulfill Lotte Department Store’s responsibility in its relationship with the various interested parties and to
provide the value required by each interested party.
Communication with Interested Parties

Lotte Department Store has provided various channels for communicationto collect opinions and requests of the interested parties. These opinions and requests have been
reflected in the management. Furthermore, Lotte Department Store is striving to accurately convey the key policies, management activities and other status to its interested
parties. Periodic internal and external surveys including customers, employees, and cooperative firms satisfaction surveys are conducted to determine discontents of
interested parties and risk factors. Direct dispute resolution channels including customer and employee counseling are available. Furthermore, channels such as
cooperative firm convention and discussions, and employee discussions are available for collecting requests and conveying management information. Also, communication
through on-line homepage as well as the unrestricted two-way communication through company intranet has been expanded, facilitating inputs and enabling instant
feedback. Shareholders communicate through various IR activities including the conference calls and on-line notification system, etc.
[Communication Cannel for Each Interested Party]

Reflection in
Category Communication Channel Area of Interest
Customer Satisfaction Survey VOC System
Providing high quality service 31~33
Customer Counseling Center CRM System
Sustainability Product quality and safety 34~36
Customer Management
Customers Report, Customer safety 34~36
Customer Opinions
Homepage Information protection 37
Customer Mentor System
Employee Satisfaction Survey

Employee CounselingIntranet Providing high quality service 59~61
Company Newsletter Product quality and safety 53~56
Employees
Idea Hot-line Customer safety 57~58
Labor-Management Conference Information protection 59~60
Employee Meeting with CEO
Cooperative Firm Satisfaction Survey

Cooperative Firm Convention Coexistence with cooperative firms 62~64
Cooperative Firm Meeting with CEO
Cooperative Firm Fair trade 65~66
All-in day On-site Work Experience
Expansion of environmental management 77
Working Level Workshop
Open Notes to Co-Workers
Periodic General Meeting

Periodic Board of Director Meeting
IR Activities Economic achievements 19~26
Shareholders
Notification System Brand value 11~12
Conference Call
Annual Report
Contribution to local society 41~48

Social Contribution Activities
Creation of jobs 41
LocalCommunity Environmental Value Management
Service to local communities 45~47
Local Community Activities Report
Eco-friendly management 69~81
Eco-friendly management 69~81

Customers Attend Government Meetings Public service activities 41~48
Economic contributions 19~26
14
■■
Risk Management
Risk Management
Various internal and external risk factors exist in the conduct of Lotte Department Store’s corporate activities. Lotte Department Store has defined all such tangible
and intangible risk factors as““risks””and is putting forth its utmost effort to prevent the occurrence of such risks.
[Lotte Department Store’s Risks]
Crisis Management Guidance

Department stores are representative retail industries. Hence various disasters and/or accidents occurring in department stores have far-reaching implications.
Lotte Department Store has established conduct guidance and management methods for different types of accidents and practices continued training to ensure
prompt response. Furthermore, Lotte Department Store has enabled prompt response in theface of actual crisis through the establishment of clear operations
system regarding crisis management. In addition, Lotte Department Store has prepared and distributed the crisis management guidance throughout the entire
company to prevent accidents and minimize loss.
[Chain of Response in Case of Accidents]
Category Contents Comments

1 Scene preservation, determination of accident content, situational understanding Support Team Leader (in conjunction with general sales team)
2 Verbal report to president and CEO and management support department head Head of respective store
(content of accident, measures to be taken)
3 Investigation of cause of fire and damage situation, instruct establishment of countermeasures Head of Management Support Department
4 Countermeasures meeting with related departments Countermeasures meeting participants
5 Comprehensive briefing on situation resolution, and prevention of reoccurrence Team leaders in related departments
6 President and CEO briefing Head of Management Support Department
7 Notify policy center following president and CEO briefing Team leaders in related departments
15
01
Definition of Risk and Management System

Lotte Department Store has categorizedrisks by type, analyzed the potential and impact of these risks, and is operating strategies and systems to minimize the
dangers of these risks.
Risk Factor Risk Definition Impact Risk Minimization Strategy / System

Products
�Errors in marking product content / material / date of �Loss of consumer confidence in productsWeakening of �Product quality inspection of products in each store
Fictitious brands /
expiry brand loyalty �Cooperation with Lotte Product Testing Lab
Errors in content labels
�Cooperative firm verification system
�Exposure during inspection by government offices, food �Loss of customers’ confidence �Management of key monthly food hygiene themes
poisoning and other health related issues among �Negative media coverage affecting reputation presented by quality testing agency
Food hygiene and safety consumers �Establishment of official certification relating to hygiene
including HACC
�PManagement of food production history
Accidents and Disasters
�Fire accidents resulting from customer and/or �Directly linked to life and safety of customers and �Establishment of crisis management guidance
manager negligence employees �Designation of responsible departments by accident type and
Fire
�Loss of social reputation and negative influence on establishment of response chain
continuation of businessMaterial loss �Continued prevention training
�Accidents during entry and exit Directly linked to life and safety of customers and Establishment of crisis management
Traffic / facility related �Consumer casualties during use of escalators and lifts employees guidanceDesignation of responsible departments by
accidents Negatively affects corporate image if problems in facility accident type and establishment of response
management are noted chainContinued prevention training
Management Environment
�Anticipated slowdown of GDP growth and private �Retail sales by nature is closely tied to national income �Establish scenario management system according to
GDP growth rate consumption levels economic changes
�Reduction in sales, potential low growth
�Negative impacts on projects in newly developing �Establish scenariomanagement system according to
nations including China, Russia, Indonesia, Vietnam economic changes
Global economy �Global economy to maintain state of low growth
etcHowever, foreign sales do not account for a large
portion of total sales to this point
�Drastic fluctuations in exchange rates in response to �No direct impact in a domestic demand business �Establish scenario management system according to
Exchange rate
economic situation structureHowever, risk factor in terms of foreign capital economic changes
fluctuations
inflow due to overseas expansion
Intra-industry �Intensification of competition among 3 department �Customer movement in case of failure to understand �Upgrade service and enhance products for continued
competition store companies in Korea the needs of consumers and differentiate accordingly occupation of advantages
�Saturation of department store and discount store �Risks of other firms occupying new projectsor markets �Establish mid/ long term strategy and proceed with
Emergence of new
marketCompetition for prior occupation of new profit in advance new and overseas project through prompt decision
busines
sources making
Consumer
�Rapid change in consumer trends �Loss of customer loyalty and drop in sales in case of �Continued trend analysis, external agency consulting,
�Failure to provide products and store composition that failure to respond to trends and provide differentiated and training (MD, employee training, publication of
Consumer trends
meet consumer demand products and services related reports)Management of a separate and new
MD organization
�Management practices that violate consumer rights �Loss of customer confidence �Observance of positive laws for the protection of
Consumer group Boycotting by consumer groups �Damage to corporate reputation due to public opinions consumer rights and increased awareness by
of civic groups and media coverage employee training
�A society in which more than 7% of the population is �Reduction of young and middle age generations who are �Preparation against future risk factors through
above the age of 60 Reduction of young and middle age the main subject of consumptionReduction in sales in establishment of mid / long term strategy and
Aging society
generation; the primary consumers case of failure to respond to changing consumption continued trend survey
bracket
Human rights and ethics
�Child labor extortion by cooperative firms �Social ripple effect and damage to corporate reputation �Observance of positive laws regarding labor and
Child labor human rights. Continued supervision and inspection of
observation of laws.
�Violation of worker human rights �Social ripple effect and damage to corporate reputation � Observance of positive laws regarding labor and
Worker human rights human rights. Continued supervision and inspection of
observation.
�Corruption and unethical acts by workers, violation of �Loss of corporate reputation and customer � Establishment of Ethical Action Standards and
Worker ethics fair trade etc trustPotential direct economic loss reinforcement of moral management
systemContinued prevention training
�Discrepancies in opinions regarding working �Economic loss resulting from the inability to conduct � Enhanced communications for the establishment of
conditionsComplications between labor and normal business operationsLoss of corporate labor-management relationship of
Labor strikes management confidence coexistenceWorkshops and management briefing
sessionsJoint labor-management training and social
volunteer works etc
Environmental Changes
�Rise in energy prices including oil and the resulting rise �Rise in cooperative firm prices on products delivered to �Establish energy reduction plan and manage objectives
Energy /
in raw material price Lotte Department Store due to rise in production cost �Energy saving activities and other company-wide
Resourceshortage
campaigns
Ecological destruction due to environmental destruction. �Regulations regarding CO2 emissions �Establishment of environmental management system
Climatic changes More stringent regulations on corporate activities relating �Change in consumption patterns �Dissemination to cooperative firms and consumers
to global warming (Green partnership, environmental training etc)
16
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Sustainability Management Status
Lotte Department Store as the first in its industry, ranked on the DJSI (Dow
Jones Sustainability Index)
Recognized for sustainability management achievements
On February 28th2009, Lotte Shopping Co. Ltd. became the first Korean distribution enterprise to be listed in the newly established Dow Jones
Sustainability Indexes Asia/ Pacific (henceforth DJSI). The DJSI consists of Dow Jones, the largest financial information agency in the world and
Sustainable Asset Management (SAM) of Switzerland jointly evaluating sustainability levels of the world’s enterprises. Dow Jones and SAM select and
announce enterprises that display exemplary performance. The DJSI is the world’s most authoritative sustainability evaluation index that provides such
information as the raw data of Socially Responsible Investment (SRI).
DJSI Asia/ Pacific is a subdivided index of the previously integrated DJSI system for each continent. The DJSI Asia/ Pacific has been added in February
2009 following North Americas and Europe. The DJSI Asia/ Pacific evaluated the top 600 enterprises in the Asia/ Pacific region and registered the top
120 enterprises. 3 enterpriseswere transferred from the existing DJSI and 4 additional Korean enterprises have been listed in the DJSI Asia/ Pacific,
bringing the total number of Korea enterprises registered to 7.
Lotte Department Store was also ranked among the top of the top 20 sustainable Korean enterprises as evaluated by Fortune. Two Tomorrows and
AccountAbility, which announce the Top 100 Fortune Global Sustainable Enterprises, supervisedthe ranking of top 20 sustainable Korean enterprises.
The sustainability levels of Korean enterprises with the highest sales are evaluated using the same methods as the Top 100 Fortune Global Sustainable
Enterprises. Lotte Department Store wasthe only Korean distribution enterprise that entered the top-rankingin this evaluation and has obtained the
score close to that of the G100 average.
Lotte Department Store’s listing in the DJSI and the Fortune Korean Enterprise Sustainability ranking signifies that the sustainability achievements of
Korean distribution enterprises have been evaluated and held in high regards with respect to the Global Standard.
17
01
Lotte Department Store’s 5-year achievements in affection for environment
Since the declaration of environmental value management in 2004, Lotte Department Store with deployment of environmental protection activities
reduced 47000 tons of CO2 in total over the last 5 years. It is equivalently the same effect as saving about 10 million big-cone pines.
Over the last 5 years, Lotte Department Store reduced the CO2 generation of34000 tons in total through the following activities: 12000 tons with the
energy efficiency of the building by creating the roof ecological parks in Nowon, Ilsan, Pusan Centum City stores, 11200 tons through infrastructure
investment of alternative energy, 10800 tons through cool/warm biz campaigns and various energy reduction activities. And the eco-friendly leaflet
printing led the reduction of CO2 emission up to 13000 tons. The annually printed 0.5 billion leaflets of the department store are made of the recycled
paper, and the bean oil ink is used to reduce the possibility of environmental pollution. Since the eco-friendly leaflet has the effect of reducing CO2
emission of 5grams per page over a common leaflet, Lotte Department Store’s annual circulation of 0.5 billion is equivalently converted to the annual
reduction of 2600 tons emission.
According to Korea Forest Research Institute, the annual CO2 absorption per 30-yr old big-cone pine is 4.6 kg, and the increasing absorption gives a
negative impact on the health of a tree. Lotte Department Store reduced 47000 tons of CO2 emission over 5 years, and it is equal to the annual
absorption rate for 10 million big-cone pines.
In addition, green shopping bags named eco-bags were given out to our customers, resulting in reduction of 1.8 million plastic bags. Some portion of
gross sales have been donated to green fund, raising KRW 3.7 billion, and various environment protection campaigns are in progress.
Lotte Department Store’s numerical achievements in affection for

environment
10,000,000 trees 47,000 tons 2,000,000 shopping bags 1,800,000 plastic bags
10 million big-cone 47,000 tons of greenhouse 2 million shopping bags 1.8 million plastic bags
pines were saved. gas was reduced. were given out. were reduced.
KRW 40,040,000,000 KRW 3,700,000,000 2,500 persons 25 stores
The purchase of environmental About KRW 3.7 billion of 2,500 students were 25 stores obtained the
products for the amount of KRW donation fund was reserved graduated from the children’s certificate of international
40 billion were put into action through sales of green gift environmental school. environmental management
through green purchase. certificate system (ISO 14001).
18
Think Economy
2009
Creating Tomorrow of the Korean Economy

The sustainable growth of the Korean economy,
Lotte Department Store stands in the center of this growth.
Lotte Department Store will grow hope of Korea by taking a leap
to the global top-ranked distribution enterprise.
■■
Economic Performance Index
Financial Statements
1. Balance Sheet (Unit: KRW million)
Category Amount Category Amount

Assets 13,303,683 Liabilities 4,473,021
I. Current Assets 1,940,403 I. Current Liabilities 3,147,474
Quick Assets 902,518 II. Non-current Liabilities 1,325,547
Inventory 1,037,885
Stockholders’ Equity 8,830,662
II. Non-current Assets 11,363,280 I. Capital Stock 145,217
Investment Assets 3,263,979 II. Capital Surplus 4,650,895
Tangible Assets 7,060,981 III. Capital Adjustment -16,271
Intangible Assets 131,530 IV. Accumulated Other Comprehensive Income, Net of Taxes 45,943
Other non-current Assets 906,790 V. Retained Earnings 4,004,878
Total Assets 13,303,683 Total Liabilities and Stockholders’ Equity 13,303,683
2. Income Statement (Unit: KRW million)
Category 2006 2007 2008

Sales 9,055,880 9,768,132 10,553,792
Sales Revenue 2,672,340 2,923,239 3,221,472
Operating Revenue 749,372 756,671 768,989
Income Before Corporate Tax Expenses 989,060 957,870 926,975
Net Income for Year 742,517 692,134 742,825
Stability, Profitability, Activity, and Growth Indexes

Category 2006 2007 2008
Current Ratio 102.58% 65.40% 61.65%
Stability Index Debt Ratio 57.97% 46.10% 50.65%
Debt Reliance 10.96% 4.61% 7.10%
Sales Growth Rate 5.21% 7.87% 8.04%
Operating Revenue Growth Rate 8.79% 0.97% 1.63%
Activity and Growth Index
Net Income Growth Rate 35.28% -6.79% 7.32%
Total Asset Growth Rate 41.63% 0.75% 11.40%
Ratio of Operating Revenue to Net Sales 8.27% 7.75% 7.29%
Ratio of Net Profit to Net Sales 8.20% 7.09% 7.04%
Profitability Index
Return on Assets 7.34% 5.82% 5.88%
Return on Equity 13.85% 8.83% 8.74%
EVG&D
GRI Guideline Index Remarks 2006 2007 2008
Direct Economic Value Generated 9,055,880 9,768,132 10,553,792
a) Income Net sales, income from financial investments and sale of assets Sales 9,055,880 9,768,132 10,553,792
Distributed Economic Value 7,269,884 7,775,891 8,250,595
b) Operating Expenses Purchasing expenses, non-strategic investments, royalties, and operating expenses Cost of Sales 6,383,540 6,844,893 7,332,320
c) Wages and Welfare Total amount paid to employees Wages, Welfare expenses 457,497 521,620 591,763
d) Cost of Capital Total amount paid to capital providers Interest expenses etc 87,318 36,524 28,839
e) Taxes Total taxes Corporate tax 337,696 359,326 292,515
f) Investments in Voluntary contributions and capital
Donations 3,833 13,526 5,158
Local Community investments (donations etc)
Surplus Economic Value Generated Economic Value - Distributed Economic Value 1,785,996 1,992,242 2,303,198
a) Income: Sales b) Operating Expenses: Cost of Sales c) Wages and Welfare: Wages + Retirement Pension + Welfare
d) Cost of Capital: Interest Expenses + Debenture Interests e) Taxes: Corporate Tax + Supplementary Corporate Tax + Tax and Public Dues
f) Investments in Local Community: Donations
21
Becoming the #1 Global Distribution Enterprise
Think Economy
02
Lotte Department Store has initiated its advancement to overseas markets with the goal of becoming a #1 global distribution
enterprise in the 21st century. Lotte Department Store’s globalization strategy based on its solid reputation in Korea and 30 years
of distribution know-how will be the potential that drives Lotte Department Store’s continued growth in the future.
Global Advancement Strategy - VRICs

Lotte Department Store selected Vietnam, Russia, India, and China (henceforth VRICs) as the 4 strategic markets based on their investment appeal, potential and
growthrate. In September 2007 and August 2008, Lotte Department Store opened its first and second overseas store in Moscow and Beijing, respectively, and
started making inroads into the overseas market. The Moscow store is significant in the fact that it marks the founding of the first overseas Korean department
store. It was also the first incidence in which a department store from an Asian nation made inroads intoa Caucasian nation. The Beijing store also marks the first
advancement of Korean department store into China. With this, Lotte Department Store is going beyond the number one department store in Korea and is opening
an era of globalization of “Korean Distribution” that combines MD, products, marketing, and service.
[Four Strategic Markets - VRICs]
Existing stores in Russia and China will serve as outposts in the expansion of stores in the respective nations. Resident offices have been set to Ho Chi Minh in
Vietnam and New Delhi in India in October 2006 and November 2006, respectively, and are actively conducting store site reviews and site surveys as phase 2 of the
overseas expansion plan. Lotte Department Store’s objective is to establish itself among the top 10 global distribution enterprise with a world wide store network
through thorough preparation and planning.
[World Department Store Ranking]

(Yr 2007 estimated)
Rank Name Country Sales(KRW 100 million) Rank Name Country Sales(KRW 100 million)
1 Sears U. S. 472,552 10 Bailian Group China 83,190
2 Coles Myer Australia 257,223 11 Nordstorm U. S. 82,277
3 Federated U. S. 245,237 12 Takashimaya Japan 79,024
4 EI Corte Ingles Spain 189,559 13 Lotte Department Store Korea 78,093
5 JC Penney U. S. 185,095 14 J Front Retailing Japan 70,142
6 Marks & Spencer U. K. 168,804 15 Dilard’

s Inc U. S. 67,169
7 Kohl’
s Corp U. S. 153,538 16 Isetan Japan 63,954
8 John Lewis Partnership U. K. 112,968 17 Mitsukoshi Japan 59,555
9 Karstadt Quelle AG Germany 107,599
22
■■
Becoming the #1 Global Distribution Enterprise
Lotte Department Store opened the Moscow and Beijing Stores in 2007 and 2008, respectively,and successfully initiated its
advancements into overseas markets. These two stores will serve as the forward base for the opening of additional stores within
Russia and China. Furthermore, Lotte Department Store is putting forth effort into thorough preliminary/preparatory research and
human resource development in order to branch out to emerging markets including India and Vietnam, etc.
Moscow Store Status

Located in the vicinity of the Grand Kremlin Palace in the center of Moscow, the “Lotte Plaza” is placed in a complex that houses hotels and offices aside from
department stores. The total area of the Moscow store is 38,530m2, and the business area of 23,130m2is home to a Korean style full-line department store that
carries luxury goods, fashion items, household appliances, and furniture. This concept of one-stop shopping department store is unprecedented in Russia. The
localization process is also underway as Lotte Department Store is hiring managers and employees from Russia and combining the Russian culture with Korean-
style department store and services.
[Moscow Store General Information]
Grand Opening Date September 2nd 2007

Location Moscow, Russia
Store Area 23,131㎡
Number of Employees 565(including co-workers)
Available Parking Space 450
Customers per Day 3,500
Beijing Store Status

Lotte Department Store opened its first store in China in August 2008 in Wangfujing Street of Beijing, the largest downtown area of the city. The advancement into
China has been a joint venture with the Intime Group of China, and the collaboration ratio is 50:50. The department store name is in Chinese and Intime-Lotte
Department Store in English. The concept of the Beijing store is the premium urban department store in pursuit of modern facilities and services. The Beijing Store
proposesa premium lifestyle to the main customer targets comprised of members of the upper class includingprofessionals with high paying jobs, government and
corporate executives. To this end, Lotte Department Store has placed high end products and applied Lotte Department Store’s differentiated marketing and service
know-how to fit the local environment. Lotte Department Store is also seeking to differentiate itself with surrounding Chinese department stores through a modern
and unique appearance, high quality facilities and interior design. Lotte Department Store views China as a market with great potential for the growth of distribution
industry. In the future,Lotte Department Store will build upon the Beijing Store and expand its business into other major cities in China.
[Moscow Store General Information]
Grand Opening Date August 1st 2007

