Lotte Department Store Uses AI for MD Strategies: "Analyzes Over 4,000 Brands"

AI Synthesizes Data and Delivers Actionable Insights
Chatbot Feature to Be Introduced in the Second Half of the Year

Lotte Department Store announced on August 26 that it has developed and implemented an in-house artificial intelligence (AI) system called "Brand AI," which analyzes more than 4,000 brands for practical use across the company.

The goal is to enhance the core work of department store merchandising (brand and product planning) by integrating AI, enabling more advanced decision-making—such as for store openings and closings—through systematic data analysis.

"Brand AI" is a brand analysis platform in which AI interprets and processes key data needed to establish merchandising strategies, and then provides the information in visualization form. By connecting data that had previously been scattered at the individual brand level, it offers integrated diagnostic services that allow users to grasp not only the performance trends of each brand but also the interrelationships between different brands.

Employees of Lotte Department Store performing their duties using 'BrandAI' (AI image). Lotte Department Store

The flagship feature, the "3D Network Graph," represents brands that are available in stores as nodes, visually connecting them based on factors such as purchase correlations to display the network of relationships. This makes it possible to easily see each brand’s characteristics as well as the overall competitive landscape in the market.

For comparing and analyzing groups of similar brands, the "Brand DNA" function is used. After choosing a target brand and up to five brands for comparison, the system displays key indicators—for example, sales revenue for each brand—in a radar chart. This approach allows users to contrast differences between similar brands based on their relative positions within the same product category.

In-depth analysis of specific brands is handled by the "AI Report." With a single click, users can view customer metrics such as age group and gender, as well as related sales data, through a dashboard interface. Additionally, "AI Insights" provides data-driven perspectives and suggestions. By cross-analyzing multiple data points, it identifies key contexts that would otherwise be difficult to capture from individual figures, offering valuable viewpoints for staff in their daily work.

"Brand AI" is quickly being adopted in actual work processes and is already showing results. Within one month of launch, the system reported a 70% return user rate; according to user surveys, productivity in similar work areas more than doubled compared to previous methods.

In the second half of the year, a chatbot function will be introduced so that users can interact with "Brand AI’s" key features conversationally. For example, by typing a sentence like "Show me the top 20 brands by proportion of customers in their 20s" into the chat window, the user can run the program. In addition, a real-time web search feature based on an API will be added, enabling analysis of external market trends alongside internal company data.

Choi Seongcheol, Head of AI STUDIO at Lotte Department Store, stated, "AI in the retail industry is evolving beyond simple work automation to become a tool that supports strategic planning." He added, "By expanding the types of practical AI use cases like 'Brand AI,' we will continue to introduce technologies that can raise overall productivity across the company."

This content was produced with the assistance of AI translation services.