South Korea: news round-up

Date : 10 May 2018

We review the latest developments at E-Mart, Lotte, Home plus and GS Retail, the four largest food and grocery retailers in South Korea.

Pepper the robot at E-Mart

E-Mart is working with Japan's Softbank Robotics Corp to test 'Pepper' the robot. 'Pepper' will be stationed at an E-Mart store in Seoul for about three weeks to service shoppers in store. The 1.2m-tall robot will be able to provide product information, answer frequently asked questions and promote items on sale. Pepper first appeared in SoftBank's Ginza store in Japan a few years ago. Its sophisticated functionality creates new opportunities to interact and engage with customers in store. 

This follows the recent trial of Eli, smart shopping trolleys that automatically follow shoppers and help customers browse items. The company is also working with Seoul National University on a joint research project in relation to auto-driving robots in retail. Having pulled its stores out of China, E-Mart signed a deal to return via SPAR by supplying food, personal care and household products.

...Q1 results highlight key growth areas

In the first quarter, E-Mart's top line sales grew 5% to KRW37.2bn compared with the same period last year. Hypermarket sales for Q1 were flat, while the retailer's traders and online operations grew 30.4% and 24.6% respectively. Investment in technology and the development of private labels have been and will continue to be key focus areas for the retailer.

Lotte streamlining at home and overseas

Lotte is trying to sell its Anyang department store. The deal with Enter Six will either sell or transfer the lease rights on the store. The Anyang store is 20km from Seoul, but only 3km from Lotte's Pyeongchon branch and is set to be offloaded due to poor sales performance.

Lotte recently exited its Lotte Mart operations in Beijing and will now sell its stores in Shanghai and nearby areas to Liqun Group for approx. KRW280bn (US$262m). This will leave the retailer with 14 Lotte Mart stores left in the country as it presses ahead to sale its affiliate stores within the first half of this year.

After a challenging FY2017, the retailer will continue to focus on profitability at home (like E-Mart) and in markets like Indonesia and Vietnam, where its operations have shown more encouraging signs of growth.

Home plus to establish REIT?

In 2015, private equity firm MBK Partners bought Home plus from Tesco PLC for US$6.1bn. The retailer revealed plans to open 10 new warehouse outlets stores called 'Home plus special' last month. It is said to be considering the possibility of establishing a real-estate investment trust (REIT) that could acquire around 40 Home plus hypermarkets. If the move goes ahead, Home plus may use IPO proceeds to renovate stores, pay of any existing debt and operate its stores under long-term lease contracts.

GS Retail localising its offer in Vietnam

Last year, GS Retail opened its first GS25 c-store in Vietnam. The retailer is now in talks with Vietnamese producers to localise offerings as it looks to add 30 more GS25 stores this year. It will also look to promote Korean items in Vietnam and take a stronger selection of Vietnamese foods back to Korea.

The retailer also supplies private-label products in Singapore and Taiwan and hopes to expand out to four further markets this year. With the convenience channel growing rapidly in Vietnam, GS Retail has also outlined ambitious expansion plans to reach 2,000 outlets in the country within the next decade. 

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