Location Wanfujing St., Beijing, China
(1.5Km from Tiananmen, pedestrian market)
Store Area 36,060㎡

Number of Employees 2,046(including co-workers)
Available Parking Space 395
Customers per Day 7,500
23
Think Economy
02
Management of Locally Employed Persons in Overseas Stores

Lotte Department Store is expanding local employment in overseas stores to enhance the localization of overseas store and its reputation as a global department
store. Selection and employment of local employees are processed by public announcement of employment information through local recruiting firms and
rigorous examinations. Furthermore, open invites for employment application for local college students and employment of students studying abroad in Korea are
being expanded in order to secure the manpower required for long term localization.
(Unit: Person)
Category Main Office Contingents Local Employment Duties Form of Business
Russia 6 39 Manager, Marketing, Operations Management, Finance, Support, Personnel Management, Computer etc Corporation
Manager, Deputy Manager, Marketing, Operations Management, Finance, Corporation,
China 15 277
Support, Personnel Management, Computer etc Representative Office
India 2 1 Representative Office including Market/ Site Survey and Company Affairs
Vietnam 4 1 Representative Office including Market/ Site Survey and Company Affairs
[Overseas Project Organization]
Fostering Executives with a Global Mindset

As increasing visibility is being obtained in terms of project expansion into new types of businesses including shopping mall, GF project center, etc and
advancements to Russia, China, Vietnam and other overseas stores, Lotte Department Store is putting forth its utmost effort in fostering executives with a global
mindset. To this aim, SEPT (Spoken English Proficiency Exam) has been reflected in the evaluation of persons for promotion to executive level. Furthermore,
advanced spoken English courses are offered to persons with an SEPT rating of 7 or higher for the maintenance and enhancement of their English proficiency.
Furthermore, overseas contingent personnel pool is managed,and applicable persons are provided with continued global business and language training.
Mid / Long Term Overseas Project Strategy

Lotte Department Store employs strategies of focus, localization, and differentiation in promoting overseas project to become a global enterprise.
[Mid / Long Term Overseas Project Strategy]
Focus Localization Differentiation
Selection and concentration Localized management

Premium Department Store,
strategy centered on the major with indigenity, Integration
Realization of differentiated image
cities of the 4 key nations of customer Loyalty
24
■■
Diversification Strategy
As the Korean department store and discount store market is entering a period of maturity, Lotte Shopping is responding to
the future distribution environment through overseas advancement and new business development strategy. Lotte
Shopping is developing new distribution business types including outlets, shopping malls, and category killers as well as
expanding fashion business through introduction of foreign brands etc.
Premium Outlet Business

In developed countries with national per capital income in excess of $20,000, suburban outlet markets are widely expanding and leading the growth of the
distribution industry. The shopping environment in Korea is also undergoing changes as increased disposableincome is leading to the increased consumption of
luxury goods. Furthermore,family centric culture of enjoying leisure time in the suburbs is becoming the norm. On the other hand, the differentiation of consumer
classes is creating a new market between high priced department stores and the low priced discount stores. Lotte Shopping is in the process of pioneering new
markets through outlets which can be considered to be the niche market between department stores and discount stores.
Gwangju Outlet
Lotte Shopping opened Gwangju Outlet, its 1st outlet store and an urban outlet,in the Gwangju
Worldcup Stadium in October 2008. The Gwagju Outlet focuses on young customers who prefer well
known brands but at the sametime are sensitive to prices. Lotte Shopping is attempting
differentiation with existing outlet companies through high quality service, amenities and pleasant
environment based on the know-how gained from department stores.
▶ Address: World Cup Stadium, Pungam-dong, Seo-gu, Gwangju

▶ Sales Area: Approximately 17,100m2
▶ Store Composition: 1~2F
▶ Number of Brands: Roughly 180
▶ Differentiation through various customer amenities including customer counseling room, nursery room,
rendezvous area on 1F
Gimhae Outlet
Lotte Shopping opened a suburban premium outlet in Gimhae Tourism and Distribution District in
December 2008. The Gimehae Outlet is characterized by high end products and various complex
facilities aimed at the high income bracket and family customers. Various amenities including
restaurants, entertainment, and rest areas are located within the vast site. The premium outlet is
going beyond a mere venue for shopping and becoming a place where families can spend the day
enjoying leisure activities and well deserved rest.
▶ Address: Tourism and Exhibition District, Jangyu-myeon, Gimhae-si

▶ Total Area: 46,700m2/ Sales Area: Approximately 17,100m2
▶ Store Composition: 1~2F
▶ Number of Brands: 140
▶ Available Parking Spots: 2,000
▶ Comprised of entertainment and amenities in an expansive site
25
Think Economy
02
Expansion of Composite Shopping Malls

Lotte Shopping plans to open 5 or more new department stores within the Korean market. Lotte Shopping opened the Centum City Store in Busan and Star City
Store in Konkuk University in December 2007 and October 2008, respectively. The latter is a 25 story building opened by Lotte Shopping. In 2009, Lotte Shopping is
scheduled to open the Gwangbok Store, the 4th in Busan. The Gwangbok Store is under construction as a composite town that combines sky scrapers, tourism,
shopping, and recreation. A large scale department store and mart is scheduled to be constructed centering onthe newly formed publicly funded station building in
Cheongnyangni in Seoul, creating the largest composite culture space in the region. Furthermore, the 2nd Lotte World, which applies new shopping concepts such
as foreign department stores and street type shopping mall, is to be developed.
[Centum City Store] [Star City Store]

Date of Opening: December 2007 Date of Opening: October 2008
Location: U-dong, Haeundae-gu, Busan (Centum City UEC District) Location: Jayang-dong, Gwangjin-gu, Seoul (Residential and Commercial Complex)
Features: High end store with differentiated design and interior, amenities, as well Features: Promotes youthful senses of commercial areas within college settings. A
as a large scale luxury brand outlet composite culture space linked to cinemas and large book stores.
Expansion of Fashion Business and PB

Lotte Shopping is enhancing its fashion business aspart of its diversification strategy. Lotte Shopping has introduced an SPA type brand that plans and produces
seasonal products to meet the rapidly changing consumer needs. In 2005, Lotte Shopping jointly launched “UNIQLO” with Japan’s Fast Retailing Co. In 2008, Lotte
Shopping introduced the world renowned fast fashion brand “ZARA” from Spain. Aside from these efforts, a GF project department is operated as a separate
organization within Lotte Department Store. The GF project department was founded in August 2005 for the purpose of differentiating MD and enhancing fashion
expertise. The GF project department is striving to achieve both quantitative and qualitative improvements of Lotte Department Store’s fashion business through
the management of PB brands and introduction of new overseas brand. Currently, the GF project department manages brands such as Tasse Tasse, Furla, Gerard
Darel and J. Press.
Category Killer
Lotte Shopping has madea licensing agreement with “Toys R Us,” the world’s largest toy category killer. In December 2007, Lotte Shopping opened the first Toys R
Us store in the Guro store of Lotte Mart. The second one was opened in the Guri store of Lotte Mart in January 2008. The third one in Samsan store of Lotte Mart in
Incheon opened in April 2008. Lotte Shopping seeks to open more than 20 stores (independent stores in the areas excess of 1,000 pyeong) by 2012. Furthermore,
Lotte Shopping plans to operate more than 90 “Toy Box”± (a 50 pyeong shop in shop).
26
■■
Management Innovation Activities
Lotte Shopping is deployingvarious management innovation activities to reform profit structure and promote efficient management by
strengthening competitiveness of the distribution industry and responding to a stage of low economic growth. To build the corporate
knowledge management foundation, the IDEA system absorbing diversified internal ideas has been activated. In addition, a simple
and speedy process management is underway to promote organizational flexibility and mobility along with quantitative growth. In
responding to changing management environment, our focus is put into the innovation of effective informatization and IT systems.
Creative Management
Lotte Shopping has announced “Management of Creation, Challenge, and Service” as its
management topic in 2008. Creative management is a new concept that goes beyond
improvements and innovations and signifies the set of activitiesthat generate customer value
oriented performance through the creation of new values. It was motivated by the
consciousness of crisis based on the belief that current management practices will not work to
maintain the top spot in the ever changing management environment. The “Idea Hotline” was
created in the groupware of open idea collection window by judging that early stabilization of
creative management and activation are feasible with employees’ voluntary participation for
creative ideas. Since June 2009, a system called “Idea Popcorn” is in operation to build the
foundation of knowledge management and active participation. Everyone has been freely
proposing ideas and the relevant working divisions review them and put them into practice.
More than 2000 ideas have been registered for 2 months. All employees share creative
management mindset with active horizontal communications, which contributes to providing a
[Idea Popcorn system]
place of value creation and knowledge sharing.
Speed Management
Lotte Shopping is executing intensive management innovation activities throughout the company to overcome economic crisis and enhance competitiveness,
thereby minimizing inefficiencies and waste factors. Digital operations improvement campaigns in which
staff and employees can easily partake in, such as the “Speed-Up Decision Making Time” campaign and the
“One-pager” campaign that utilize the IT systems established within the company are being implemented to
enhance company wide efficiency. In particular, the “Speed Up” campaign (to reduce decision making
process) that took place in 2008 reduced decision making process by an average of 51% compared to the
previous year. Furthermore, this campaign reduced the unnecessary agreement processes among
departments by 72%. The Speed Up campaign also helped save about one million hours annually required
for intra-company decision making process on over 3,000 items per month. Through this system, Lotte
Shopping completed a 24 hour decision making process in Korea, previously unprecedented in Korea.
The “One-pager” campaign simplifies the various paperwork and meeting related work causing an obstacle
to on-site works for the customers’ needs. This campaign will be utilized as an opportunity to allow
employees to monitor the document output for each month and to dispense of existing business practices,
thereby transforming the corporate structure. A full fledged effort is implemented withfeed-back provided to
teams on a monthly basis in order to achieve the campaign goal of reducing paperwork by 30%. As this
campaign is drawing positive responses and expectations from the employees, Lotte Shopping expects to
successfully reduce unnecessary meetings and paperwork by the first half of 2009.
The innovation activities listed above will enable Lotte Shopping to maintain its leadership position in the
distribution industry through customer centric management efficiency. Furthermore, these activities shall [Speed-up campaign]
serve as the catalyst of change by reforming the corporate structure with maximization of organizational
flexibility and efficiency under the global economic crisis.
27
Think Economy
02
Value Innovation Management

During the IMF crisis of ‘97, Lotte Shopping promoted management reformation works through MR. Afterwards; Lotte Shopping continued BPR activities that
included establishment of IT systems through improving work process and BSC activities based on key performance index to establish a balanced evaluation
system for the organization and the individual. In 2008, Lotte Shopping introduced LEAN Transformation (TR) to overcome the global economic crisis resulting from
the global financial crisis. Lean transformation, as the word “lean” indicates, is part of work innovation activities to upgrade the work structure and is a value
innovation activity that maximizes the customer value by eliminating unnecessary work and waste factors.
[Introduction of LEAN TR]
BSC Performance Management

The BSC (Balanced Scorecard) has been introduced to establish responsible management and a performance oriented culture centered on objectives for each
group. BSC performance management signifies a balanced performance management system that utilizes KPI (Key Performance Index) based on objectives
rather than the existing comparative evaluations based on short term profitability in order to realize performance management that befits independent responsible
management. Starting from the latter half of 2008, the existing organization level KPI has been expanded to encompass all employees, thereby contributing to the
establishment of objective oriented performance culture on both the organizational and individual level.
System Innovation
Lotte Shopping is identifying and analyzing improvements to be made in each phase, creating the digital work environment by establishing a system, and creating a
user oriented environment through periodic survey of user satisfaction and utilization rate of systemsin order to maximize work efficiency using IT resources.
[Key Achievements by Year]
Year Achievements
2001 Introduction of SAP (finance, purchasing etc)
2002 RIS(Retail Information System), EDI(Electronic Data Interchange), Computerized gratitude system
2003 VOC(Voice of Customer) System, Integrated Card Information System
2004 Introduction of PDA POS, CRM system, AMS system
2005 Membership System, Integrated Call Center System, New Culture Center System
2006 BSC System, Single Project Direct Purchase Management System, Agreement Management System, Internal Accounting System
2007 New Personnel System, Damage Repair System
2008 SSO (Single Sign On) Integrated Access to Company System
28
Think Customer
2009
Dear Customer, how may we be of service to you?

Lotte Department Store with enrichment of quality products and services
We will always be with our customers with earnest, honest,
and unmatched service.
■■
Realization of Value MD
MD (Merchandising) signifies the set of activities required to sell products to customers and is comprised of distributing
products and services that meet the needs of the customers in the right time with reasonable prices. In a typical operation of
store management, MD is comprised of lay-out, product composition, product purchasing, inventory management, sales
promotion, and display. The true value of Lotte Shopping can be considered to lie within MD. Lotte Shopping is executing
sustainability management through MD.
Differentiation MD
1. Multi Shop
Multi Shop is a form of store that combines 2 or more brands in a single space. This enables the proposal of a wide variety of styles that was previously unfeasible
with any single brand. Customers increasingly prefer one-stop shopping space as they experience a lack of time for shopping. Furthermore, customers are
increasingly focusing on selection of products based on concepts as opposed to brand names and are seeking to present one’s style in an individualistic fashion.
Due to this trend, multi shops are becoming the main stream medium of the global fashion market. Lotte Shopping, as of December 2008, is managing 28 shops in
67 stores including O’live Hotstuff, Pop Cast, Shoe Clip, Via Galerie, Luxury Stationery, and THE PLACE, etc.
2. Expansion of PB/NPB
Lotte Shopping is expanding superior independent brands that can

only be seen in Lotte Department Stores, and uniquely convey
Lotte°Øs valueto our customers. Lotte Shopping is seeking out
promising new brands, providing systematic support, and creating an
independent brand to realize differentiated MD. In 2008, Lotte
Shopping discovered 20 superior brands including Benefit Eye Brow
Bar, Jill by Jill Stuart, Brooks Brothers, Dpam, and Blue Marine
Home Collection. These brands were entered into the NPB, thereby
enhancing competitiveness.
3. Emerging M/D
Lotte Shopping is taking an active role in the development of new

growth products through strategic partnership with its cooperative
firms. Lotte Shopping is discovering niche markets with increased
demands through analysis of existing product lines and markets, and is occupying the brands that fall within
the new product lines in advance, thereby creating new zones.
Lotte Shopping has newly established the Young Contemporary Zone comprised of Juicy Couture, Sandro, and
Manush, etc. with the increased demand for high speed casual by young customers in consideration.
Furthermore, Lotte Shopping expanded the trendy product group named Urban Casual Zoning, targeting men
in their 20’s, by introducing System Homme, Club Monaco, and T.I for men, etc.
_ MD : Activities necessary to sell products to customers. MD is comprised of a set of activities to distribute

products and services that meet the needs of the customers in the right time with reasonable prices.
_ PB : Form of merchandising in which the distribution enterprise directly participates in the planning, production,
and sales of the product (Private Brand)
_ NPB : Form of merchandising in which the production enterprise is responsible for planning, production, and
sales while a single designated distribution enterprise takes responsibility of selling such products (National Private Brand)
31
Think Customer
03
Green Price Program

Lotte Department Store implemented the “Green
Price” program on men’s formal wear, city casual, and
shirts since August 2007. The Green Price program
started with the purpose of eliminating customers’
mistrust of prices due to arbitrary discount sales and
proposing a reasonable price.
The most important thing for customers is the price tag
the customers see in the stores. Regardless of the high
quality service and pleasant shopping environment, the
department store will lose customer confidence when
the customers cannot place their confidence in the
prices. Lotte Department Store reduced the prices of products by approximately 30% through agreements withour cooperative firms. However, we will also strictly
observe the indicated prices and forgo arbitrary and occasional sales at all times with the exception of predetermined season off periods.
Upon the implementation of this program, our customers were able to purchase normal goods at a reasonable price, and Lotte Department Store has recovered
the customers’confidence in product prices. This has subsequently led to increase in sales for the product lines implementing the Green Price program. Increase
in normal goods sales signifies the company’s ability to cut back on inventory costs and increase profits.
The Green Price program enables the provision of products at a reasonable price to the customers. The Green Price program also enables the improvement of
profit structures of manufacturing and distribution enterprises by increasing rate of normal goods sales. Furthermore, the Green Price program is a win-win
system that helps restore brand image and customer confidence.
※ Expansion of Green Price Program to Wine

Since June 2009, item list for the Green Price program has been expanded to wine.
Wine is another item with discount competition, causing price confusion among
customers. Lotte Department Store’s Green Price program offers wines with
reasonable price to customers, and also provides wines which we directly outsources
from the farm.
David Project
In fall 2008, Lotte Department Store introduced the “David Project” through
joint planning with its cooperative firms in order to overcome the stagnant
situation of the men’s wear market. Though the price appeal brought about
by discounts were dispensed of due to the implementation of “Green Price”
program, the increased payability resulting from the increased sales of
normal goods enabled reinvestments in product development. The David
project, which draws is motif from the Michelangelo’s “David” that
represents the perfection of men’s appearance, is a campaign intended to
revitalize the stagnant men’s wear market by proposing new fashion trends
to male customers in department stores and clothing brands. The David
Project brought about many changes to the men’s wear market through
planning and launching products that adopt the “Slim and Stylish” fashion
and proposing a slim and stylish ways of wearing such garments. Men’s
formal wear sales at Lotte Department Store increased dramatically
following the implementation of the David Project. The customer base also
expanded to include males in their 20’s in addition to the traditional males in
their 30’s and 40’s. The David Project is a strategy unique to Lotte
Department Store that provides value to customers through new fashion
style and expands the market with cooperative firms.
32
■■
Customer-Centric Management
All employees at Lotte Department Store think from our customers’ perspectives and are striving to provide the service our
customers want. Furthermore, Lotte Department Store is making innovative improvements to its system and regulations to
provide world class service according to the vision of leaping to the top-ranked distribution enterprise.
MVG / VIP Customer Service

All Lotte Department Store branches are implementing various services and marketing for our
most valued customers. In 2009, Lotte Department Store increased benefits provided to our MVG
(Most Valuable Guest) and increased the number of customers to receive such benefits. As the
competition to attract customers with high purchasing power is intensifying each year, Lotte
Department Store will increase the number of customers receiving such conveniences and
services and further subdivide the management of these customers according to predetermined
levels to enhance customer loyalty. The new nomenclatures for MVG areMVG-P (Prestige), MVG-
C (Crown), and MVG-A (Ace). Customers are automatically designated as the appropriate MVG
upon reaching the predetermined purchasing amount. Customers can also check whether they
have met or fell short of the MVG standards through the “My Position Service” provided within the
Lotte Department Store homepage. Furthermore, the number of MVGs has been increased by 5,000.
Basic services for MVG include ① private parking and valet service, ② gifts during holidays and anniversaries, ③ access to MVG lounge, and ④ discount services
regardless of possession of coupons. In additional, different stores are providing various benefitsincluding porter services, personalized shopping guide, gift
counseling for holidays, and presentation of thank-you gifts.
_ My Position Service: Lotte Department Store is providing the My Position Service which allows customers toconfirm their total purchase over the past year and lets the customers know
what benefits they can receive. This information can be confirmed at the Lotte Department Store homepage or the kiosks in each store.
Customer Value offered through CRM System

CRM (Customer Relationship Management), just as the phrase indicates, is a strategy making family-like customers through “customer relationship
management.” More specifically, CRM is an activity that provides differentiated services which fit into thecustomer characteristics.
Lotte Department Store became the first to introduce the CRM system in the department store industry in November 2004. The CRMsystem goes beyond the
traditional focus on personal information and purchasing records and scientifically analyzes customer purchasing activities, loyalty, life style, and potential
purchasing power, etc. to implementtarget marketing. Furthermore, LotteDepartment Store independently developed the AMS (APT Map Solution) that combines
geographical data to CRM data and transformed the trade area management based on the concept of distance to one based on time required to reach stores,
accessibility and other customer oriented perspectives. At the “8th Teradata Universe Conference” in 2007, Lotte Department Store was designated as the first
Korean enterprise to implement successful CRM marketing. The members program that was introduced to Lotte Department Store in November 2005 was
expanded to include 17 enterprises under Lotte Group and has secured over 10 million membership holders.
Customers under the definition of CRM can be subdivided according to purposes based on purchasing power, loyalty, life stage, purchasing potential during
promotion period, etc.in addition to the demographic factors including age, occupation, and residence. Lotte Department Store, in addition to conveying information
to target customers through DM and SMS, etc. is implementing customer participatory culture marketing, customer event driven marketing that manages
anniversaries of customers, customer invitation session as a method of 1:1 marketing as a part of marketing and operations support activities utilizing CRM.
Furthermore, Lotte Department Store is implementing MVG/ VIP differentiation service and establishing MD strategy through purchasing pattern analysis of each
trade area and reflecting such service activities in key decision making.
33
Think Customer
03
Certificate Acquisitionof CCMS (Consumer Complaints Management System)

