Lotte Hi-Mart to Transform Small Shop-in-Shop Stores into 'Experiential Stores'

[Asia Economy Reporter Minyoung Cha] Lotte Hi-Mart is transforming its small shop-in-shop stores located inside Lotte Mart into experiential stores. Lotte Hi-Mart classifies shop-in-shop stores under 661m² (200 pyeong) as small stores and plans to convert some of them into experiential stores for medium and small home appliances.

Lotte Hi-Mart announced on the 25th that starting with the Siheung Baegot Lotte Mart store and Hwajeong Lotte Mart store on the 28th, it will newly open about 10 small shop-in-shop stores as experiential stores this year.

Medium and small home appliances refer to all appliances except large ones such as TVs, refrigerators, and washing machines. In 2019, the average sales proportion of medium and small home appliances in Lotte Hi-Mart’s shop-in-shop stores was 11 percentage points higher than that of standalone stores. The sales proportion of medium and small home appliances accounted for more than half of the total sales in shop-in-shop stores. While customers visit standalone stores with a specific purpose, shop-in-shop stores often see customers shopping at nearby marts or department stores who also purchase small appliances they can carry out themselves.

In response to this consumer purchasing tendency, Lotte Hi-Mart is attempting a bold change by converting most of the space previously occupied by large home appliances in small shop-in-shop stores into experiential stores for medium and small home appliances. In particular, the space will be transformed into an area where customers can directly experience, freely compare, and purchase medium and small home appliances.

First, the display area for medium and small home appliances has been significantly expanded to more than 80% of the previous size. The selection includes a variety of products ranging from household appliances such as cordless vacuum cleaners and hair dryers to kitchen appliances like dishwashers and electric ranges. Popular overseas brands known for excellent design, such as Cuisinart, De'Longhi, and Balmuda, are gathered by brand, and Lotte Hi-Mart’s private brand (PB) product, Hi-Made, is also available. Trendy products from pet appliances to robot vacuum cleaners are prepared. Products popular online have also been brought offline.

The experiential space has also been enhanced. Various zones such as a premium audio equipment experience zone, gaming zone, and one-person media zone have been prepared. A kitchen appliance showroom featuring popular brands like SK Magic and Rinnai electric ranges and dishwashers is introduced, creating an effect as if customers are in an actual kitchen. Customers can directly experience a wide range of products from health appliances like massage chairs to small massagers and hair dryers. Consumables such as rice cooker packing and power tools, which are especially popular among customers visiting the mart stores, are also available for purchase.

Meanwhile, Lotte Hi-Mart plans not to miss customers who wish to purchase large home appliances such as TVs and refrigerators. To efficiently utilize the limited display space for large appliances in small shop-in-shop stores, showrooms will be organized focusing on the top-selling models of popular items at each store. Products not displayed in the store can be purchased through the omni-channel service. The omni-channel service allows customers to search for and purchase products not displayed in the store via a dedicated app on tablet PCs provided in the store. Omni tablets will also be placed in rest areas so customers can directly search for products.

Moon Chong, head of Lotte Hi-Mart’s Store Development Division, said, “The core of Lotte Hi-Mart’s offline stores is ‘experience,’” and added, “We will strive to create spaces where customers can directly experience and purchase various products not only in large stores but also in medium and small stores.”