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News3 min read·2026-10-19

Lotte Department Store AI STUDIO Head Choi Sung-cheol: Using Customer Data to Turn Brand Negotiations from Subjective Persuasion into Objective Discussion

Choi Sung-cheol, head of AI STUDIO at Lotte Department Store in South Korea, describes how the company's Brand AI has freed merchandise planners from time-consuming data aggregation and report writing, while 'Customer DNA' — containing customer age, spending tendencies and emotional attributes — helps discover emerging brands that lack sales history but share similar customer profiles with established ones. AI provides options and evidence; final decisions on tenancy and store layout remain with human planners.

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2026-10-19 15:42 GMT+8

Choi Sung-cheol, head of AI STUDIO at Lotte Department Store in South Korea, described in a recent interview with ZDNet Korea a concrete shift: after introducing Brand AI, the biggest difference in negotiations with prospective tenant brands is that both sides can finally discuss things objectively based on data, rather than relying on subjective persuasion.

The starting point of this shift is 'Customer DNA.' Lotte Department Store uses Customer DNA — which contains customer age, spending tendencies and emotional attributes — to uncover the potential of emerging or small-to-medium brands: finding brands whose customer characteristics resemble those of existing brands but which have little sales history. Choi says large brands already attract plenty of attention and data; what AI genuinely adds is surfacing emerging brands whose Customer DNA matches that of mature brands.

Brand AI went live at the end of July 2026. When a merchandise planner enters a brand name, the system automatically generates core performance metrics, a brand relationship network and comparisons with similar brands. Choi emphasized that AI's role is 'to provide options and evidence' — showing multi-dimensional data and relationships to widen the range of choices available for review — but final decisions on tenancy and store layout remain with the planner. Factors that are hard to quantify, such as a brand's emotional tone, market reputation, store display potential and a partner's willingness to cooperate, are areas where the planner exercises comprehensive judgment.

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In the negotiation phase, AI-generated analysis serves as objective evidence. When adjusting a brand's store area or location, the planner can present cross-flow paths of customers within the store and purchase correlation data with adjacent brands. Choi said that once brand companies see which neighbouring stores their own customer base actually generates linked purchases at, they are more willing to accept the proposed location and contracts proceed more smoothly.

Lotte Department Store established AI STUDIO in a December 2025 reorganisation, integrating the former DX team, data platform team, IT planning team and communications strategy team, and creating a new AX team responsible for company-wide AI strategy formulation and execution. AI STUDIO does not simply wait for business units to submit requests before developing systems; it proactively identifies functions needed in practice, quickly builds prototypes using vibe coding to verify feasibility, then converts them into formal systems in partnership with external collaborators. Choi summarised this as 'pragmatic, field-oriented AX that does not stop at showpiece proof-of-concepts.'

The next challenge is connecting the currently independent AI services into a unified whole. Lotte Department Store is building a data ontology so AI can understand relationships among scattered internal data on customers, brands, products, stores and sales; it is also setting up a Model Context Protocol (MCP)-based connection layer so AI agents can safely retrieve internal information. Choi noted that the retail industry has strict compliance requirements around personal data and trade secrets, so internal data cannot simply be fed into external models — 'making AI accurately reference business knowledge while maintaining security' is the fundamental premise.

It should be noted that all of the above are Lotte Department Store's own accounts. The article provides no quantified before-and-after comparison of efficiency or decision quality, and the effectiveness of the Customer DNA approach also depends on the company's accumulated scale of over 4,000 brands — whether smaller retailers with less data could reproduce similar results remains unclear.

Sources

  • 原始出处zdnet.co.kr↗
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