As the program recommended to enterprises for adoption and operation by the Fair Trade Commission,CCMS signifies an
autonomous management execution system to prevent customer complaints in advance and provide prompt relief for complaints.
Lotte Department Store held the CCMS introduction ceremony in June 2008, and then acquired the CCMS certification as the first in
department store industry (June 2009) by building customer complaints prevention, internal control system, and customer complaints
A/S autonomous management system. In particular, regarding CCMS evaluation Lotte Department Store stood high in estimation in
terms of CEO’s iron will for customer-centric service management, high interests by all employees, and organized VOC system in
operation, etc.
[CCMS Implementation]
[CCMS Execution Guidance] [CCMS Management by Phase]
Phase I: Establishment of Execution System

- Clarification of CCMS principles by CEO
- Appointment of CCMS manager
- Assignment of appropriate authority and responsibility
- Establishment of CCMS system
- Establishment of internal control system
- CCMS training
Phase II: Implementation of CCMS
- Establishment of implementation procedures for prevention
- Establishment of implementation procedures for relief∙within company
- Establishment of implementation procedures for relief∙outside company
Phase III: Maintenance, Promotion, and Improvement of CCMS
- Recording, analysis and utilization of customer complaints
- Measurement of customer satisfaction regarding CCMS
- CCMS inspection and evaluation
- Continued improvements to CCMS
34
■■
Consolidation of Service Capability
Lotte Department Store, based on the understanding that customer service improvement is derived through enhanced
competence of store operations manager, is implementing training and award systems including “service maestro” and
“shopping advisor,” etc.
Service Maestro
Lotte Department Store is implementing a system in which co-workers displaying superior customer service are selected as “service maestros” and awarded
accordingly. Each year, co-workers with high service evaluation ratings are selected. These persons are awarded with a letter of commendation from the president
and CEO, prize money, and are given an opportunity to study abroad. The execution of this system has lead to the instillation of the workers’ self-esteem and further
efforts towards providing customer-centric service.
Shopping Advisor
An important service for customers is the ability to assist the customers in their selection of products with accurate information and knowledge about the products
in stores. Since 2008, Lotte Department Store has implemented the “Shopping Advisor” certificate system with the candidate pool of operations managers at each
store to foster professionals capable of assisting our customers in their shopping experience. Certification is granted after receiving special training from the store
manager for a specified duration over women’s wear, lingerie, golf, baby, and wine products. Through this system, our shopping advisors are able to make
suggestions from the customers’ perspective and provide prompt and accurate answersto customers’ questions. This has led to increased purchase satisfaction.
Customer Satisfaction Survey

Customer satisfaction survey is conducted biannually to continuously inspect the current customer satisfaction level at Lotte Department Store and to
devise strategic improvement methods for increasing future customer satisfaction.
Customer Satisfaction Survey Case Study
Customer Satisfaction Index (CSI) Survey for First Half of 2008

Subject of Survey: Customers present at Lotte Department Store on the day of the survey that make purchases more than once a month.
Method of Survey: 1:1 interview at MVG lounge, parking lot, culture center
Number of Sample: Total 3,595 (allocated across all Lotte Department Stores considering the size of each store)
Survey Content: Store environment, product, service attitude, amenities, event, information, overall image satisfaction etc.
Utilization of Results: Analysis of results by store, survey criteria, and customer category. Identification and implementation of
improvements.
[Customer Satisfaction Trend]
※ 2008
35
Communication with Customers
Think Customer
03
VOC Appeals Center

Lotte Department Store’s ears are always wide open to our customers. Our customers can present their opinions anytime, anywhere. Customer service centers in
all of our stores offer prompt consultation and handling for our customers’ inquiries, inconveniences, and complaints from the customers’ perspectives. The
internet homepage VOC system, capable of receiving inquiries and inputs regardless of time and place, forwards all matters received to the appropriate
representative. Subsequently, the said representative provides a response within 24 hours, enabling a fast and convenient method of handling appeals. Lotte
Department Store goes beyond simply resolving the issue by analyzing the root cause of the customers’ complaints and applying these causes in the betterment of
Lotte Department Store’s services.
[Online VOC Appeals Handling Status]
Failure to Exchange Defective Poor

Types of Appeals Inquiry Satisfaction Poor response Total
keep a promise /refund goods hygiene
2006 8,576 1,673 1,612 5,320 1,510 1,582 246 20,519
2007 10,206 1,826 1,710 7,705 924 970 242 23,583
2008 14,082 1,348 642 5,493 539 1,234 135 23,473
Want Slip
Lotte Department Store is implementing the Want Slip campaign to gather complaints and opinions occurringfrom the points of contact with customers and to
apply these inputs into the management improvement activities. Under the catch phrase of “we will lend our ears to the smallest of our customers’ voices,
”employees of Lotte Department Store have created a system in which the voices of the customers are heard and these inputs are used to bring about
improvements.
VIP Customer Mentor Program

Lotte Department Store collects and reflects our customers’ opinions regarding MD and product development, the critical factors of department store business.
Customer mentors are selected among VIP customers highly sensitive to fashion trends. These customer mentors serve for 1 year. Customer mentors are
provided with a topic in advance and present their opinion through a Focus Group Interview on the said topic. In 2008, 3~6 customer mentors were selected in the
miscellaneous goods, women’s wear, men’s wear, and household product groups. A total of 27 customer mentors participated in this program in 2008.
If I was to be the Product Planner

Lotte Department Store operates an online channel always open to suggestions regarding MD. All Lotte Department Store homepage members can post.
Members may write freely about stores, brands, ideas about new products, proposals, and advanced practices overseas. Superior ideas will be selected and
awarded on a regular basis. The aforementioned teams’ ideas will be reviewed for application in real life. This program was initiated in June 2008. An average of
approximately 60 product related ideas are being registered on a daily basis.
Management of Homemaker Customer Evaluation Group

Lotte Department Store manages a homemaker customer evaluation group in each store to receive direct input from our customers and reflect their ideas. The
homemaker customer evaluation group visits the store and confirms store temperature, assortment of goods, amenities, and products from the customers’ point
of view and indicates inconveniences. These evaluations are conveyed through monthly performance report and discussions with the store manager. Improvement
measures are implemented for inconveniences are complaints raised.
36
■■
Product Safety Control
Lotte Department Store has established risk management and response system for food safety and hygiene to eliminate
risk factors in advance and is executing efficient hygiene control.
Quality Assessment Personnel Program

Lotte Department Store first introduced the quality assessment personnel program in August 2003. The program initially started with 4 people and has been
subsequently expanded to encompass all stores. Quality assessment personnel strive to manage hygiene of food stores, inspect violations of food related rules and
regulations (date of expiry, country of origin labels, etc.), inspect personal hygiene (workers and cooks), and to improve areas subject to poor hygiene including
refrigerators and freezers and rear areas. Furthermore, restaurant hygiene inspection is taking place alongside these efforts. Key inspection areas for each month
have been selected for inspections and inspections are taking place in conjunction with the product testing laboratory. Furthermore, hygiene training is conducted
on a regular basis to ensure thorough hygiene control so our customers can feel absolutely safe about the products they purchase.
[2008: Key Inspection Areas by Month]
Category January February March April May June

Content Preparation for stringent Inspect gift packages Inspect country of origin, Inspect country of origin Strict inspection of Intensive sampling test
inspections by public - exaggerativepackaging, false and residual chemicals of spring herbs and summer food poisoning by public agencies
agencies in light advertisements in agricultural products vegetables - sushi, lunch boxes, cold - personal, work site, and
of New Year holiday - Inspect labels and markings - country of origin label - confirm markings on noodle broth etc cooking utensil hygiene
- observe country of origin and inspection imported dry herbs inspection
markings - preparations for residual - hygiene inspections on Take-
- various documents, refrigeration chemical inspection Out products
and freezing temperature
Category July August September October November December

Content Focus on personal Focus on management Preparation for stringent Management of hygiene Focused inspection Inspect gift packages
hygiene during monsoon of food poisoning inspections by public “blind spots” during Kimchi-making for Christmas and
season - personal and cooking utensil agencies in light of - cooking utensils, food tasting season end of the year
- prevention of waterborne hygiene Chusok holiday table, rear refrigerator, frozen - inspect country of origin - inspect country of origin
epidemic - storage of raw material etc - product sampling, country of show case, work site etc markings on agriculture and markings on agriculture and
- caution against food poisoning origin, labels, date of expiry etc Inspect markings on marine products marine products
Sushi food poisoning imported products - salted sea foods, cabbage, - salted sea foods, cabbage,
inspection - country of origin etc and radish etc and radish etc
- food poisoning bacteria found
in ‘07
Food Hygiene Prevention Activities

Category Content
HACCP certification of meat worksite
Reinforced standards for hygiene facilities
Reinforcement of hygiene facility standards
Standardized hygiene facility criteria for deli/ snack worksite
(cleaning table, paper towel, knives, kitchen board, sterilizer etc)
Prepare manuals for response Include reporting system, response methods,
against crisis situations and compensation standards in manuals
Increased hygiene rules
Periodic testing of hygiene rules and regulations by store manager
and regulation knowledge
Improved food hygiene duties Reinforced hygiene training (quarterly, in conjunction with KFDA)
Prevention of hygiene related accidents through focused control of
products with potential for food poisoning in summe
Summer food hygiene control
Suspension of sales of products with potential for food poisoning
(May ~ September of each year)
37
Think Customer
03
HACCP Certification
(Hazard Analysis Critical Control Point)
Lotte Department Store’s farm product store became the first to receive national HACCP
certification in December 2008. HACCP is a hygiene control system devised to block potential risk
factors in the production of raw material, manufacturing, processing, storage, and distribution
process until the product reaches the final consumer, and to secure food safety through systematic
management. Lotte Department Store has preparedfor certification evaluation by forming HACCP
promotion TF in 5 stores (Jamsil, Youngdeungpo, Star City, Gwangju, Dongnae) from May 2008.
Subsequent certification took place after the evaluation by HACCP institute under Ministry for Food,
Agriculture, Forestry, and Fisheries. All employees including workers to sales representative act
according to the HACCP standard manual in HACCP certified farm product stores in Lotte
Department Stores. Hygiene control program inclusive of entry and exit from worksite, worksite
temperature regulations, hygiene uniform, dress codes, various microorganism inspection, hygiene education, and sterilization of cooking utensils is implemented to
preclude potential risk factors causing contamination. Up to this point, only the slaughterhouses and processing plants of Lotte Department Store’s cooperative firms
have been certified. However, this certification has allowed Lotte Department Store to completely preclude risk factors even within the stores enabling differentiation
by providing products with enhanced hygienic qualities. Lotte Department Store plans to further reinforce hygiene controls and expand stores in phases at the
company level to play a leadership role in providing a food culture in which customers can feel absolutely safe about their purchases.
Korean Beef Production Record System

Beef record system is a system that mandates the attachment of ear labels on all cows and indicates and manages information regarding the entire process from
butchering through processing of cattle registered in the record support system of the livestock rating center. Lotte Shopping has computerized the entire process
from calf production to the distribution of beef sold in the food department starting from May 2005, thereby enabling customers to purchase safe Korean beef with
confidence.
Operation of Contract Farms

Lotte Department Store is operating contract farms by having agreements with farms in the producing
districts in order to obtain a stable supply of high-quality products. Currently, there are 21 contract farms
nationwide providing top of the line apples, pears, grapes, tomatoes, and melons as well as other major
fruits. The operation of contract farms can be seen as a “win-win strategy” in which contract farms are
provided with a stable outlet and the department stores are guaranteed the highest quality of products.
Lotte Department Store is expanding additional contracts with the farms held in the highest regards in the
industry based on the producing district information Lotte Department Store has accumulated over the past
30 years. Lotte Department Store intends to continuously seek out potential contract farms to expand the
supply from contract farms in producing districts.
[Contract Farms]
38
■■
Customer Information Protection
To Lotte Department Store, our customers’ personal information is the most precious asset. Lotte Department Store is
striving to handle the personal information of the 14 million Lotte Members and all of the customers visiting our stores in
the safest and the most effective manner. Lotte Department Store is learning from the all too frequent cases of personal
information leakage in major corporations and is putting forth our utmost effort to preclude the leakage and invasion of our
customers’ privacy.
Personal Information Handling Policy and Personal Information Manager

Lotte Department Store established the “Personal Information Handling Policy” and conducts all business in accordance with this policy in order to observe all
rules and regulations set forth in “Acts Regarding Information Network Usage Promotion and Information Protection.” Personal Information Handling Policy
stipulates guidance regarding the entire process of collection, usage, consignment, and destruction of personal information. This information is announced to
ensure easy access by our customers. For detailed information on Personal Information Handling Policy and Personal Information Manager, please refer to the
Lotte Department Store homepage (www.lotteshopping.com).
Company Wide Customer Information Protection and Management

Lotte Department Store convenes the Information Protection Committee 4 times a year to discuss the company wide information protection status and to develop
methods of improvement. In particular, Lotte Department Store is putting forth effort to devise technical and management measures related to protection of
customers’ personal information by designating managers through internal management planning.
Prevention of Information Leakage through Continued Training and Internal Inspection

Lotte Department Store conducts continued training to ensure employees that come into contact with customers throughout the nation can assure the protection
of customers’ personal information. Customer information protection training is conducted on at least a biannual basis for employees handling customer
information. Lotte Department Store also implements on-site inspections of customer information management to preclude all possibilities of customer
information leakage. Lotte Department Store inspects management of customer information in all points of contact including operations team, thank you events,
and MVG lounges, etc. and discusses possible improvements.
Lotte Department Store seeks to obtain certification regarding information protection management system in order to conduct even more systematic and
professional customer information protection activities. Furthermore, Lotte Department Store will put forth efforts to prevent customer information leakage due to
employees by continued training and reinforced inspection.
39
Safe and Pleasant Shopping Environment
Think Customer
03
Safety Management
Safety is of utmost concern in distribution facilities for numerous visiting customers. Lotte Department Store is engaged in continued inspection and improvement
activities and is conducting employee training and education to create a space in which customers can safely enjoy their shopping experience.
[Seasonal Safety Inspections]
① Electric Heat Image Measurement (1st): Confirm faulty connection and overheating with infrared camera
JAN.~MAR.
② Thawing season and Spring inspection: Inspect rupture during thawing season. Confirm progress of environment improvement
① Inspect fire extinguisher and gas operation: Inspect for normal operating conditions of fire extinguishing and gas facilities.
APR.~JUN. ② Inspection of generator operation: Inspect automatic operation of generators in no-load situation through simulated blackout
③ Escalator inspection: Inspect safety mechanism and hygiene of escalators.
① Safety inspection in preparation of storm and flood damage: Inspect damage prevention equipments against storm and flood damage
JUL.~SEP. in summer. Confirm conduct guidance.
② Electric Heat Image Measurement (2nd): Confirm faulty connection and overheating with infrared camera
① Winter Fire Prevention Inspection: Safety management of vulnerable areas and inspection of use of heating equipments
② Electric Heat Image Measurement (3rd): Confirm faulty connection and overheating with infrared camera
OCT.~DEC. ③ Fire Drill Competition (October): 4~7 teams to be comprised in each store. Evaluate and report measures taken against fire incidents.
④ Special Fire Prevention Training: Heightened interest among employees through fire and safety accident prevention training centered
on the store manager.
Enhanced Safety in Entrances

In 2008, Lotte Department Store enhanced management and installed additional safety devices in entrances, where safety accidents occurredfrequently. Safety
sensors have been added to 220 glass doors in 26 stores, shock protection devices have been installed, and warning signs have been attached to prevent customer
accidents. Furthermore, radiation
inspection is conducted on a
yearly basis on common store
entrances to inspect the
conditions of fittings difficult to
inspect with the naked eye in
order to prevent displacement.
Defective parts are replaced well
[Escalator Inspection] [Fire Extinguishing Inspection] [Fire Drill Competition]
in advance.
Air Quality Management within Department Stores

Department stores are facilities opened to unspecified masses and are visited by a large number of persons on a daily basis. Hence, the interior air quality
management is imperative. Lotte Department Store has developed interior air quality management standards more stringent than that proposed by legal
standards for the health of our customers, staff, and employees. Interior air quality inspection results from 2008 are as follows.
[Air Quality Testing Results for All Lotte Department Store Branches]
(조사시점: 2008년10월)
Lotte Department Results Legal Comparison with Analysis relating to Lotte Department Store
Category Item Measured Unit legal
Requirements
Low High Average requirements Main Cause Effects on Human Body Reduction Measures
Particulate Matter ㎍ /㎥ 37.0 62.8 47.60 150 31.7% Clothing, inflow from external environments Silicosis, pneumoconiosis Sufficient ventilation, strict management of filter
CO ppm 0.1 0.5 0.20 10 2.0% Human body, exhaust gas Chronic respiratory disorder Improved ventilation, limit use of burners
Store
Formaldehyde ㎍ /㎥ 8.0 71.4 35.10 120 29.3% Construction finishing materials Tussis, diarrhea, dizziness Improved ventilation, remove source, maintain appropriate internal temperature
CO2 ppm 418.0 758.5 526.80 1000 52.7% Respiration Shortness of breath, headaches Improved ventilation, maintain positive pressure, separation of persons indoors
Particulate Matter ㎍ /㎥ 37.0 92.6 70.30 200 35.2% Floor dust, inflow from external environments Silicosis, pneumoconiosis Sufficient ventilation, maintain parking lot hygiene
CO ppm 0.3 6.0 2.00 25 8.0% Vehicle exhaust Chronic respiratory disorder Improved ventilation, prohibition of idling of engine
Parking Lot
Formaldehyde ㎍ /㎥ 3.0 47.5 19.00 120 15.8% Construction finishing materials Tussis, diarrhea, dizziness Improved ventilation, remove source, maintain appropriate internal temperature
CO2 ppm 402.0 592.0 479.50 1000 48.0% Vehicle exhaust Shortness of breath, headaches Improved ventilation, prohibition of idling of engine
40
Think Society
2009
Promoting society with growing faith and hope

By fulfilling corporate social responsibility in sharing community
and striving for the development of local community, Lotte
Department Store will be a lovely companion in our society.
■■
UN Global Compact
In January 2007, Lotte Department Store became the first in the industry to join the UN Global Compact in full support of UN’s
objectives regarding human rights, labor standards, environment, and anti-corruption. Lotte Department Store hereby announces
that the 10 principles of the UN global compact are merged into part of the actual enterprise strategy, culture, and management.
The Ten Principles of UN Global Compact
Human Rights
Principle 1：Businesses should support and respect the protection of internationally proclaimed human rights; and
Principle 2：make sure that they are not complicit in human rights abuses.
Labour Standards
Principle 3：Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4：the elimination of all forms of forced and compulsory labour;
Principle 5：the effective abolition of child labour; and
Principle 6：the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7：Businesses should support a precautionary approach to environmental challenges;
Principle 8：undertake initiatives to promote greater environmental responsibility; and
Principle 9：encourage the development and diffusion of environmentally friendly technologies
Anti-Corruption
Principle 10：Businesses should work against all forms of corruption, including extortion and bribery.
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Staff and Employee Status
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04
Personnel Status by Employment Type

Lotte Department Store provides equal opportunity during initial employment and does not discriminate based on gender, age, and other limitations. As of the end
of 2008, the number of employees in Lotte Department Store is 6,004 employees in total. 73.5% of the total number of employees is full time employees. Male and
female employees comprise 46.1% and 53.4% of the full time employees, respectively. The ratio of female employees is higher as more females are hired for store
operation and management. Women comprise 3.3% of the manager level employees but this figure is increasing every year. Furthermore, women comprise 52.4%
of all new employments.
[Personnel Status]
Category 2006 2007 2008

Total number of employees 6,614 6,215 6,004
Full time 4,656 4,471 4,410
Non-regular 1,958 1,744 1,594
Retired employees 271 318 224
Retirement rate (%) 0.5 0.6 0.4
New Employment 112 158 143
- Male 63 77 68
- Female 49 81 75
Ratio of women (%) 52.7 53.4 53.4
- Manager level 2.8 2.7 3.3
- New employment 43.8 51.3 52.4
Handicapped persons 152 152 154
Handicapped employment ratio (%) 2.1 2.2 2.4
Handicapped employment ratio at Lotte Department Store is 2.4% which exceeds the government mandated ratio of 2%. Lotte Department Store was also
awarded a letter of commendation for its exemplary employment of handicapped persons. (2007 “True Company” Gold Award supervised by the Ministry of Labor
and Korea Employment Promotion Agency for the Disabled. 2008 citation for Gwangju superior handicappedwelfare facilities)
Retirement rate for the past 3 years have been 0.5% on average. Retirement rate is continuously decreasing due to the expansion of employee welfare and fair
compensation system based on performance.
[Number of Retirees and Retirement Rate]
Term 2002 2003 2004 2005 2006 2007 2008

