Lotte Mart and Supermarket Merge with eGrocery Business Unit
Lotte Mart to Take Charge of Online Grocery Business
eGrocery App Launch Scheduled for First Half of Next Year
Plans to Introduce Ocado Smart Platform Also Underway
Lotte Mart announced on the 1st that it will integrate the e-Grocery Business Unit within the e-Commerce Division.
Until now, Lotte Shopping's grocery business was divided between offline channels such as marts, supermarkets, and warehouse discount stores managed by the Lotte Mart Division, and the online channel, Lotte Mart Mall, managed by the e-Commerce Division. With this organizational restructuring, Lotte Mart will take full charge of the entire online and offline grocery business. The collaboration project with Ocado, previously handled by the e-Commerce Division, will also be promoted by Lotte Mart.
Lotte Mart is implementing strategies in the offline distribution industry including ▲creating synergy through the integration of the Mart and Supermarket divisions ▲transitioning to a specialized grocery store ▲strengthening competitiveness in grocery product categories such as fresh produce and private brands (PB) ▲and continuously expanding overseas business.
With this integration, Lotte Mart emphasized that it has added a new online grocery business in collaboration with Ocado to its offline channel-focused growth strategy. Ocado is a UK retail tech company that developed an automated online delivery system. It operates the integrated solution business called the Ocado Smart Platform (OSP), which covers the entire process from online grocery ordering to delivery.
According to Statistics Korea's "Online Shopping Trend Survey," online food transaction volume from January to July this year reached 27.7896 trillion KRW, a 21.9% increase compared to the same period last year. Lotte Mart explained that as the importance of the online food market in the distribution industry continues to grow, securing competitiveness in the online grocery business has become crucial.
In response to this market environment, Lotte Mart stated that it decided on this organizational integration to create synergy between online and offline business units. Since freshness and quality are core competitive factors for grocery products such as fresh food, trust is higher in offline channels where customers can directly check the condition of products. Therefore, it was judged optimal to integrate and promote the Ocado collaboration business, which centers on grocery products, under the Mart division.
With this online and offline grocery integration, Lotte Mart expects to improve product procurement capabilities through expanded purchasing scale, as well as increase operational efficiency in product management and marketing by utilizing an integrated online and offline database (DB). Additionally, it plans to launch an integrated membership service combining online and offline channels to provide better shopping benefits to customers.
Going forward, Lotte Mart will gradually introduce an online grocery system based on the Ocado Smart Platform (OSP), starting with the launch of the next-generation e-Grocery app in the first half of next year and culminating in the opening of a Customer Fulfillment Center (CFC).
Through the adoption of the Ocado Smart Platform, Lotte Mart plans to build a personalized online grocery shopping environment and improve the inconveniences of online grocery shopping. The next-generation e-Grocery app will enhance user convenience, while AI-based analysis of product and customer behavior data will provide personalized marketing services.
After establishing the Busan Customer Fulfillment Center, the product assortment will be expanded to about 45,000 items, twice the number of the existing online logistics center. Automation will be implemented through AI-based demand forecasting and inventory management, robot-assisted product picking and packing, and optimization of delivery routes and dispatch. Delivery capacity will also be more than doubled. Delivery vehicles will be operated with 100% refrigerated trucks, maintaining product freshness through a cold chain system (low-temperature logistics system). This will improve customer satisfaction by addressing issues such as product spoilage, stockouts, misdeliveries, and delayed deliveries.
Kang Sung-hyun, CEO of Lotte Mart and Supermarket, said, "With this organizational integration with the e-Grocery Business Unit, Lotte's grocery business has become a complete one team." He added, "Leveraging the synergy from this integration, we will improve profitability and efficiency, and provide customers with an innovative online and offline shopping experience, aiming to become the number one grocery market in Korea."
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