Department Store Sales in Vietnam and Indonesia Up 43%
Vietnam Hypermarkets Record 1.5 Trillion KRW in Sales
Growth Rate Surpasses Domestic Business Segment
Establishment of Local Business Headquarters Planned for This Year
Aiming for External Expansion and Internal Reinforcement
Lotte Shopping is showing clear results in Southeast Asia, chosen as a breakthrough to offset the sluggish domestic market. Centered on strategic regions such as Vietnam and Indonesia, it has quickly established itself in the local market by promoting premium shopping malls and K-food. In line with Lotte Group Chairman Shin Dong-bin's directive, who has staked his fate on pioneering overseas markets, it is expected to accelerate the global expansion and strengthening of these businesses.
According to related industries on the 12th, Lotte Shopping's overseas department store business recorded annual sales of 115.7 billion KRW last year, marking a 43.7% increase compared to the previous year. This contrasts with domestic department store sales of 3.2036 trillion KRW, which decreased by 1.6% compared to the previous year. During the same period, the operating loss of overseas department stores was 6.1 billion KRW, reducing the deficit by 14.5 billion KRW from -20.6 billion KRW the previous year.
As of the fourth quarter of last year, Lotte Shopping operates four overseas department stores: three in Vietnam and one in Indonesia. Among them, Lotte Mall Westlake Hanoi, which opened in September 2023 in Hanoi, the capital of Vietnam, showed remarkable growth over about a year, resulting in Vietnam department store sales increasing by 116.3% to 86.7 billion KRW last year compared to the previous year. Lotte Mall Westlake Hanoi also achieved consecutive profits in October and November last year. The Indonesian department store also posted an operating profit of 1.9 billion KRW last year, growing more than threefold (209.5%) compared to the previous year.
Interior view of Lotte Mart Gandaria City store. Provided by Lotte Mart
Results were also seen in the overseas mart business. Last year, sales increased by 3% to 1.497 trillion KRW, and operating profit rose by 19.3% to 47.8 billion KRW. During the same period, domestic discount store sales decreased by 4.7%, and operating profit fell by 63.7% due to a Supreme Court ruling related to ordinary wages.
Lotte Shopping operates 48 marts in Indonesia and 15 in Vietnam. Among these, in Vietnam, sales and operating profits have increased year-on-year for 12 consecutive quarters since the first quarter of 2022. Operating profits have risen every year for three years from 2021 to last year.
Lotte Shopping analyzed that the effectiveness came from applying shopping experiences common in Korea?such as product purchasing, culture, gastronomy, and services?to the local market. Considering the increasing demand for K-food, investments in food-related areas were also expanded. For example, Lotte Mart Gandaria in Indonesia underwent a renewal (renovation) early last year, expanding the grocery store area by more than 20% to 80%, and strengthened ready-to-eat products and convenience foods.
Following Chairman Shin Dong-bin’s New Year vision, which urged overseas business expansion instead of the saturated domestic market facing stagnation and a population cliff, Lotte Shopping is expected to expand differentiated strategies centered on these Southeast Asian markets this year as well. Earlier, Kim Sang-hyun, Vice Chairman and Head of Lotte Distribution Group, cited "global business expansion based on the rapidly growing Southeast Asian market" as one of this year’s growth strategies in a 'CEO Letter' posted on the internal intranet last month.
Kim Myung-joo, a researcher at Korea Investment & Securities, said, "It is positive that Lotte Shopping’s new overseas department store and discount store businesses are performing better than market expectations," adding, "In particular, the continuous reduction of operating losses at Lotte Mall Westlake Hanoi and the operating profits recorded in October and November are very encouraging." However, he pointed out that the overseas business accounted for only 12% of Lotte Shopping’s total sales as of the fourth quarter of last year, indicating a limitation in its contribution.
Lotte Shopping stated, "We will strive to overcome the impact of the sluggish domestic market by strengthening overseas and new businesses this year." As a specific implementation plan, it presented a plan to establish an International Headquarters (iHQ) organization in the first half of this year to oversee Southeast Asian businesses based on expertise in the local overseas business environment, making it a hub for Southeast Asian business and promoting overseas business expansion.
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