Retiree 497 393 291 313 279 318 224
Monthly Retirement Rate 0.80% 0.63% 0.49% 0.56% 0.51% 0.60% 0.40%
[Retirement Numbers by Age and Gender]
Category Male Female

Under 30 6 57
30~50 90 40
50 and above 11 1
Overall 107 98
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Developing Talent and Competence
Lotte Department Store has established the notion of talent after determining that the fostering of talented individuals is
imperative to achieve and execute the vision of “becoming the world’s #1 distribution enterprise.” Lotte Department Store is
striving to establish a phased competencedevelopment process, fair evaluation and performancecompensation system.
In Search of Talent
Lotte Department Store is actively investing in the development of human resources in order to become a world class distribution enterprise in the 21stcentury
based on creativity and aspirations. Lotte Department Store is searching for talented persons who consider customers’ value as top priority, are passionate,
creative, and are of global capacity. Lotte Department Store is striving to foster top notch distribution talents through these ideas as the building block.
[Talented Human Resource]
Introduction of Interviews to Establish Competence based Structure

Lotte Department Store employs persons that meet the talent criteria set forth through the structured evaluation standards. Lotte Department Store conducts
structured interviews based on competence to enhance the objectivity and equity of job interviews. Lotte Department Store identified attributes of employees
deemed necessary to the accomplishment of the organization’s vision and to generate results and developed structured questioning, evaluation standards, and
interview guidance to determine an individual’s possession of these traits. Extensively trained interviewers fully knowledgeable of the competence to be evaluated
conduct interviews according to an objective standard. In this system, personal opinions and decisions of interviewers do not form a part of the evaluation, thus
securing the consistency of evaluations. This process in turn enables the selection of talented persons tailored to meet the requirements to bring about further
advancement of the organization.
Competence Development Training Process

Lotte Department Store is implementing a capability-based learning program for talent development. to achieve the management objective of world class
distribution enterprise. Lotte Department Store is conducting training based on the three major competence systems of common competence, leadership
competence, and workplace competence in order to foster talented persons capable of executing vision and values based on external management environment
including the need for globalization, change and innovation, and expertise as well as Lotte Department Store’s vision for talent including customer centricity,
passion, creativity, and global talent.
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Supporting Autonomous Self-Improvement

Credit System / e-Campus
Fostering of creative talents requires support to autonomous learning and self improvement activities. Lotte Department Store is creating an environment of self
improvement initiatives through personal credit system. Furthermore, Lotte Department Store is developing necessary competence for each job and position
through collective training, reading training, and cyber training etc. Furthermore, Lotte Department Store has established e-Campus, a cyber education system
that provides various knowledge, information, and learning material. The e-Campus reflectsthe learning needs of the employees to the fullest possible extent and
provides optimized learning program and information. The e-Campus strives to achieve a perpetual learning system that combines on-site experiential learning
and distance learning.
[Trend of Training and Education Fee Increase] [Persons Registered for Cyber and Reading Education in 2008]
Category 2006 2007 2008 Category Cyber Education Reading Education

Total Training and Education Fees (KRW million) 2,640 3,200 3,800 Number of Courses 249 267
Training and Education Fees per Person (KRW 1,000) 413 525 638 Number of Persons 12,033 6,107
Total Training Time (H) 876,800 939,400 957,950
Training Time per Person (H) 137 154 161
Total Training Courses 620 690 710
Fostering of Distribution Professionals

Lotte Department Store is managing a distribution professional fostering program comprised of training courses tailored to each position. E-MBA courses for
directors, distribution graduate courses for class 2 employees, and Distribution Collegefor classes 3, 4 employees are available. In 2008, 23 persons completed the
graduate course and 38 persons completed training at the Distribution College. The Distribution College has a history of 16 years and has 461 alumni through2008.
The graduate course which provides in-depthtraining education for Distribution College graduates has 70 alumni. The Distribution College is a 4 semester long
course. The first semester covers basic management courses such as marketing, personnel organization, and consumer behavioral theory. The second semester
provides in-depth distribution affairs practicum including distribution management affairs and operational planning affairs. The third and fourth semesters are
comprised of topical research and study abroad, respectively. The graduate course covers lectures, discussions, and group study abroad courses and awards
diplomas after evaluating submitted reports.
Category Course of Study 2008 graduates Total graduates

Director / Store Manager
Distribution MBA 12 23
Team Leaders
Managers Graduate Course 23 93
Employees, class 3~4 Distribution College 38 499
Supporting Continuing Education

Lotte Department Store is conducting 4-year in house commissioned
[Commissioned In House Colleges]
college education for 2-year college graduates holding associate’s degrees Category 4-year program 2-year program
and regular 2-year associate’s degree program for high school graduate
Myongji College, Kyungnam College University
employees in order to fulfill our employees’ educational needs and wants. Kyung Hee
School of Information and Technology,
Educational opportunities are provided to co-workers as well in order to University
Yeungjin College, Dongkang College
enhance motivation and induce continued service. Since 2006, Lotte
Department Store has cooperated with Kyung Hee University to provide a distribution management, social welfare,
major in management. To date, 34 employees received finance diplomas Department Management business Japanese, fashion business,
and 85 employees are currently completing the program. Lotte and fashion marketing etc
Department Store is cooperating with Myongji College in Seoul, Kyungnam Implementation Date September 2006 March 2003
College University of Information and Technology in Busan, Yeungjin
Enrolled 85 480
College in Daegu, and Dongkang College in Gwangju to offer 2-year
associate’s degree programs. Currently, 221 direct and cooperative Graduated 34 221
employees graduated and an additional 480 are enrolled in courses of
studies that include distribution management, social welfare, fashion business, business Japanese, and fashion marketing etc.
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In search of Talented Persons and Developing Competence
Education System by Position
Seoul National University(SNU) AFP - Lotte Department Store’s Liberal Arts Course
offering
In August 2009, Lotte Department Store opened ‘SNU AFP-Lotte Department Store’s Liberal Arts Course’ as the first among domestic enterprises
through the negotiation with college of liberal arts in SNU. The principal leadership program of SNU’s liberal arts(AFP:Ad Fortes Program) is the
training course to enhance knowledge of the liberal arts and creativity for leaders from all walks of life. This program offering was motivated by
judgment that the liberal literacy to display macro view and creativity is important to become a global enterprise. Currently, Lotte Department Store’s
executives and team managers (66 persons) are participating in this program.
[Liberal Arts Course Program]
Category Content
ㆍJune 2009 ~ August (Phase 1), August~October (Phase 2)
Period
ㆍOffered every Saturday
Trainee ㆍ66 in total for executives and team managers in head office
ㆍLiterature, Art, history, philosophy, and lectures by professionals
Education program
ㆍReading assignments and discussion, on-site program for opera and Korean classical music
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Lotte MD Academy
MD’s role of proposing high quality product to customers is among the key capacities of a department store. Starting in 2008, Lotte Department Store has been
conducting training linked with external professional training agencies (Kolon Fashion Laboratory, FIK) to enhance MD capability enforcement. Key contents of
training include fashion merchandising, prime cost calculation, and brand launching etc. Faculties for the 2 month course are comprised of fashion brand directors
and college professors. Lotte Department Store strives to achieve differentiated buying power and independent MD realization capabilities through these courses.
[2008 MD Competence Development Training Status]
Category Personnel Content

● Fashion professional course (fashion information, material, prime cost analysis, MD affairs)
Job Professional Course CMD
● Marketing Expert Course (Sales promotion, CRM marketing etc)
All members ● Global trend explanation session
Invitation of Professionals
of product department ● Fashion market trend explanation session
Department Store Association ● Food Course: hygiene safety laws, country of origin management etc
MD
MD Improvement Course ● Fashion Course: Trend, product analysis methods etc
● Miscellaneous goods, clothing, GF department, MD
MD Academy MD
_ fashion merchandising, multi shop, production process, marketing etc
● Chungang University Industry Research Laboratory
_ Dining industry expert (Deli CMD), wine (liquor CMD)
External Commissioned Training CMD, MD
● FIK MD course
_ Fashion (1), Operations (1), Director Purchase (15)
Shopping Advisor
Lotte Department Store is implementing the ‘Shopping Advisor’ program to operations managers
that interact with customers in our stores. The purpose is to increase work capacity by equipping
shopping advisors with expertise regarding the product groups they manage and to provide
differentiated services to our customers. Starting from December 2008, shopping advisors that
received professional education in areas such as fashion, lingerie, golf, baby, and wine products
have been placed in our stores. In the future, the shopping advisors will be offered in more product
groups so that all store managers can perform the role of advisors and/or consultants.
Global School
Lotte Department Store is fostering global talents with language proficiencies and a global business sense to make inroads into foreign markets and to enhance
support to its overseas projects. Global School training is conducted according to the countries which Lotte Department Store intends to penetrate into. The 6-
month course is comprised of global management strategy, global business etiquette, international contract affairs, intensive language course commissioned to
Hankuk University of foreign studies, and understanding management environment of the respective countries.
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Performance-based Incentive Program
Fair and Equitable Compensation

[Average Annual Salary by Job Classification]
(Unit: KRW 10,000)
Lotte Department Store employs identical job classification system for both
genders. In terms of annual pay, the average annual salaries of female Job Classification Gender Average Salary
employees exceed 99% of the amount received by male counterparts Male 4,794
Class 2 B
reflecting the equality of compensation. However, small discrepancies may Female 4,785
occur according to salary classes and careers. Male 3,847
Class 3
Female 3,818
Male 3,099
Class 4
Female 3,093
[Comparison of New Employee Wages and Legal Minimum Wage]
Category Normal Wage Normal Hourly Pay Minimum Wage Ratio

New Employee 131,700 6,271 3,770 166%
Performance Incentive Program

Lotte Department Store has established an annual salary system based on competence and performance. Aside from base pay and bonuses, financial incentives
are provided with personal performance and objective accomplishment in consideration. Special financial incentives are defrayed after a comprehensive review of
the yearly company performance. Merit evaluation in which personal performance records are directly reflected is used to determine annual salary class. Annual
pay is paid according to the salary class. In 2008, the additional financial incentives were provided in order to increase motivation for enhanced performance in
times of crisis through enhancing compensation for meritorious performances. Annual salary difference is applicable to all employees above class 3. The ‘08
additional financial incentives were provided to staff members above class 2.
[Evaluation and Compensation System]
Performance Management Process

Lotte Department Store conducts evaluation according to personally agreed objectives and standards to ensure fair and equitable evaluations. A differentiated
compensation system is in place according to the accomplishment of personal objectives and personal service records that directly reflect an employee’Øs
performance. Performance management takes place on a biannual basis through an interview between the leader that evaluates performance and the team
member being evaluated. All members of Lotte Department Store are assigned quantifiable personal objectives according to the company and organization
performance objectives. Fair evaluations are conducted accordingly.
[Performance Management Process]

Objective Setting Approval of
Registration of Objectives Evaluation Feedback
Consultation objectives
- Confirm - Personal Performance - Approval of - Input Personal Objectives - Evaluation
Organizational � Objectives in the Achievement � Objectives by � - 1st Evaluation by Evaluator � Feedback
Objectives of Organizational Objectives
- Determine Evaluation - Personal Competence/ Talent Evaluator - 2nd Evaluation by Evaluator Interview
Standards Development Objectives - Multi-faceted Evaluations - Coaching
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Respecting Employee Rights
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Equitable Treatment and Respecting Human Rights

Lotte Department Store employees are ensured for equitable treatment in terms of working
conditions regardless of gender, nationality, religious beliefs and/or social status according to
article 4 of employment regulations. Furthermore, Lotte Department Store observes the UN
Global Compact regarding labor standards. Periodic monitoring is conducted to dispense of
discriminatory factors regarding personnel changes, appointments, and promotions in order to
prevent personnel management related grievances. Furthermore, overtime work by pregnant
employees and employees that have given birth within the past year are limited for the protection
of motherhood. 90 days of leave is guaranteed before and after delivery.
Ombudsperson System
Lotte Department Store is implementing an ombudsperson system named the ‘Place for Sharing’
in order to resolve the complaints and grievances of staff and employees. Lotte Department Store
is striving to resolve difficulties experienced by full-time, non-regular, and cooperative employees
alike and rectifying irrational and unjust corporate culture. Counseling is a system that boosts
employee morale and enhances productivity by conducting on-demand inspection and
consultation regarding employees’ grievances, complaints, and difficulties through various
channels including visitation, telephone, internet, and e-mail. The ‘Place for Sharing’ has been
founded on April 1st 2001. Currently, in 2009, the ‘Place for Sharing’ is formed of 30 counselors
selected for their trustworthiness and counseling abilities. These counselors are working in their
respective stores. Works by these persons include counseling by job classification, position, in-
house sexual harassment center, retirement consultation, in-house lecture activities and
volunteer activities in excess of 4 times a week. From 2001 through 2008, more than 60,000
received counseling. Works by these counselors monitor improvements to working conditions,
systems, and welfare and reflect related findings in the conduct of business. The in-house on-line
counseling system has been established in November 2007 and is being operated. In particular,
the psychological counseling system has been introduced in 2008. At first, counseling by a
professional psychological counselor was implemented. Gradually, all members of the ‘Place for
Sharing’ have obtained a psychological counseling certificate and are utilizing it in their daily work.
Opening of Psychological Counseling Center
Since July 2008, Lotte Department Store has been operating the ‘Psychological Counseling Center’ to management employees’ stress and to promote psychological
well being. The ‘Psychological Counseling Center,’ in conjunction with external psychological counselors provides in-depth counseling regarding family matters,
anger management, and depression etc in addition to work related stress. All employees can receive psychological counseling at all times on-line. Those wishing to
receive personal and/or in-depth counseling may meet with an expert once a week by making reservations. In addition, self diagnosis and aptitude test are also
available. Statistically, at 87.5%, women comprised the vast majority of the persons receiving counseling while employees in their 30’s accounted for 52.8% of those
receiving counseling. Family matters accounted for 35.6% of all counseling, followed by personality issues (22.5%) and interpersonal relationships (9.7%).
Sexual Harassment Prevention Training
Lotte Department Store is implementing the ‘Creation of a Bright and Sound Workplace’ program through ‘sexual harassment prevention training.’ In 2008, sexual
harassment prevention training was conducted with 760 persons in 48 teams in the main store. For three months from August to October, sexual harassment
prevention program was conducted for 51,808 persons throughout all stores of Lotte Department Store. The sexual harassment program presents sexual
harassment prevention and response methods under the topic of ‘shedding light upon sexual harassment in workplace and conducts training focused on the
worksite through analysis of sexual harassment cases. Furthermore, the program raises awareness regarding sexual harassment through discussion and
feedback after watching the ‘Workplace Free of Sexual Harassment. Go! Go!’ VTR (15 minutes) produced by the Ministry of Labor. The sexual harassment
prevention training will be conducted for an extra year or longer in order to achieve a bright and sound workplace culture.
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Major Welfare System

Lotte Department Store employs various support systems in order to create a workable company and an environment in which employees can work with a peace
of mind. Lotte Department Store is managing various loan systems to provide financial support to employees and provides full academic scholarships from
nurseries through college. Furthermore, Lotte Department store operates condominiums and clubs for the leisure of its employees and provides financial support.
To persons moving to regional stores, housing and moving expenses are provided. Transportation expenses for visiting home. Employees are registered for an
accident insurance with coverage up to KRW 200 million for illness and accidents to employees and families. Employees are provided with medical expense
support system at the company level and comprehensive health examination system are also implemented. In particular, non-regular workers are also provided
with welfare benefits identical to the full-time workers in terms of major welfare including medical expenses support, accident insurance registration, and
condominium use benefits. Furthermore, Lotte Department Store strives to reduce industrial disasters through enhanced safety procedure training within the
worksite. Recently, Lotte Department Store has been providing various benefits regarding pensions, medical fields, and real estate services by expanding
cooperation with external agencies.
[Employee Medical Expense Support]
(Unit: KRW 1 million)
Period ’
04 ’
05 ’
06 ’
07 ’
08
Number of incidents 168 212 229 268 386
Support amount 194 230 211 253 397
※ Medical expenses provided for full-time, PT, and long term A/R employees
[Number of Condominium Accounts for Employees]

Category ’
02 ’
03 ’
04 ’
05 ’
06 ’
07 ’
08 ’
09
Number of Accounts 95 162 162 182 163 163 163 173
※ Transferred 18 accounts to Lotte Mart in 2006.
[Industrial Disaster Incidence Trend]

<Based on 25 stores including main store>
Category ’
04 ’
05 ’
06 ’
07 ’
08
Number of Industrial Accidents 7 4 4 2 1
Source: Korea Worker’s Compensation and Welfare Service
[Support to Groups] (Unit: Number of Groups, KRW 1 million)
Category ’
04 ’
05 ’
06 ’
07 ’
08
Number of Groups 64 74 70 67 72
Support Amount 182 230 225 233 254
※ As number of groups have a trend to be cumulative, only active groups have been accounted for.
Retiree Support
Each month, retirement pension installments are made in relation to retirement allowance. Retirement allowances are determined by multiplying average pay
comprised of average salary over the past 3 months and average bonuses over the past 2 months by the length of service. Lotte Department Store has registered
for external retirement insurance to ensure the payment of retirement allowance. A plaque commemorating the service of retirees is awarded to convey the
appreciation and consideration for the continued service. Also, various certificates are mailed free of cost upon request.
Outplacement Support Program
The Outplacement System has been in place since 2008 with the purpose of systematic management and support to retirees. Services provided include re-
employment and business starting consulting, competence enhancement training program, professional psychological counseling etc.
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Balancing Work and Life
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04
Family Friendly Management

Lotte Department Store is implementing a wide variety of family friendly programs to enable our employees to keep a balance between work and life. Employee
satisfaction is enhanced and family friendly culture is being settled through systems including support to childbirth and childcare, living support, counseling
programs, and family anniversary leave system.
Childbirth Promotion Campaign
Lotte Department Store is actively seeking to find a solution to the low birth rate problem that is increasingly becoming a national concern. Birth rate promotion
project involving the participation of staff, employees, and cooperative works have been introduced. Furthermore, employee welfare regarding childbirth and
childcare has been greatly enhanced, reducing the burden placed on employees while rearing children. In addition, working conditions have been improved to
enable both childcare and work to reflect the characteristics of a service enterprise with a comparatively higher number of female employees. Lotte Department
Store plans to introduce childcare facilities including nurseries starting from the latter half of this year.
[Social Welfare System relating to Childbirth and Childcare]
Details Main Contents

Celebration/ _ celebration expense provided upon childbirth: KRW 100,000
Provides celebration expense upon childbirth
Condolence Support regardless of job classification/ 3 days of leave
_ 3 months (90 days) of leave before and after childbirth
Childbirth → 45 days of leave after childbirth guaranteed as mandated by law
Implementation of maternity leave system
Maternity Leave _ Additional pay
upon childbirth
→ 60 days: provide normal wage (excluding overtime)
→ 30 days: provide subsidies from government employment support center
School School expense support for _ for children in nursery, junior high/ high school/ college (elementary school excluded)
Expense Support children of staff and employees _ maximum of 3 children/ actual expenses for applicable educational courses provided
Medica Medical expense support for _ spouse and children registered for medical insurance of staff and/or employee
Expense Support families of staff and employees _ Support amount: KRW 5~10 million per year depending on years of service
Childcare Family allowance provided _ subject: employees under class 3
Family Allowance
within employee pay _ KRW 10,000 per child (maximum of 2 children/ KRW 20,000)
_ subject: female employees with child 3 years of age
Implementation of maternity
Maternity Leave _ maximum of 1 year maternity leave per child (can be divided once)
leave for childcare
_ government employment support stipend provided during leave (KRW 500,000/ month)
Provision of children’s day and _ subject: all staff, employees, and co-workers
Other Employee Gifts
year end gifts for staff and employees _ provision date: twice per year (children’s day/ year end)
Living Support Service

Lotte Department Store provides support to enable employees to utilize various services needed in everyday life through the company. The support provided
includes celebration and condolence commodities, free legal counseling, discounts on real estate brokerage fees, and moving expense discounts etc.
Family Anniversary Leave System

Lotte Department Store is implementing a system that encourages use of leaves during anniversaries including family events, spouse birthday, and children’s entry
into school and graduation. Gifts are presented upon anniversary registration and use of leaves. Furthermore, additional financial support is provided to employees
using the company condominiums during leaves. Lotte Department is expanding the employees’ opportunities to spend time with their families through this
system
Management of Professional Psychological Counseling Center

Lotte Department Store operates professional psychological counseling center in all stores to enable employees to receive expert advice on work, everyday life, and
family related issues. In reality, family related issues comprise the largest portion of counseling.
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Communication with Employees
Emotional Management
Lotte Department Store routinely watches baseball games in groups and invites staff and employees to Lotte World. The sensible management program that
involves inviting family members of staff, employees, and co-workers has been applied, bringing about positive effects.
[Watching Baseball Together]
Communication with Employees

Lotte Department Store provides support to ensure smooth communication among employees and free proposal of various opinions and ideas. Lotte Department
Store is also striving to reflect employees’ opinions in management.
Groupware, Messenger
Groupware System and an exclusive messenger for Lotte employees have been in place starting 2006. This has allowed for the dissemination of real-time work
related announcements. Employee convenience was further improved by posting of celebratory or condolent events of all employees, on-line groups and
communities, and sharing work related information and data. Furthermore, coordination and information sharing between departments have been facilitated
through instantaneous communication enabled by the Lotte Messenger.
Proposal of Ideas
Lotte Department Store is employing a system that allows for a free proposal of ideas by employees and the reflection of such ideas to the conduct of daily business
following immediate evaluation. Employee idea manager within the support team of each store utilizes an idea pool. Ideas applicable on a company level are
collected by the general affairs team in the main store and all aspects of the idea are evaluated for practicality prior to reflection on-site. Employees may
conveniently propose ideas by logging onto the idea hot-line system on-line. Registered ideas are conveyed to the responsible person in the applicable department
and are evaluated in 10 days. A system of awarding Lotte points is being implemented for applicable and viable ideas. In addition, ‘vitamin phones’ that enable
proposal of marketing ideas through SMS, and ‘imagination lounge’ that conducts free discussions over a monthly topic among working level employees are also in
place.
Conversation with CEO

In 2008, ‘Conversation with CEO’ took place in all stores with the president and CEO of Lotte
Shopping visiting all stores throughout the first and second half of 2008. These sessions are
conducted to discuss the various problems and complaints in the conduct of business in the store
and to devise solutions. Employees attending these sessions presented opinions regarding
difficulties in the stores, welfare, marketing strategies for each store, and the way ahead for Lotte
Department Store. All such contents have been conveyed to the internal management of the
respective stores and related departments in the main store. Furthermore, stores have been
mandated to provide feedback for the discussion contents and to report the implementation
results. (Total participants in 2008 discussions: 867 from 24 stores).
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Lotte Department Store is sharing the labor-management philosophy of trust and conversation, mutual respect and labor autonomy, and
participation and cooperation and is putting forth continued effort to further develop this philosophy. Current issues and discords between
labor and management are resolved through the biennial group agreement or the labor-management conference that takes place in a
monthly or quarterly basis. Each year, joint labor-management study abroad groups are sent overseas to research and experience exemplary
management practices of world renowned enterprises and to search for methods applicable to Lotte Department Store, thereby further
developing personnel and labor management system. Due to these efforts, Lotte Department Store is maintaining a dispute free record to this
point and has been selected for superior new labor-management culture enterprise. Lotte Department Store will continue to put forth effort
holding the resolution that the labor management relations of coexistence are the foundation for the advancement of the company.
Lotte Department Store Labor Union Registration Status (as of December 2008)
Subject: 2,757 persons

※ Open Shop (Individual registration by class 4 or below employees, automatic withdrawal for class 3 or above employees)
Total registered persons: 1,902
Full-time personnel: 10
Also affiliated with: Federation of Korean Trade Unions, Federation of Korea United Worker°Øs Unions
Other: Personnel, labor, general affairs, planning, accounting, safety, auditing, broadcast, and computer related works are excluded
Joint Labor-Management Study Abroad Groups
Joint labor-management study abroad program was conducted in December 2007 to create an
opportunity to foster a global mindset and an opportunity for labor-management harmony. Programs
included site visit of Beijing Lotte Department Store construction site and exploring local business areas.
A total of 80 persons participated in the first advancements to China and had the opportunity to conduct
an open and honest discussions between labor and management.
Joint Labor-Management Volunteer Activities
Starting from August 2008, labor union executives and management have been conducting joint
volunteer activities to promote labor-management accord through emotional management. Joint
volunteer works are conducted biannually by visiting local social welfare facilities.
Lotte Department Store Safety Personnel Training

Lotte Department Store is conducting service
and safety management training once or
twice a month in each store to safety
personnel. The main content of the training is
special session on arresting methods in
emergencies, accident prevention, and
customer reception training. Furthermore,
human rights and hospitable service training
for customers and in-store employees are
conducted simultaneously.
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Coexistent Partnership Management with Cooperative Firms
Lotte Department Store has enhanced its coexistent management wit hits cooperative firms while fulfilling moral and social
obligations in order to develop into a world class distribution enterprise. Coexistent management is being implemented in
various ways through conventions and discussions, environmental management support, training support, financial/ funding
support, and expansion of communication channels.
Cooperative Firm Invitation Convention

Lotte Department Store invites officials from cooperative firms on a yearly basis to extend gratitude and provide a venue for strengthening relationship of the
mutual trust and coexistence. In February 2009, Lotte Department Store opened the ‘2009 Lotte Department Store Convention’ and invited 200 representatives of
cooperative firms. 24 cooperative firms displaying exemplary performance were awarded plaques of trust, friendship, hope, and gratitude at the ceremony. Also, 30
co-workers displaying exceptional work ethic amidst difficult conditions throughout the all stores in the nation were selected and a total of KRW 60 million along
with scholarship certificates were handed out in ‘Lotte Share the Love Scholarships.’ In particular, this year’s ceremony celebrated the 30 year anniversary of the
founding of Lotte Shopping. The ceremony featured looking back at the 30 years of development with the cooperative firms and extending gratitude to the
cooperative firms. Furthermore, a cooperative win-win relationship that shares Lotte Department Store’s vision for the future has been reconfirmed.
Revitalization of Communication
Lotte Department Store has created various communication channels with cooperative firms and is
reflecting these channels in the systemic improvements. Discussions with representatives of cooperative
firms for each product groups are conducted on a biannual basis to collect opinions and reflect such
opinions in the conduct of business. These sessions were conducted in June and December in 2008 with
some 120 CEOs in presence. Proposals regarding improving evaluation system, strengthening
communication and information support, brand development, and ensuring profitability was noted and
reflected in improving the conduct of business. Aside from these measures, the annual satisfaction survey
conducted to resolve the difficulties of cooperative firms have been expanded to a biannual basis. The results
of such surveys are analyzed and reflected in making systemic improvements.
2008 Cooperative Firm CEO Discussion Results _7 sessions in both June and December of 2008 (Total 122 CEOs in attendance)
[Proposals during Discussions and Improvements]
Category 1st Session, 2008 2nd Session, 2008 Improvements

MD Evaluation 27 7 Improved evaluation system
Communication 15 2 Conducted information exchange workshop
Brand Development 14 4 Expanded on-site evaluation, expanded support for new brands
Profitability 11 14 Sales based margin adjustment system
Others 21 16 -
Total 88 43 -
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Serving Our Co-Workers

Co-workers (delegated employees) responsible for sales in stores throughout the nation stand at the very point of the contact of customer service and are
important constituents who comprise 80% of Lotte Department Store’s manpower. Lotte Department Store is providing various support systems so that co-
workers can develop a sense of company loyalty and belonging.
Psychological Counseling Service

Lotte Department Store is the first in the distribution industry to have professional psychological
counselors visit the store to provide psychological counseling to co-workers and help manage stress.
Furthermore, certified counselors from the ‘Place for Sharing’ in each store visit co-workers rest areas or
worksite to take note of actual hardships and provide counseling.
Legal Counseling Service

Starting from July 2008, Lotte Department Store has provided overall legal counseling services for civil,
family, and real estate affairs over the phone or internet.
[ Psychological Counseling ]
Training Support
Lotte Department Store is providing training regarding work, culture, and Lotte Department Store’s vision
and value to develop superior manpower among co-workers.
ㆍNew Salesperson Competence Enhancement Training: Monthly. total of 12,500 persons per year
ㆍCyber Training for Salesperson: Customer management, sales speech etc. Total of 4,400 persons per
year.
ㆍReading and Communication Training for Salesperson: sales skills, leadership etc. Training provided
since August 2007. [ Discussions with Co-Workers ]
ㆍOn-site training utilizing store service instructor: 30,000 persons per year
Open Notes
Lotte Department Store has established a system in which co-workers can convey general discomforts
and requests during work at stores through an anonymous note. The Open Note box is located in the co-
worker rest area and feedback and measures to improve working conditions are conducted on a monthly
basis after collecting these opinions.
Co-Worker’s Day [Co-Worker’s Day ]

All stores of Lotte Department Stores designate a day of every month as a ‘co-worker’s day.’ On this day,
managers prepare an event for co-workers and hold events and provide a forum for communication to
further a sense of belonging and relationship among colleagues through birthday parties and special meal offering.
Financial and Funding Support to Cooperative Firms

Lotte Department Store is implementing financial and funding support program to overcome help middle and small cooperative firms overcome their financial
difficulties. Purchasing funds have been in advance starting from 2006 for foods and livestock enterprises that require much purchasing funds in the initial stages.
Currently, in 2008, approximately KRW 6 billion have been provided in advance for 4 enterprises. Expenses are provided in cash within 10 days, twice a month to
small agricultural and marine product enterprises. Furthermore, Lotte Department Store has developed loan programs in conjunction with financial institutions to
provide operation funds, facility, and interior funds at an interest rate of 0.8%~1.5% below the market rate.
Sales Based Margin Adjustment System

Lotte Department Store is implementing the sales based margin adjustment system to boost cooperative firm morale and revitalize sales.
This has resulted in sharing of profits beyond sales objectives. The first sales based margin adjustment has been conducted from June
through August of 2007 and a total of 455 of 2063 brands have achieved their objectives and shared profits through the fifth implementation
of the sales based margin adjustment system.
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Compliance with Fair Trade Rules and Regulations
On September 19th, 2001, Lotte Department Store became the first in the distribution industry to hold a “Fair Trade Compliance Program Proclamation
Ceremony”to announce its intention of compliance with fair trade rules and regulations both internally and externally. Furthermore, the “Fair Trade Compliance
Program Department” unique in the distribution industry has been organized under the compliance program manager with responsibilities including training,
inspection, interventions, board of director briefings, and external announcements. Lotte Department mandates prior consultation with cooperative firms regarding
joint sales promotion events, shop movement, and interior works. Systematic measures are taken to prevent unfair trade and corruption by conducting prior
screening and in-depth legal review regarding major issues. As a result of these efforts, Lotte Department Store was awarded the “Fair Trade Commissioner’s
Award” in 2005. Furthermore, during the period of the report, no legal violation by Lotte Department Store was observed by the Fair Trade Commission.
Moreover, Lotte Department Store obtained “AA rating” in the 2006 “CP evaluations.”
※ CP : Compliance Program
Fair Trade Compliance Program System

Legal Violation Prevention System
Lotte Department Store publishes and distributes work guidance titled “CP handbook” and “Work Manual” on a yearly basis to prevent violation of fair trade rules
and regulations in advance. The CP handbook includes guidance regarding large scale retailing notices and other various laws, case studies, Q&A and intervention
committee. The “Work Manual” on the other hand, lists guidance applicable to the conduct of daily business including entrance and exiting of businesses, sales
promotion event, interior, advertisement signs, and premium events. Lotte Department Store distributes such handbooks and manuals to employees in operations
and product divisions who are susceptible to legal violations. These manuals and handbooks are also posted on the homepage and company bulletin to ensure
easy access to all employees.
※ 2008 Prevention Activities

● Distributed CP handbook (volume 7) and work manual
● Distributed sign and advertisement related work guidance
● Implemented Fair Trade CP Program (posters and leaflets distribution and PR activities)
● Fair trade CP mail notification and signing by all employees
Training and Evaluation System
Lotte Department Store has established and is conducting systematic off-line training including new employee training, in-house fair trade expert development
education, and fair trade commission invitation training etc as well as on-line training including cyber training and reading and communication training etc. In
particular, operations and product division employees are obligated to complete 1 or more hours of mandatory training per quarter. Furthermore, biannual fair
trade rules and regulations test is conducted to evaluate the employee wide understanding of fair trade laws and the training effect, there by systematizing the
capacity to confirm the training effect in actuality.
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Fair Trade Surveillance and Supervision System
Lotte Department Store focuses its inspection on areas with high potential for legal violations considering the characteristics of the department store industry in
order to ensure efficient surveillance and supervision. Lotte Department Store focuses its inspection on unfair acts regarding entrance and exiting stores and
interiors, activities to increase margins during contract period, sign and advertisement activities that can be misconstrued by customers to prevent disadvantages
to cooperative firms and customers. Legal violation activities discovered during these periodic and/or on-demand inspections result in self corrective measures
including personnel reprimanding and resolving disadvantages to cooperative firms.
Fair Trade Opinion Collection System
Lotte Department Store conducts the “Cooperative Firm Satisfaction Survey” through an external research firm on a yearly basis. Through this survey, cooperative
firms evaluate Lotte Department Store’s CP activities. Also various channels including telephone reporting, e-mail, and fair trade reporting system on the internet
homepage are managed in order to facilitate reporting of violation of fair trade rules and regulations by cooperative firms, co-workers, and internal staff and
employees. Through the “Cooperative Firm Satisfaction Survey” and “Fair Trade Reporting” system, Lotte Department Store collects opinions from cooperative
firms and reflects in improving business practices.
※ 2008 Surveillance and Supervision System

● Unfair sign and advertising during bargain sale
● Store entrance and exit procedures and interior works during product group adjustment
● Forcible demanding of participation in sales promotion and discount events
● Unfair contract modification during contract period
● Conduct of other works aside from original sales
● Charging of costs unrelated to sales promotion
※ Cooperative Firm Satisfaction System

● Surveying Organization: Hankook Research
● Subject of Survey: Cooperative firm staff and employees of Lotte Department Store
● Survey Area: Cooperative firm satisfaction in terms of Lotte Department Store system, employees, and fair trade
● Survey Method: Survey through personal interview (PI)
Category Details
Systemic Level Equity of evaluation system for entrance and exist of enterprises. Equity of store layout standards.
Employee Level Expertise, hospitality, and moral consciousness of purchasing and store employees
Fair Trade Level Degree of various unfair demands, degree of standard trade contract
Acquisition of “AA” Rating in “CP Rating Evaluation” Supervised by Fair Trade Commission
In 2006, Lotte Department Store received the “AA” rating, the highest among some 60 participating companies, in the “CP Rating Evaluation” supervised by Fair
Trade Commission. This indicates that Lotte Department Store’s fair trade CP activities been recognized both internally and externally as the most practical and
exemplary. The “CP Rating Evaluation” evaluates the practical implementation of the CEO’s CP implementation intent, training, and intervention systems regarding
the fair trade CP program and assigns a rating.
Category Contents
Evaluation Supervised By Fair Trade Commission (executed by Korea Fair Competition Federation)
Evaluation Period July ~ October 2006 (4 months)
CP evaluation group (economic policies, legal, accounting, and management experts) conducted survey, interview, and site
Evaluation Method
visitation evaluations on CP enterprises
① Announcement of CP principles by CEO, ② appointment of CP manager, ③ internal inspection and reporting system for
Evaluation Areas CP, ④ Implementation of personnel reprimanding policies for violators, ⑤ establishment of management system for
related documents, ⑥ CP handbook preparation and distribution, ⑦ fair trade commission training system
Evaluation Rating Total of 8 ratings (AAA, AA, BBB, BB, B, C, D)
Participating Enterprises 60 enterprises (manufacture, distribution, finance etc)
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Social Contributions
Lotte Department Store is executing various social contribution activities under the key business policies of social
responsibilities and contribution to the nation.
Practice of Global Standards Social Contributions

Lotte Department Store installed the dedicated division of social contribution (CSR) as the first in its industry (2008) to implement nationwide social contribution
meeting global standards, and reinforced the organization further (2009). In addition, TF team for social contribution was launched by integrating main Staff
divisions in head office for corporate social contribution integration and revitalization, and corporate-wide effort to implement organic social contribution is
underway.
For this purpose, the balanced practice of responsible management of society, environment, and ethics in 3 areas of social responsibility is in progress, and
especially for environment area as the industrial leader, implementing Green Lotte is further reinforced while in society area corporate employees’ voluntary
activities are more revitalized, and more efforts are in place for childbirth promotion and helping alienated neighborhood as nationwide social contribution. In ethics
area, Clean management with global standards is put into action by keeping the goal of formation of sustainability which meets global standards.
Childbirth Promotion Campaign

As of late, there has been a common understanding that low birthrate that has reached dangerous levels, is a major factor in the decline of national
competitiveness. Korea’s birth rate last year has been 1.19 persons. Should this trend continue, Korea’s productive workforce will decrease from 2016,
subsequently bringing about a shortage of manpower. Ultimately, low birth rate leads to manpower shortage, increased burden for maintenance of elderly citizens,
and contraction of consumption and investment, all of which have detrimental effects on the national economy. The government is in the process of developing
active childbirth promotion policies and systems.
Lotte Department Store, as the leading distribution enterprise of Korea, is taking an active role in childbirth promotion campaign. Internally, Lotte Department
Store is striving enhance employee welfare to create a corporate culture in which work and family can coexist. Furthermore, Lotte Department Store is preparing
various events to raise awareness of the value of childbirth and to share the benefits. Lotte Department is utilizing a wide variety of PR channels to conduct periodic
campaigns to shed light on the happiness derived from family. Lotte Department Store is also planning to expand customer service and convenience related to
childbirth. Lotte Department Store also implements events in conjunction with the government and each respective region. Currently, Lotte Department Store is
sponsoring the 3rd Young Korea Contest managed by the Ministry for Health, Welfare, and Family Affair (MW) and is collecting various ideas and opinions for
promoting childbirth. In addition, Lotte Department Store is implementing scholarship projects for families with multiple children. In the future, Lotte Department
Store will provide preferential benefits of practical value to families with multiple children in conjunction with each respective local government. Lotte Department
Store also intends to actively partake in the childbirth promotion campaign led by the government.
[Childbirth Promotion Campaign Logo]
God’s gift,
children are blessing.
The above is the slogan and logo for childbirth promotion campaign, selected by employees’ suggestions and polls. In particular, The idea of
“Child loves you” is outstanding. Lotte Department Store plans to make the best use of this slogan and logo for interoffice campaign,
overseas cooperation, customer campaign, etc.
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Employees of Lotte Department Store become Mothers and Fathers

of Children Overseas
- 440 staff and employees volunteer to establish 1:1 sisterhood relations with impoverished children overseas -
Lotte Department Store has been executing the 1:1 sisterhood relationship program for poor children overseas since 2008. Lotte Department Store
employees become sponsors of poor children overseas and provide financial support so they may overcome the harsh realities of life and live a normal
life. Moreover, Lotte Department Store employees become psychological mentors of these children and exchange letters and gifts to introduce lives
and cultures of foreign countries.
Lotte Department Store have introduced a matching grant system in which the Store donates a monetary amount identical to the donations made by
the employees in order to vitalize voluntary donation culture. Therefore, if employees are to donate KRW 15,000 a month, Lotte Department Store
matches that sum, providing a total of KRW 30,000 to the sponsored child. 440 staff and employees voluntary participated in this campaign, originally
planned for 120 persons. This has resulted in 4 times as many sisterhood relationship than initially planned.
A Lotte Department Store employee who established a sisterhood relationship with a child in Cambodia through this event said “it’s a relief to know
that the child lives close to a well, and above all, I am happy to know that the child is attending school as opposed to tending to household affairs and
labor.” This employee also vowed to maintain “continued love and interest to the new adopted child so the child may grow up to be decent.“ Employees
participating in this sisterhood relations campaign sponsor children so they may complete schooling till the age of 18. Furthermore, opportunities to
participate in volunteer works in the respective countries and meet the children will be provided over the summer vacation period.
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Together with Local Communities
As of December 2008, Lotte Department Store is managing 29 stores throughout Korea. Opening of Lotte Department Store
brings about significant ripple effects on the respective local communities. With the opening of Lotte Department Store, the
local infrastructure expands. Furthermore, the location of Lotte Department Store in key points of traffic flow including
subway stations brings about increase in floating population and expansion in trading areas. Opening of Lotte Department
Store brings about not only economic stimulation effects by vitalizing the economy by promoting local consumption but also
increased tax revenues for the local community. Furthermore, each store strives to execute positive roles in economic,
social, and environmental aspects through partnerships with the local communities and also contributes to cultural
development of the local community.
Contributions to Development of Local Communities through Increased Local Tax Revenues

Lotte Department Store is contributing to the development of local communities through payment of local taxes in excess of KRW 39 billion.
[2008 Local Tax Payment Status]

Category Inhabitants’ Tax Enterprise Tax Property Tax Automobile Tax License Tax Total
Amount 19,930 1,386 18,221 2 7 39,546
Local Employment Policies

Currently, Lotte Department Store open invites applications of new college graduates and all employments take place through group evaluations. There is no self
employment by respective stores. Therefore, all other store management personnel are employed within the local community. This implies that the opening of
Lotte Department Store has significant impacts on creating jobs in the local community. With the opening of each store, an average 1,500~2,000 new employees
including part-time employees, service personnel, and co-workers are hired.
In 2008, Lotte Department Store opened the Star City store (1,700 persons), Gwangju World Cup store (approximately 700), and the Gimhae Premium Outlet
(approximately 800), and hired approximately 3,200 new employees. In particular, the Gimhae Premium Outlet has contributed to creation of jobs in the local
community. Currently, approximately 63% and 57% of the direct employees and service personnel, respectively, reside in the vicinity of Gimhae. Lotte Department
Store is also contributing to the creation of jobs for women. Approximately 420, or more than half, of the total Gimhae Outlet employees are women, reflecting the
characteristics of the distribution industry with an abundance of sales related jobs.
Star City Store Concludes MOU of Employment

Priority with Gwangjin-gu
Lotte Department Store’s Star City store is putting forth effort in a variety of areas for the
development and revitalizing of local communities. In June 2008, prior to opening, the Star
City store participated in the employment exhibition hosted by Seoul Regional Ministry of
Labor and received a plaque of appreciation for superior employment records. The Star City
store also concluded an MOU to accommodate regional residents to the fullest possible
extent during employment. Furthermore, the Star City store executed local friendship
activities and actively engaged in publicity relations activities and participated in the Achasan
Goguryeo festival, which has established itself as a local festival, in October 2008. This has
led to a cooperative relationship with the local district offices.
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Lotte Department Store Culture Center

Lotte Department Store is operating culture centers as a continuing education institution that supports self
improvement and leisure of our customers, thereby providing an opportunity to facilitate access and participation
in cultural life within the local communities. The first culture center in Lotte Department Store has been
established in the Jamsil store in 1988. Currently, 25 stores across the nation operate a culture center. Lotte
Department Store culture center is home to unrivaled programs and facilities in the distribution industry, and
has secured the largest number of courses and members. By providing a venue for cultural experience and
education, and informational exchange, Lotte Department Store serves as the epicenter for local development.
[Lotte Department Store Culture Center Status]

_ Seoul and Greater Seoul Metropolitan Area: 14 stores/ Regional Stores: 11 stores (total of 25 stores)
(Newly opened stores in ‘07~’08: [December ‘07] Centum City Store, [October ‘08] Star City Store)
Year Number of Culture Center Total Number of Courses Total Number of Members (yearly)
2008 25 41,860 417,515
2007 24 39,790 396,616
2006 23 39,100 402,709
The Culture Center program encompasses a wide variety of areas including arts and culture education, leisure, language, financial technology, sports, and infant
and child education. The Culture Center program reflects trends of the society and times and proposes alternatives to social issues. Furthermore, Lotte
Department Store’s Culture Center program is expanding opportunities to participate in cultural experiences in the local communities by providing free lectures,
inexpensive special training, periodic presentations and exhibitions, and performance tickets and discount coupons.
※ Introduction to 2008 Culture Center Program

① 1 Addition of Safe Food Cooking Class
_ Newly established safe food related cooking course in response to melamine incident
② Newly established child sexual harassment prevention course
_ Puppet shows and courses to prevent kidnapping of children and sexual offenses
③ Established courses related to emotional purification and depression prevention
_ Established courses for emotional purification and depression prevention in response to ensuing
suicides by celebrities
④ Expanded participation opportunities in response to economic downturns including high oil prices and
exchange rate
_ Expanded opportunities for cultural participation by opening free or discounted special courses
Lotte Department Store Environmental Arts Competition

Every spring, Lotte Department Store hosts the “Children’s Environmental Arts Competition” to raise children’s
awareness of the importance of environment and to serve as a venue for families’ outdoor activities and
education. In April 2008, Lotte Department Store opened the 29th annual “Lotte Children’s Environmental Arts
Competition.” Stores in a total of 8 regions including Seoul and Greater Seoul Metropolitan Area, Busan etc
received entries from local communities, with more than 10,000 children participating. In 2008, the
[Winner of the Grand Prize in the 2008
Environmental Arts Competition was held with the theme of “Don’t Suffer Earth, We’ll Save You!” The Environmental Arts Competition]
registration fee of KRW 2,000 per person was sent to the Korean Federation for Environmental Movement
(KFEM) as donation for the restoration of Taean, making it an evermore meaningful event.
[Lotte Department Store

Environmental Arts Competition]
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Contributions to Local Communities
Lotte Department Store is striving to fulfill its social responsibility within local communities as the number 1 shopping venue
in all major cities and provinces in Korea. Lotte Department Store conducts events with the local sentiments in
consideration, sales of donated products in a bazaar setting with participation from customers, and fundraising and donation
activities, thereby sharing the company’s profits with the local community and underprivileged persons.
Bazaar of Love
Lotte Department Store works in conjunction with the Republic of Korea National Red Cross and Childfund Korea to hold various bazaars to return part of its profits
to the society. Through the bazaar Lotte Department Store provides continued interest to underprivileged persons and conducts relief projects to disaster victims to
put forth effort into continued social contributions.
[Donations to Local Communities by Store in 2008] (Unit: KRW 1 million)
Category Main Jamsil Cheongnyangni Busan Main Gwanak Gwangju Bundang Bupyeong Ilsan Daejon Gangnam Pohang
Donation Amount 2,511 42 1 32 10 70 2 3 13 43 7 11
Ulsan Dongnae Changwon Anyang Incheon Sangin Jeonju Mia Centum City Cheongju Young Plaza Total
14 5 2 7 8 15 5 14 7 1 2,823
Local Environmental Preservation Activities

Lotte Department Store has adopted the platform of environmental value management and is
striving to preserve the local environments of all stores. In case of main store, Lotte Department
Store has participated in the Cheonggyecheon restoration project in 2005 and conducted
gardening works at Cheonggycheon. All stores throughout Korea have selected one river and
mountain within their region and are implementing the “one store to one mountain and stream”
program.
Ulsan Store Awarded the Minister of Environment Award for Environmental Campaign
Store manager of the Ulsan Store of Lotte Department Store was awarded the Minister of Environment award during the “30th anniversary
ceremony of Natural Protection Charter Announcement” in October 2008. Ulsan Store has routinely conducted garbage collection activities
around the store and terminal and climbed local mountains and conducted environmental campaigns in areas surrounding hiking paths.
Furthermore, the Ulsan Store conducted purification activities in areas surrounding Taewha River and created new flower beds on a
monthly basis through the 1 store to 1 mountain and stream program in order to share an even more pleasant environment with local
residents.
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Lotte Department Store is lending a helping hand to our underprivileged neighbors in local societies through voluntary
sharing and service activities by our employees. In 2008, a total 6,543 persons participated in Lotte Department Store’s
volunteer activities. A total of 550 volunteer activities took place, and 18,513 volunteer hours were recorded.
Accumulation of Social Service Funds through Matching Grants

Lotte Department Store has created an in-house social service funds and is managing a social service funds steering community to continuously and
systematically conduct volunteer works. In order to collect social service funds, Lotte Department Store, according to the labor-management agreement in June
2007, agreed to the introduction of the matching grant system that deducts units less than KRW 1,000 from employees’ salaries. The company will match the
identical amount and put it into funds.
Social Volunteer Works

Lotte Department Store is implementing environmental value management. Severe environmental damage and economic difficulties were expected for local
residents following the worst marine pollution accident in Korea resulting from the oil spillage in the West coast in December 2007. Lotte Department Store
provided material support through bazaar events and donation of ecological preservation funds. Furthermore, approximately 140 staff and employees participated
in the disaster control works. In addition, Lotte Department Store is conducting various social service works utilizing social service funds.
_ Taean oil spillage accident recovery activities: January 2008, participation by 140 staff and employees. Disaster control works and donation of ecological
preservation funds.
_ Sharing Coal, Sharing Love: November ~ December 2008, participation by 160 staff and employees. Supported and delivered 12,400 sheets of coal to
underprivileged families.
Volunteer Groups by Store

All Lotte Department Stores have volunteer groups in which employees take the initiatives to get engaged in volunteer works. Currently, as of 2008, 8,021 persons in
26 volunteer groups visit underprivileged residents in their respective local communities to conduct volunteer works. To induce active participation in volunteer
works in each store, number of activities by volunteer groups, number of registered and active members, support contents, and PR examples are quantified and
groups with exemplary performances are awarded.
Designation of the “Place for Sharing” as Volunteer Activities Verification Center

In April 2006, Lotte Department Store has been designated as a social welfare volunteer work certification center by the head of Korea National Council on Social
Welfare (KNCWS). According to the social welfare volunteer works certification and management regulations, Lotte Department Store manages the fostering of
volunteers, establishes DB system for certification and management of social welfare and volunteer works, and issues social volunteer work performance
certificates for volunteer workers across the nation. Counselors of “Place for Sharing” in all stores have been appointed as certified personnel and are responsible
for such works.
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Communities
Store Name
Details of local community activities
Related Photographs
Volunteer works with participation of employees:

- Group name: Sanasa
① Head office
- Visited elderly persons in Yongsan House of Love
- Sponsors mother and child resting place
- Sponsors neighborly love program at 1st dong office
of Jung district
office
Cheonggyecheon activities:
- Cheonggyecheon environmental purification activities

- Group name: Charlotte Volunteer Group
② Jamsil
- Provided lunch at Sungnam foreign workers’ house
- Visited Rainbow Rehab Clinic in Songpa-gu
- Visited Resting Place of Love in Gangdong-gu
- Visited Sujung elderly welfare center in Sungnam
Achasan activities:
- Achasan purification activities

- Group name: Love, big and small
③ Yeongdeungpo
- Visiting helpers at Sungnowon infant nursery
- Lunch delivery to elderly persons living alone in
Yeongdeungpo area
- Delivered rice to families without food in
Yeongdeungpo area
Achasan activities:
- Anyangcheon environmental purification activities

- Dasomi
④ Cheongnyangni
- Served food at Dongdaemun elderly welfare center
- Visited disabled children at Seunggawon
- Outing with elderly persons with dementia at
Dongdaemun Composite Social Welfare Center
- Donated rice to Urisarang welfare hall
Baebongsan activities:
- Baebongsan and surrounding area purification activities

- Group name: Gwanak Love
⑤ Gwanak
- Periodic visit to Donmyeongwon for cleaning and
food serving
- Sponsored Christmas event at Ondal°Øs House in
Daehwadong
Baebongsan activities:
- Boramae park purification activities
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Store Name Store Name

Details of local community activities Details of local community activities
Related Photographs Related Photographs
Volunteer works with participation of employees: Volunteer works with participation of employees:
- Group name: Sungsim Association - Group name: True Love
⑥ Bundang ⑪ Incheon
- Visited John’s House in Yongin - Incheon elderly welfare association visit
- Delivered lunch to elderly persons living alone in - Incheon Nam-gu disabled persons°Ø welfare center
Bundang visit
- Visited Gyeongin branch of leukemia and child tumor
Cheonggyecheon activities: association
- Bulgoksan and Tancheon purification activities
- Namdong-gu Olympic park purification activities
- Group name: Sharing and Loving - Group name: Chunsamo
⑦ Bupyeong ⑫ Nowon
- Visited Yerimwon (mentally handicapped persons) - Visited Dongchun House in Junggye-dong
- Companionship and daily necessaries provision to - Visited Junggye Composite Social Welfare Center
elderly persons living alone in Bupeyong 1-dong - Cooking at House of Peace in Junggye-dong
- Participated in “Food for Love” vehicle in Bupyeong
park Cheonggyecheon activities:
- Sooraksan and Bulamsan environmental
Cheonggyecheon activities: purification activities
- Cheolmasan purification activities
- Group name: One Boundary - Group name: Areumsaesang
⑧ Ilsan ⑬ Mia
- Visited Bethel’s House (facility for disabled) - Visited disabled persons’ welfare center in
- Visited House of Happiness (nursing house for elderly persons) Gangbuk-gu
- Assistant for field tour of intellectually and - Participation and sponsorship of athletic events in
developmentally disabled persons disabled persons’ day
- Joint volunteer works with regional teenage volunteer group - Delivered kimchi to families of elderly persons living alone
Cheonggyecheon activities: Cheonggyecheon activities:

- Jungbalsan environmental purification activities - Samgaksan environmental purification activities
- Group name: Bright Shining Love - Group name: Dasarang
⑨ Gangnam ⑭ Star City
- Delivered sponsorship funds for elderly persons living alone - Bathing and cleaning works at Gwangjin elderly
- 80th, 90th birthday celebration of elderly persons living alone persons protection center
- Invitation of children in Myeongdong nursery in - Visited Gwangjin composite elderly persons welfare center
Hongchon, Gangwondo, for cultural experience - Conducted kimchi making festival for the
underprivileged at Gwangjin plaza
- Daemosan and Yangjecheon environmental Cheonggyecheon activities:
purification activities - Achasan environmental purification activities

- Group name: Sarangmaru Association
⑩ Anyang
- Volunteer work at Anyang elderly welfare center
- Love sharing walkathon for starving children
- Samsungsan, and Anyangcheon purification
activities
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Store Name (Group)

Details of event program
Related Photographs

- Group name: Sarang Nanumi
- Jin-gu social welfare center visit
① Busan Main
- Maeshil nursery visit
- Maria Infant nursery visit
- Baekyangsan purification, Jin-gu/ Irwon purification
activities

- Group name: Bitgoeul Sharing Volunteer Group
- Gwangju temporary infant protection facility visit
② Gwangju
- Gwangju happiness rehab clinic visit
- “Love House” to improve living conditions of low
income elderly persons living alone in the area
- Invitation event of multi-cultural families and single
parent families in the area
- Regional cultural asset “Mangwijung” purification
activities

- Group name: Dasarang
- Sungae elderly nursing home visit
③ Daejon
- Assistants for outing of visually handicapped
persons from Hanmaeum House
- Neulsarang infant house visit
- Seo-gu composite elderly welfare center visit
- Gapcheon environmental purification activities

- Group name: Sarang Association
- Visited elderly persons without dependents in the
④ Pohang
region
- Support of Kimchi sharing with love
- Northern bathing resort and Hyungsan river area
purification works
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Store Name (Group) Store Name (Group)

Details of event program Details of event program
Related Photographs Related Photographs
- Group name: Dongheng - Group name: Dasom Association
- Serving and dishwashing at free dining facility in the - Assisted household affairs for elderly persons living
⑤ Ulsan ⑨ Sangin
region along in Sangin area
- Visited “House of Love,” a child protection agency in - Sponsored low income children in Daegu
Ulsan - Invited elderly persons living alone to longevity
- Visited Taeyon rehab center festival
- Athletic events in conjunction with Daegu disabled
Cheonggyecheon activities: persons’ welfare center
- Taehwa river and Shinsunsan environmental
purification activities Cheonggyecheon activities:
- Juheulsan environmental purification activities
- Group name: Hanoolsarang - Group name: Ongoeul Volunteer Group
- Visited elderly persons living along in the region - Facility repairs in study room for children with single
⑥ Dongnae ⑩ Jeonju
- Visited Sungaewon children parent in Jeonju
- Invitation of children in nurseries to department - Visited Jeonju elderly nursery home
store - Cosmetics volunteer works for house of happiness
at elderly persons’ welfare center
- Oncheoncheon environmental purification activities Cheonggyecheon activities:
- Moaksan environmental purification activities
- Group name: Nanumi - Group name: Inhyang
- Visited Sungshimwon in Changwon - Visited Sungshimwon
⑦ Changwon ⑪ Centum City
- Repaired facilities in regional welfare facilities and - Volunteer activities in conjunction with social welfare
donated daily necessaries facilities in Haeundae and Sooyoung area
Cheonggyecheon activities: Cheonggyecheon activities:

- Upo swamp and Junam reservoir environmental - Haewoondae environmental purification activities
purification activities

- Group name: Sanasa
- Visited Daegu composite handicapped welfare
⑧ Daegu
center
- Visited Daegu good neighor’s
- Invited handicapped persons in area to watch
movies and provided food
- Palgongsan area environmental purification
activities
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Love of Earth for Our Next Generation,

Eco-Friendly Management is on its way.
Green management is changing the world.
Green Lotte caring for the environment is put into action
for the better tomorrow.
2009
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Green Value Management
Environmental issues are emerging as core value for company’s management activities. Lotte Department Store
announced ‘Green Value Management’ for the first in the distribution industry in 2004 and is being reborn as an eco-friendly
brand, which contributes to people and society.
Green Value Management Policies of Lotte Department Store
Lotte Department Store, which has led Korean distribution industry based on the customer-focused management
principle, declares ‘Green Value Management Policies’ as below for the eco-friendly development of society and
companies
1. We change domestic distribution industry into more eco-friendly one through the green value management, and
position Lotte as a global leading eco-friendly company.
2. We provide customers with diversified products and life culture, and recommend them eco-friendly daily life as a
consumer.
3. We take the lead of the eco-friendly management of our subcontractors by sharing the green value management with them.
4. We actively endeavor to curtail resources usage and waste for disposal, and perform continuous activities for
environmental improvement.
5. We comply with environment-related regulations and establish∙practice enhanced internal standards.
6. We participate in various activities to preserve the environment with subsidized environment funds, and particularly
inform customers and society of environmental significance via bird protection campaigns.
Green Management system

Lotte Department Store completed the renewal evaluation of its ISO14001 certificate for the main store and the
other 25 branch stores in December, 2008. ISO14001 is an advanced management system as international
standards for green management, which continuously monitors and reduces environmental loads. Many
manufacturers are bringing the system in while only several companies including Lotte introduce it in the
distribution industry. Lotte Department Store obtained the ISO14001 certificate in 2005 and passed the renewal
evaluation administered by the largest international certification institute of the world, SGS Certification Institute
(Arthur Kwon, General Manager of SGS Korea Co., Ltd.).
[ISO14001인증서]
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05
Practice of Green Distribution Leadership - Green LOTTE

The environmental management slogan of Lotte Department Store is Green LOTTE. It signifies that as the top leading distribution enterprise, expansion of green
value through Lotte department store’s network is placed on the environmental management.
Lotte department store’s business is comprised of two boundaries, which are Buy Side forming a partnership with cooperative firms and Sell Side selling products
to customers, and is becoming a point of contact for both sides. Cooperative firms of Buy Side include foods, household goods, miscellaneous goods, home
appliances (all in B2C biz category) as well as clothing business while business relationships with about 3000 firms including operations management firms such
as outsourcing and services are maintained. In terms of Sell Side, Lotte department store, as the biggest domestic offline consumer point of contact, operates 29
stores nationwide and 0.2 billion customers visit them every year. 2 million consumers meet Lotte department store through internet homepage every month.
Considering this business structure, practicing Green LOTTE of Lotte department store signifies playing a role of green hub expanding the intention of
environmental care to cooperative firms and consumers.
For this purpose, practice of Green partnership and efforts on Green campaign are in progress in perspectives of Buy Side and Sell Side, respectively.
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Green Company
As global warming issues are getting serious, it is likely to impose legal control over carbon emissions. The first response to
that is to reduce energy usage. Lotte Department Store establishes its target for the amount of energy reduction every year,
and performs various activities such as replacement of equipment, strengthened standards of energy management, internal
campaigns, and the like to cut down energy consumption and CO2 emissions.
Greenhouse Gas Reduction Activities

Annual energy cost amounted to 52.23 billion won and 6.28 million won was saved annually. It was reduced by 1.6% in 2008 compared with the previous year and
4.5% down compared with the annual target. Also the CO2 emissions of Lotte Department Store’s 28 branches is 227,064ton, 0.945ton/3.3m 2. We are reducing the
CO2 emissions/3.3m2 by continuously monitoring, and the result of 2008 was a 12% drop since the declaration of ‘2004 Green Value Management’.
�Installation of inverter:
�Deteriorated equipment improvement: Deteriorated freezer replacement
�High efficient lamp adoption: LED lamp replacement
�Illumination improvement: Unnecessary lamp equipment and indirect
lighting control, communications zone alternate lighting operation
�Etc: Natural lighting use, platform facility operation control, water saver
installation
Adoption of Inverter System

Lotte Department Store has been installing the inverter system, electricity reduction device, to mutual assistance motors and circulation pumps of its branches
since 2008. The inverter system results in operating electricity cutback and efficiency improvement by power load control suitable for rev count of the usage
amount. This system was applied to 10 branch stores in 2008 and reduced energy cost by 2.42 million won for the year. In 2009, 7 more branches are planned to
install the system to lessen our energy consumption.
[The number of Inverter System Installation Per Branch And Reduced Amount]
Store Installation Month Quantity Capacity Store Installation Month Quantity Capacity
Main Store March 17 305kW Gangnam Branch November 85
Gwangju Branch June 15 312kW Anyang Branch November 43
Kwanak Branch November 27 Incheon Branch November 28 7,800kW
Bundang Branch October 66 7,800kW Nowon Branch October 28
Bupyeong Branch November 23 Mia Branch October 84
High-efficiency Lighting Application

Our electricity equipment guidelines are revised in March, 2008, and thus the lighting of the stores are being changed to high-efficiency equipment such as CDM, T5
and LED lamps. We are removing unnecessary spot lighting and replacing ‘HQI 150W’, high intensity discharge lamps, with ceramic metal lamps of 70W capacity.
In addition, we measure each branch store’s intensity of illumination to control needless and indirect lighting, which leads to energy usage reduction. The energy
cost in 2008 was reduced by approx. 130 million won through the illumination control.
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05
New & Renewable Energy Equipment at Nowon Branch

Solar Energy Equipment was installed at Lotte Nowon Branch, for the first time among domestic department stores, in August, 2008. Flat boards built on the roof
can generate hot water of about 3,150 tons to be used at restaurants and toilets inside the store, which will reduce the annual energy cost by 7.5 million won.
Especially this equipment is linked to the roof park of Nowon Branch and utilized as an environmental experiential learning space for customers and children.
[Eco-Friendly Equipment Status]
Energy Saving Campaign during the Summer Season

Lotte Department Store is carrying out a campaign to reduce energy consumption of each building, whose reduced costs are gathered to support the new &
renewable energy supply business for the neglected class. We have established the standards to control the cooling temperature and lights-out and check out
them.
[Check-out List of Energy Reduction Activities]
Object Check-out Activities

Control lighting by the standards for lighting and lights-out schedules
Turn on only required lamps (preparing construction?performance) after closing the store
Store
Maintain internal temperature by operating standards for cooling and heating systems
Shut off the power and plug out of PC∙OA devices∙lighting equipment
Put two staffs (main and assistant) in charge by each team∙division for office energy control
Office Put out lighting∙OA∙heating equipment, shut off the power and plug out
Put out inside lighting during meal time
Light by the parking space with allowing each floor parking in order
Parking Lot Put out the lights of the places with natural lighting during the daytime
Comply with the standard for the air exhausters
Confirm lights-out by a staff in charge of the warehouse
Warehouse∙The rear
Carry out the lighting option to only one of two objects and put out all the lights at the disused places
Outer Illumination Control outer equipment like streetlights?show windows by the step
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Rooftop Afforestation Project

On the roof of Lotte Ilsan Branch ‘Ecological Park’ was constructed. It was the largest ecological rooftop park of Korea when it first opened in 2006. Although it had
to hand over the first position 3 years later of its opening, it is more devoted to its own aim at ‘ecological stepping stones in harmony with nature’.
Wildflowers such as Fleabanes, Chickweeds, Violets and Pasqueflowers, which are found in Mt. Gobong and Mt. Jeongbal nearby, were bloomed at the roof park in
the spring of 2008, and they look better in harmony with the existing plants to become a perfect ‘Biotope’.
In the autumn of 2007, it won Chairman’s Prize at the ‘2007 Roof, Wall, Special Afforestation Technology Contest (hereafter ‘Roof Contest’) held by the ‘Urban
Afforestation Technology Development Organization’ of Japan. Winning the prize at the Roof Contest was recorded as the first award given to an overseas rooftop
park.
Lotte Department Store’s rooftop parks were constructed as Biotope Eco-parks considering ecological cycle, different from the existing roof gardens. Thus, they
can be utilized to provide customers and staffs with natural rest places, and children with environmental experiential learning spaces; prevent the Urban Heat
Island Phenomenon; and are very effective for cutting greenhouse gas emissions by improving energy efficiency by more than 15%.
[ Ilsan Rooftop Park ] [ Centum City Rooftop Park ]
[ Wild Flower in Ilsan Rooftop Park ]
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Green Partnership
Think Environment
05
Green Partnership
Lotte Department Store is carrying out a ‘Green Partnership with
Subcontractors’ Project for the first in the distribution industry. The 22
representative companies of each product category are participating in this
project sponsored by the Ministry of Knowledge Economy. It consists of
‘Green Management System Construction’, ‘Cleaner Production Process
Construction’ and ‘Promotional Material Development for Green Marketing’
under the objective of green marketing expansion of all the subcontractors
to practice green love and win-win management.
Green Partnership Project Achievements 1 -

Construct Green Management System
We are supporting internal improvement consulting provided by an
professional consulting company so that the companies participating in the
Green Partnership Project can construct Green Management System. Total
18 companies have gained a certificate (ISO14001) of international
standards for green management system.
Green Partnership Project Achievements 2 - Publish Sustainability Management Report

We performed consulting so that the participating subcontractors could adopt and establish sustainability management, and supported publication cost for the
Sustainability Report. 11 companies of the participants published the Sustainability Report.
Green Partnership Project Achievements 3 - Improve Production, Logistics Processes

We are supporting energy saving, waste reduction, and improvement of transportation and storage processes. We established a roadmap to improve 4 companies’
cleaner logistics and a plan to save energy.
Green Partnership Project Achievements 4 - Make Green Management Manuals

Green Partnership Project is not a campaign to confer a benefit upon only the participants but a win-win project for all the 1,500 subcontractors of Lotte
Department Store. The representative companies of each product category have been selected to meet the project’s aim, and they are respectively representing for
each different part. Lotte Department Store carried out standardization work to introduce Green Management System for each product group through the Green
Partnership Project. In December, 2008, ‘Eco-friendly Manual for the clothes industry’ was made and distributed to the 700 clothes manufacturers dealing with
Lotte Department Store without charge.
Green Partnership Project Achievements 5 - Run a Green School for Subcontractors

A ‘Colleague Green School’ made a tour of the country for environmental principles and green management understanding, and total 2,500 colleagues have
completed the course. Also we produced a cyber educational course so that all personnel of the subcontractors can have access to environmental information.
Green Partnership Project Achievements 6 - Provide Information on the Environment for Customers
We developed a Lotte Green Homepage (www.lottegreen.co.kr) to deliver eco-friendly information to customers and subcontractors, which can play a role of a
promotional channel to provide customers with information on eco-products and inform subcontractors of product eco-friendliness. Also it provides useful
information to customers via its general information on nature and ecology, environment-related events and column. Furthermore, it supplies various kinds of
forms and data to give help to the subcontractors. We are providing information on eco-products not only via the online homepage but also via the green shopping
guidebook and verifying the eco-friendliness of products through Lotte’s Green Label policy and trying to deliver correct information.
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Green Product
Provide Shopping Information to Expand Eco-friendly Products

Lotte Department Store is producing and distributing an eco-friendly guidebook to provide customers with shopping information for the environment. The eco-
friendly guidebook lets customers know about the importance of eco-consumption and suggests practical plans to prevent climate change and introduces
representative eco-brands and eco-products of Lotte Department Store. The brands introduced by the guidebook are Aveda, L’occitane, Sum37°…, Fresh, Origins,
Fruits&Fashion, BB house, Man Star, Polham, Crocodile Lady, BCBG, Yejak, Ping, Eco-shop, Purum, Orga, Chaegwawon, MUJI, Natural City, and so on and it also
introduces the eco-friendly cases of Wooji Company and JJ Catering that assist Lotte’s management area. We printed 10 thousand eco-guidebooks and distributed
to the information desks of all the branches and eco-brand shops. We also provide its online service via Lotte Green Homepage (www.lottegreen.co.kr).
Introduction to Lotte Green Label

Lotte Department Store introduced a Green Label policy to expand eco-management and revitalize eco-
fashion brands. The certificates of Eco-product Mark and Good Recycle Mark that the government operates
have been mainly focused on industrial products, so in many cases they have not been applied to clothes
and food that are major goods of department stores. Lotte’s ‘Green Label Policy’ is the first eco-label of
Korea, developed for clothes, and the first case of eco-standards for the domestic fashion industry proposed
by the distribution industry.
The policy of ‘Lotte Green Label’ is to grant a green mark to verified excellent eco-products of
subcontractors that implement Green Value Management once a half year. The levels of their green value
management are assessed by international eco-marks and eco-product-related policies such as ISO 14001
and Organic Cotton Mark, and their eco-friendliness verify the quality excellence and label legality besides
environmental harmfulness like formaldehyde and heavy metals and the fastness of dye to perfectly meet
the standards of Europe and Korea. Lotte Department Store grants the Green Label to the products that
pass through all the assessment to inform customers of their excellence and is seeking institutional
incentive system for the companies with the green label.
Introduction to Lotte Eco-products

Food
The family’s health is threatened by food exposed to genetic modification, artificial additives, chemical
fertilizers, antibiotic and mad cow disease. Eco-friendly dietary life is now an impending issue not only for
the environment but also for our healthy future. Lotte Department Store is actively endeavoring to enhance
the eco-food brands for customers’ health and future generations.
Purum (all the branches of the metropolitan area)_ Purum is Latin for ‘Pure’, and this is a
specialized brand for eco-food at Lotte. It has diverse lines, which enable customers to do one-stop
shopping with more than 100 different vegetables and fruits, 30 various cereals and 300 processed
foods made of only selected organic foods.
Orga (23 branches of the metropolitan area and provinces)_ Orga has been named by the first 4
letters of ‘Organic’, where you can buy more than 3,000 various healthy eco-products ranging from
organic grains∙vegetables∙fruits to pure-blooded Korean beef cattle, processed food without [ Purum ]
artificial additives, healthy functional food, specialized atopic products and eco-friendly household
goods.
[ Orga ]
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05
Cosmetics
Makeup, which is directly related to skin health, traditionally has claimed to stand for eco-friendliness and
naturalism. The makeup brands of Lotte Department Store are trying to develop nature-friendly products by using
organic pure ingredients without artificial additives. Also they are choosing high-tech eco-methods for
manufacturing processes including eco-packing and new & renewable energy usage.
Aveda_ Aveda supplies high-functional goods with proof of the efficacy of nature through innovative and
scientific manufacturing processes. It maximizes the content of natural ingredients from 100% to 91%,
whose 90% of essential oil and 89% of vegetable ingredients use organic one. The package of its products is
also made from recycling containers and soybean oil to perform the environmental principle.
L’occitane_ L’occitane has made the goods containing natural ingredients. It has recently introduced its
new eco-products such as 5 100%-organic-products (100% pure Shea Butter, Lavender Body Lotion,
Lavender Shower Gel, 2 kinds of Essential Oil Blend) and ‘Shea Cotton Facial Care Line’, and will gradually
develop further organic goods.
Fashion
The explosive response to the recent debut of fashion brand Eco-Bag showed the potentiality of eco-products as a
new trend creating a novel fashion. Additionally continuous creation of this kind of eco-fashion trend will contribute
to environmental protection. Lotte Department Store has tried to create eco-fashion trends including Cool Biz
Fashion Show and Warm Biz Fashion Show. Also various fashion brands of Lotte Department Store are positively
developing eco-products and participated in eco-campaigns. The development of organic cotton, bamboo clothes
and clothes containing charcoal, green tea and aloe demonstrates their way of efforts to make eco-trends.
BCBG_ BCBG fashion with traditional and elegant style is specialized in dresses
made of cotton and hemp cloth and is contributing to customers’ health and
environmental conservation by raising its portion of high quality clothes in
harmony with eco-material and design. Also it continues to improve the
manufacturing processes to save raw material and energy and reduce CO2
emissions with the guidance of professional environmental consultants.
Polham_ Polham mixed the traditional look and sporty sense of new generation
lifestyles. It has taken various opportunities to participate in environmental
protection activities carrying out 7-SAVE Campaign to reduce energy usage and
environmental pollution; proposing 7 codes of conduct to prevent global warming
and preserve the environment; donating its partial proceeds of CARE T-shirts to Al Gore Foundation.
Environment-friendly Eco-shop
Eco-products are nature-friendly goods for both people and nature. However, the Korean people still have the perception that the eco-products are low-quality
products with unfashionable design and more pricy, which has caused a vicious circle that the purchasing rate of eco-products is lower than in Europe, so
manufacturers do not produce them.
‘Eco-shop’ opened on 8th floor of the Lotte main store is displaying strictly selected good-quality eco-products with excellent design in the world. Lotte Department
Store returns the proceeds of eco-shop to accumulate funds for environmental protection.
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Green Campaign
Global warming is in progress even now. The main reason for global warming is the emission of greenhouse gas like CO2.
The part on distribution enterprises to reduce CO2 in practice is energy saving consumed by mutual assistance, lighting,
refrigerator/freezer facilities, and Lotte Department Store is active in various energy saving efforts. In addition, Lotte
Department Store is the place where many customers visit every day, and the space closely related to daily consumption
pattern and lifestyle. Therefore, Lotte Department Store is advancing various campaigns to expand the reduction methods of
CO2 in a practical way to customers’ life.
Cool Biz Warm Biz Campaign

Lotte Department Store carried out ‘2008 Cool Biz Campaign Fashion Show’ jointly with the Korea
Green Foundation in June, 2008. The Cool Biz Campaign was started from the idea that if the
employees work without unnecessary ties and jackets in summer, cooling temperature can be raised
by 2°C, which would reduce CO2 emissions by 1.6 ~ 2.9 million tons yearly. Lotte Department Store
and the Korea Green Foundation first introduced the Cool Biz Campaign in Korea in 2005, and is
progressively practicing energy saving and environment-friendly lifestyle suggestions. The Cool Biz is
not only ‘No Tie Campaign’ but actively producing more fashionable lifestyle through Cool Biz fashion
and eco-products.
In winter, to the contrary, we are promoting the Warm Biz Fashion Campaign, for which we
recommend warmer clothes to lower heating temperature and save energy. Lotte Department Store
suggests a new way of business attire that the employees wear in warm layers rather than a warm
suit, enabling them to adapt to inner and outer temperatures.
Eco-family Community Operation

Lotte Department Store runs ‘eco-family’ community to contribute to environmental protection and
spread eco-lifestyles. ‘CO2 Housekeeping Book’ was turned on at the homepage to let users know monthly CO2
emissions intuitively. Once they input their electricity and gas bills, transportation, and so on, they can measure the
monthly amount of CO2 emissions and also compare it with the previous month or the same month of last year. The
families who make efforts to save energy can take part in diverse activities such as voluntary services for the
environment and eco-mom school with their accumulated points. Eco-family members are presented with an eco-
family guide book containing useful ideas for an eco-friendly life. The guide book suggests various ways to be
implemented under the theme of ‘12 life habits to protect the earth’, and introduces many teaching materials and
educational books related to global climate change. You can read it as an e-book type at the eco-family homepage
(www.ecofamily.kr).
[Eco-family Guidebook]
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05
Eco-Bag Campaign
Lotte Department Store is supplying shopping baskets to reduce the usage of disposables. They are
improving with better and more comfortable design via annual competitive show where the employees
take part, and more than 400 thousand shopping baskets are supplied yearly. Since our introduction in
2004, we have produced and distributed about 2.8 million baskets. Customers can get 50 won discount
as long as they are shopping at the food floor with the shopping baskets. The yearly usage of disposables
was going down to the level of approx. 15% after using the shopping baskets, but since ‘Enforcement
Decree of the Act on the Promotion of Saving and Recycling of Resources’ was amended in July, 2008,
the usage of disposable paper baskets have been increasing again. According to this, Lotte Department
Store is seeking an alternative plan to reduce the consumption of disposables, such as improvement of
the material of shopping baskets, lending the baskets and the like.
eco-leaflets [ Eco Leaflet ]
Lotte Department Store yearly prints more than 500 million leaflets and are trying to reduce CO2
emissions and contributing to global environment preservation by changing its leaflet to eco-friendly
one. We introduced the recycling paper with ‘Eco-Friendly Mark’ acquisition for the first time in the
distribution industry. Also we do not use industrial solvent ink when printing but use soy ink with a
certificate from American Soybean Oil Association to minimize environmental pollution. Eco-leaflets
additionally cost more than 20%, but have an effect to save 5g CO2 per page compared with ordinary '06 '07 '08
paper, which yearly results in less emissions of 2,600ton when calculating Lotte’s 500 million leaflets. [ CO2 reduction rate through eco leaflet ]
(When calculating it for 5 years, total amount of reduction reaches 13,000ton, which has the same effect
of keeping 400 30-year-old big con pines).
Also we are performing a campaign of issuing all eco-leaflets online that used to be printed during the
week from the year of 2009, which helps cut paper consumption and CO2 emissions.
Lotte Environmental School for Children

Lotte Department Store runs Lotte Environmental School for Children as an environmental campaign
together with customers. The school, which began in 2004, graduated over 1,300 total students including
the 7th graduates of 2008 for the last 5 years. The students not only participated in diverse work-study
programs such as green camps, field trips to environmental agricultural villages and bird watching
expeditions, but also took experiential environmental study trips to glaciers in Canada, eco-swamp in
Hong Kong, stop global warming facilities in Japan and so on. The programs of Lotte Environmental
School for Children are performed according to main environmental issues of the year and are well-
known for their high-quality and best environmental education, to which thousands of children apply
every year.
Lotte Green Volunteer Corps to Save the Earth [ Children’s environmental school ]
Lotte Department Store carried out volunteer activities with customers of all the branches at the second
half of 2008. It was a program to visit the places around each branch with major environmental issues to
perform volunteer activities with regional environmental NGOs and to grasp the regional pending issues
and experience an absolute necessity for environmental protection. The Green Volunteer Campaign was
held at 24 Lotte Department Stores nationwide with the participation of 16 regional NGOs and over 700
total customers.
[ Sum of graduated students in environmental school ]
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Support for Environmental Films

Lotte Department Store implemented a promotional campaign to commemorate the release of ‘The
Earth’ invited to the 7th Seoul Environmental Films Festival. ‘The Earth’, an environmental
documentary film, shows earth’s environmental systems and the beauty of nature. Actor Dong-geon
Jang took part in the narration and the Environment Foundation distributed it. Lotte Department Store
sponsored to play this film to society opinion leaders participating in the Climate Change Leadership
Course, and gave a preview to all the management and employees, whose response was very
impressive. The promotional materials were distributed and the movie tickets were presented at 24
Lotte Department Stores nationwide.
Design Deco Market

Lotte Department Store is implementing a ‘Design Deco Market’ event with the interior accessories
that were used for the interior decoration of departments. This event is to sell the interior accessories
quarterly at the special department of the main store, Jamsil branch and Yeongdeungpo branch,
which is not only an opportunity to buy the high-level decorations of Lotte Department Store at a low [ The Earth ]
price but also an eco-campaign to reduce waste via recycling.

All the proceeds from the Deco Market are donated to the neglected neighbors. The first proceeds
from the Deco Market in the summer of 2008 were used for ‘The Well of Life’ Campaign helping
Cambodian children of in water-deficient areas, and the second in the winter of 2008 for ‘Namaste,
the Ganges’ Project to help children living a day with less than one dollar at the Ganges areas of India,
Nepal and Sri Lanka.
Train Experts in Climate Change [ Design Deco Market ]
Lotte Department Store, jointly with the Chosun Ilbo and Climate Change Center, carried out a
teaching program for climate change with invited teachers. The climate change program was to
supply the teachers in active service with a curriculum and educational materials so that they could
deliver the seriousness of climate change at school and suggest homework that would prevent
climate change in daily life. The program proceeded as a discussion forum with international and
domestic popular lecturers, and the teachers who applied for ‘2008 Peach & Green Boat’, an Eastern
Asia Environmental Peace Cruise Program, were invited to the program via a drawing.
[ Climate Change Program]
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Lotte Green Fund Execution Results
Think Environment
05
Eco-friendly Gift Card Campaign

Since Lotte Department Store declared the Green Value Management in 2004, it has been performing an Eco-friendly Gift Card Campaign to return its partial
proceeds of gift cards to the environment fund. The Eco-friendly Gift Card Campaign is an environmental protection activity of a virtuous circle so that the results of
consumption by using the purchase amount for environmental protection businesses gives a benefit of the affluent environment back to consumers.
The Eco-friendly Gift Card Campaign enables numerous customers to easily take part in donation for environment. Lotte Department Store raised the
environmental fund of 3,695 million won and donated to environmental organizations for 2004~2008, and the expenditure breaks down as below.
[The Expenditure Breakdown of the Gift Card Campaign Fund]

(Unit: Million Won)
2004 The 1st Environmental Film Festival 200 Environmentally Advanced Country Research 50
Gift Card Fund Winter Bird Protection Campaign 75 Publication of Environmentally Educational Books for Children 100
Total 600 million Bird Love Scholarship 150 Others 25
2005 Environmental School for Children 150 The 2nd Environmental Film Festival 200
Gift Card Fund Environmentally Educational Program for Families 30 Experiential Environmental Program for Children 50
Total 650 million Environmental Fair of Tokyo 50 Bird Protection Campaign, etc. 170
2006 Environmental School for Children 200 The 3rd Environmental Film Festival 200
Gift Card Fund Eco-fashion Campaign 80 Environmentally Advanced Country Research 80
Total 800 million Environmental Scholarship 80 Supporting International Environmental Campaigns, etc. 160
2007 Environmental School for Children 170 Bird Information DB Construction 280
Gift Card Fund Bird Love Campaign 135 Supporting Environmental Communities 130
Total 980 million Stop Global Warming Campaign 170 The Earth’s Day, etc. 95
2008 Restoring Environmentally Disastrous Areas of Taean 100 Environmental School for Children 200
Gift Card Fund National-wide Environmental Services with Voluntary Customers 80 CO2 Calculator Development 35
Total 675 million New & Renewal Energy Equipment 90 Supporting Environmentally Educational Course Development 170
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Major Data of Environmental Management
Management Status of Energy/Greenhouse Gas

Lotte Department Store keeps reducing the amount consumed of electricity, LNG, water annually through various energy saving activities. In the analysis of energy
use of 2008, the reduction rate for the electricity usage per pyeong is 207 Kwh/pyeong, LNG with 18.5Nm3/pyeong, water with 2.8ton/pyeong, respectively. As a
result, CO2 emission is reduced to 0.945tons/pyeong, and equivalently about 12% saving over 5 years.
[Electricity Usage]
Electricity Usage Per pyeong Usage

Classification Stores
(10,000 kwh) (kwh/pyeong)
2004 22 42,254 2,129
2005 22 42,740 2,048
2006 23 42,335 1,948
2007 26 43,823 1,894
2008 29 46,193 1,922
[Fuel Usage]
LNG Usage Per pyeong Usage
(10,000 Nm3) (Nm3/pyeong)
2004 22 1,523 76.7
2005 22 1,513 72.5
2006 23 1,387 63.8
2007 26 1,367 59.1
2008 29 1,399 58.2
[Water Usage]
Water Usage Per pyeong Usage
(ton) (ton/pyeong)
2004 22 354 17.9
2005 22 360 17.3
2006 23 353 16.3
2007 26 360 15.6
2008 29 363 15.1
[CO2 Usage]
Emission Per
Classification Stores CO2 emission pyeong Usage
(ton)
(ton/pyeong)
2004 22 213,128 1.074
2005 22 214,966 1.030
2006 23 210,438 0.968
2007 26 216,301 0.935
2008 29 227,064 0.945
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Waste Management Status

Waste generated by Lotte Department Store is living waste mainly coming from stores. Generation rate of total waste for 2008 is 24,770 tons, and recycling rate is
13,089 tons which is about 53% of total amount.
[Processed Amount for Waste Classification]

(Unit: ton)
Classification 2006 2007 2008
Domestic Wastes Incineration and Reclamation 8552.3 10156.9 11565.2

of Workplaces Recycling - 956.3 815
Incineration and Reclamation 525 89 79

Wastepaper
Recycling 9789.6 11155 10989.2
Incineration and Reclamation 3 3.1 3.5

Scrap Iron, Can
Recycling 356.4 281.8 282.7
Incineration and Reclamation 33.2 8.8 8.4

Waste Containers
Recycling 229.3 174.2 165.2

Waste Plastics
Recycling 307.9 339.8 370

Styrofoam
Recycling 254.6 254.5 232.8

Waste Edible Oil
Recycling 282.4 232.8 234.1

Total
Recycling 11220.3 13394.3 13089
※ For the effectiveness of data, ’l=kg’ is assumed.
Water resource recycling rate / Sewage generation rate

(Unit: ton)
Classification Water usage Heavy water usage Heavy water use rate Living sewage generation rate Tube wash water generation rate
2006 3,532,134 793,062 22.5 3,927,822 286
2007 3,598,911 712,529 19.8 2,850,730 105
2008 3,631,829 719,860 19.8 3,160,259 129
Refrigerant Emission Rate (Unit: kg)
Refrigerant emission rate for central air-conditioning freezer

Classification
Freon123 Freon22 R11 Etc Total
2006 3,550 7,279 1,950 220 12,999
2007 2,450 8,453 4,110 371 15,384
2008 2,350 7,699 4,760 266 15,075
Halotron extinguisher holding rate (Unit: piece, %)
Classification Halotron extinguisher Etc Total Halotron extinguisher rate

2006 6,158 12,180 18,338 33.6
2008 6,614 14,043 20,657 32.0
84
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To the stakeholders of Lotte Shopping
Lotte Shopping (hereinafter called LOTTE) Sustainability Report 2009 (hereinafter called The Report) was structured and prepared by the management of LOTTE,
who retains responsibility for the contents and data presented in the report. SolAbility (hereinafter The Auditor) was assigned by the management of LOTTE to
conduct an independent third-party review of the full report. The objective of this review is to externally assure that statements and data presented in The
Report are free of material misstatements and based on thorough data collection system.
Assurance Methodology
The assurance work has been planned and performed in accordance with leading international standards, including, but no limited to, The AA 1000AS, ISEA3000.
The report has been evaluated against the following criteria as defined in the AA 1000AS..
�Materiality
�Completeness
�Responsiveness
Scope of this assurance engagement

The assurance engagement covers and reviewed and examined the following:
�Review of whether financial data has been derived adequately and correct from the financial statement audited by an external third-party auditor.
�Provision of assurance on whether non-financial data in The Report is presented in full, and free of material misstatement.
Assurance process and works undertaken

In order to provide assurance to stakeholders, the auditor undertook the following steps during the assurance engagement:
�Reviewed a selection of external media reports and selected group-level documents relating to safety, ethical and environmental aspects of LOTTE
performance, to test the coverage of topics within the report against stakeholder information needs.
�Review of the current sustainability issues that could affect LOTTE business and are of interest to stakeholders.
�Reviewed stakeholder feedback
�Reviewed LOTTE processes for determining material issues to be included in the report
�Conducted interviews with senior managers of LOTTE
�Reviewed relevant policies, guidelines and management system at store and corporate level
�Reviewed LOTTE approach to data collection and data management at corporate level
�Reviewed internal performance documentation of non-financial data presented in the report
�Conducted LOTTE headquater and one store visit at NOWON store, interviewing all relevant operational managers and reviewed store data collection system
�Reviewed environmental, health and safety related processes, data management system and data from all operational sites to test whether they have
been collected, consolidated and reported appropriately at corporate level and the locations visited
�Performed a peer review of global sustainability reports to benchmark disclosure levels
Limitations of this assurance engagement

The scope of this assurance engagement was limited to LOTTE headquater and a sample of one of 29 stores in Korea. The auditor did not conduct any visits
to overseas facilities or projects in which LOTTE holds interests. Our review of data processes included the following data sets :
environmental data, health & safety data, as well as sample social data. Our review of these data processes at operations level was limited LOTTE-
operated business visits.
85
Findings
We reviewed and provided feedback on drafts of the report and where necessary changes are made. On the basis of the work undertaken, nothing
came to our attention to suggest that the report does not properly describe LOTTEs adherence to the principles or its performance.
Our conclusions
On the basis of our review and in accordance with the terms of reference for our work we provide the following conclusion on the report. Our conclusions
should be read in conjunction with the above section on “Assurance process and works undertaken” and “Limitations on this assurance engagement”,
Materiality: Has LOTTE provided a balanced representation of material issues concerning LOTTE sustainability performance in its operations and business
interests?
�We consider that the information contained in the report covers the most relevant aspects of LOTTE sustainability management and performance
according to LOTTE business and operations
�Nothing has come to our attention that causes us to believe that LOTTE management has not applied its processes for determining material issues to
be included in the report, as described in assurance methodology.
Completeness: Does LOTTE have a complete set of information and data on which to base a judgement of what is material for inclusion in The Report?
Is the data presented in The Report complete and free of material misstatements?
�We have reviewed internal and external information and explanation on the statements on LOTTE sustainability activities presented in The Report and we
are not aware of any misstatements in the assertion made.
�Nothing has come to our attention that causes us to believe that health, safety or environmental data presented in The Report has not been properly collected
from information reported at operational level.
Responsiveness: How does LOTTE report respond to stakeholder concerns and information needs?
�We are not aware of any additional issues of stakeholder interest that are not currently included in the report
�However, it is recommended that LOTTE extends and diversifies its communication channels to engage with relevant stakeholders to acquire more in-
depth stakeholders opinions. The auditor also suggest that LOTTE conducts survey on stakeholders to identify whether interest of stakeholders
matches corporate sustainability focus.
Issues for further consideration

�The auditor recommends that LOTTE keeps refining and developing its sustainability management systems and structure across all operations,
particular in light of planned overseas operations and exploration activities.
�Defines long-term sustainability key performance indicators and targets on corporate level.
�Report stakeholders opinions collected through stakeholder engagement process.
Our independence
The auditor was not involved in the preparation of any part of The Report, and has no other affiliation with LOTTE that might compromise our independence
or autonomy or place the auditor under LOTTE influence, therefore ruling out any possible conflicts of interest.
2009. 7. 22
Solability Co. CEO Andy Gebhardt
86
■■
GRI G3 Content Index
● : disclosed to the report, ◐ : partially disclosed to the report, ○ : not disclosed to the report, N/A : Not available
Reporting
G3 item number Content Page Remarks
level
Strategy & Profile
Profile
1.1 Declaration issued by CEO about reporting structure, 4 ●
strategy, and sustainability
1.2 Key impact, risk, description on opportunities 11,15,16 ●
Organizational Profile
2.1 Organization title 5 ●
2.2 Representative brand, product and/or service 5 ●
2.3 Organizational operation structure 6 ●
2.4 Head office/center location 5 ●
2.5 Location of overseas business unit and number of countries, nation’s name having 22,23 ●
concrete relationship with sustainability issues covered in the report or key business unit
2.6 Features of ownership structure and legal form 7,8 ●
2.7 Activity market form 5,11 ●
2.8 Size of reporting structure 5,6,11 ●
2.9 Key changes of size, structure, and ownership structure in reporting period 7,8,25,26 ●
2.10 List of awards in reporting period 12 ●
Reporting parameter
3.1 Reporting period 1 ●
3.2 Publication date of recent report 1 ●
3.3 Reporting period 1 ●
3.4 Report and contact info of report’s content 1 ●
3.5 Processes for report’
s content definition and decision 1,13,14 ●
3.6 Reporting coverage 1 ●
3.7 Concrete limited items about Reporting coverage and boundary 1 ●
3.8 Reporting standards affecting comparison possibilities in periods and/or groups 1 ●

such as joint-venture company, subsidiary, contract firm, etc
3.9 Standards of data measurement method and calculation including techs and assumption supporting 1 ●
predictions applied in the process of information collection such as achievement index, etc
3.10 Reengineering results and reasons of information proposed in the previous reports 1 ○
3.11 Updated items of coverage, boundary, measurement method compared with previous reports 1 ◐
3.12 Chart showing locations of public notices in the report 85,86,87 ●
3.13 Policy and current habitual about outside assurance of the report 88,89 ●
Corporate governance, committee, participation
4.1 Organizational ownership structure 7,8 ●
4.2 Describe if chair of board of directors keeps the position of the executive together, 7 ●
describe management role and reason for assignment of chair if applicable
4.3 In case of unified structure in board of directors, the number of 7 ●

independent members or non-executive members
4.4 Mechanism proposing advice or direction to board of directors by shareholders and employees 7 ●
4.5 Relationship between organizational achievements and incentives for members of board of directors, high-level managers, executives 7 ●
4.6 Process of conflict prevention for interests inside board of directors 7 ●
4.7 Process deciding expertise and quality of board of directors to support - ○

organizational strategy for economy, environment, and society
4.8 Statements, codes of conduct, and principles about mission and core value developed 3,9,10,43, ●
internally related to economic, environmental, social achievements and activities 57,58,71
4.9 Steps for management and understanding of economic, environmental, and social achievements of board of directors - ○
87
Reporting
level
4.10 Process of self-evaluation of achievements for board of directors - ○
4.11 Prevention approaches or adoption of principles and adoption methods 15~16 ●
4.12 Economic, environmental, social consitutions developed outside with support/ 43 ●

join of organization, principles, or other initiatives
4.13 Major membership qualification of associations and domestic/overseas organizations 89 ●

4.14 List of stakeholders’ attendance 13,14 ●
4.15 Recognition of stakeholders’ attendance and selection criteria 13,14 ◐
4.16 Formation, attendance type of stakeholders including attendance rate of stakeholders in groups 13,14 ◐
4.17 Main topics and interests suggested by stakeholders and 13,14 ◐ Management approach and achievement
countermeasures index
Economy
EC1 Direct economic value creation and distribution 21 ●
EC2 Financial effect for climate change and opportunities and risks about business activities 16 ◐
EC3 Organizational incentive coverage for pension benefit plan 51 ◐
EC4 Beneficial records of government subsidy - N/A Not available
EC5 Wage rate of entry-level employee to consitional minimum wage of on-site major business unit 51 ◐
EC6 On-site purchase policy of major business unit, habitual and rate - ○
EC7 Local employment process of major business unit and rate of high-level mamagers 24 ◐
EC8 Infrastructure investment and service support activities and effects for public interests 61~68 ●
Environment
EN1 The amount of raw materials used for weight or volume standards - N/A No direct use of material due to the nature
of distribution business
EN2 Rate of recycling among raw materials used - N/A No direct use of material due to the nature
of distribution business
EN3 Amount of direct energy consumption for primary energies 83 ●

EN4 Amount of indirect energy consumption for primary energies 83 ●
EN5 Total energy amount saved by saving and efficiency improvement 72 ◐

Products and services using energy-efficient or recyclable energy
EN6 Energy reduction rate as the results of these initiatives 72 ◐

EN7 Initiative and achievement to reduce indirect energy consumption 72 ◐
EN8 Total water intake for each supplier 83 ◐
EN10 Total amount and rate of water reused and recycled 83 ●
EN11 Possession, renting, managed ground location and size in eco system protection - N/A No relevant case study
area or near region
EN12 Key impacts caused by products, services, corporate activities near eco system regions - N/A No relevant case study
EN16 Total emission amount of direct/indirect greenhouse gas 83 ●
EN17 Emission amount of other indirect greenhouse gas 83 ◐
EN19 Emission amount of destructive material of ozone layer 83 ○
EN20 Emission amount of major air pollution materials like NOx, SOx, and others - N/A Relevant for exemption of air pollution
substance control by the use of LNG
EN21 Total amount of waste water and water quality for final discharge sources 83 ◐
EN22 Discharged amount of waste material for formation and process methods 83 ●
EN23 Discharge rate and amount of critical contaminated materials - N/A Regulation compliance, No relevant case study
EN26 Initiatives for reducing the environmental effects of products and services, 75~79 ◐
degree of impact reduction
EN27 Recycling rate of sold products and packing materials for product categories 76 ○
EN28 Penalty charged for violation of environmental regulations and non-expense restrictions - N/A No relevant case study
88
■■
GRI G3 Content Index
Reporting
level
Society: labor and habitual
LA1 Employment type, employment contract and regional HR status 5,44 ●
LA2 Transfer rate and amount for age, gender, region 44 ◐
LA4 Employee ratio for adopting collective negotiation 54 ●
LA5 Minimum notice period about key updates of organizational management, 54 ○ No relevant item for collective agreements,
objection statement about collective agreement but notice on demand by message for business
cooperation, messenger, bulletin board
LA7 Regional occurrence of Injury, occupational disease, missed workdays, absence, 51 ◐

and occupational accidents
LA8 Education, training, counseling, prevention and risk management program to 51 ◐

support employees, families, local communities about critical diseases
LA10 Annual education time period for per position-based employee 46 ●
LA11 Continuing education program to support technical management and continuing 46,51 ●
employment availability and help retirement management
LA12 Employee ratio for periodic evaluation about achievement and career development 49 ●
LA13 Governance organization’s structure and employment size for gender, age, 44 ●
small group membership, other diversity related index
LA14 Basic wage ratio in male/female employees in employment categories 49 ●

Society: human rights
HR1 The amount and rate of key investment agreement for human rights article - ○
or human rights inspection
HR2 Ratio of human rights inspection for major suppliers and contract firms - ○
HR4 Car accidents and related handling for total automobiles 49~50 ◐
HR5 Management to support relevant rights and business units estimated for 54 ●
potential violation of freedom of associations and collective negotiations
HR6 Management to eradicate child labor and business units with high risk of 43 ●
child labor occurrence
HR7 Management to eradicate forced labor and business units with 43 ●

high risk of forced labor occurrence
Society: society
SO1 Program’s feature, coverage, and effectiveness for evaluation and management for 63~68 ◐
impact on local communities in the level of start, operation, and end of business activities
SO2 The amount and rate of business units analyzed for corruption risk 57~58 ◐
SO3 Employee ratio of education for anti-corruption policy and process 57 ◐
SO4 Management for corruption accidents 10,58 ◐
SO5 Position for public policy, setup of public policy and attendance to lobbying 75,79 ◐
SO8 Penalty and non-expense restrictions charged for violation of law and regulations - ○
Society: product guarantees
PR1 Customer’s health and safety impact evaluation process during the use of products and 37~38 ◐
services for improvement, ratio of major products and services with relevant evaluation
PR3 Information type of products and services with process-based request, ratio of 37~38 ◐
major products and services applicable to such information requirements
PR5 Customer satisfaction related activities including results of customer satisfaction survey 34~35 ●
PR6 Restrictions, standards, and self-motivated principle compliance program related to 57~58 ●
marketing communication such as advertisement, promotion, and sponsorship, etc.
PR9 The amount of penalty for violation of law and regulation about supply and use - ○
of products and services
89
Contact us
#17 Floor, Lotte Shopping Center Building, 1 Sogong-dong, Joong-gu, Seoul
Social contribution division, management planning department
TEL 02-2118-2030~3
FAX 02-2118-2280
E-MAIL aoii@lotteshopping.com
※ This report was printed with 100% eco-friendly paper and bean oil based ink.
90

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2009 Sustainability Report

2009 Sustainability Report

1 Sogong-dong, Joong-gu, Seoul, 100-721 Korea Tel 02∙771∙2500

1. Guidelines for Preparation of the 2009 Report

2. Content and Scope of the 2009 Report

3. Applicable Period of the 2009 Report

4. Verification of the 2009 Report

Additional information on the 2009 report

CSR, Management planning team, Planning division, Lotte Department Store

71_ Environmental Value Management

31_ Realization of Value MD

Slogan Always with you _ Always with our customers

2009 Catchphrase : START 2009

President Chul-Woo Lee

[Key Status by Stores] - As of December 2008

(Unit: persons, m2, # of vehicles)

Lotte Department Store Organization Management

Establishment of a Transparent and Reliable Corporate Governance Structure

Lotte Shopping Board of Directors

2. Rights of the Board of Directors

3. Process for Generating the Board of Directors’ Opinion

4. Auditing Committee and NSD Recommendation Committee

[2008 Lotte Shopping Board of Directors Pay]

General Shareholder Meeting

[Status of Share Ownership of the Largest Shareholder and Interested Parties]

Share Ownership Share Ownership

Protection of Shareholder Rights

[Status of Hosting the Board of Directors and Attendance Rate of NSD]

Count 1 2 3 4 5 6 7 Total Rounds of Hosting

Enactment of Ethical Action Standards and Detailed Guidance

Ethics Executive Office

Various Information Channel

Internal Reporter Protection

Treatment Process of Moral Management Violation

Specific Execution of Moral Management and Continued Prevention Activities

Prevention Activities of Obstacles to Moral Management

Moral Management Training

Clean Management Agreement with Cooperative Firm

Political Non-involvement Principle

Status of Department Store Industry

[Department StoreMarket Size Changes]

*Source: Korea National Statistical Office

[Sales in Retail Market by Business Type in Korea]

Sales Characteristics of Department Store Industry

Lotte Department Store’

Category 2006 2007 2008 Category 2006 2007 2008

Lotte Department Store’

[External Certification relating to Brand Value]

Certification Type Superintendence ExaminationMethods Date of Publication Remarks

Lotte Department Store’ s underlying principle is the““customer-centric management”

“Always with…” the Promise of Lotte Department Store

Lotte Department Store’

Lotte Department Store’

Lotte Department Store’

Lotte Department Store’

Interested Parties of Lotte Department Store

Communication with Interested Parties

[Communication Cannel for Each Interested Party]

Employee Satisfaction Survey

Cooperative Firm Satisfaction Survey

Periodic General Meeting

Contribution to local society 41~48

Eco-friendly management 69~81