Lotte exiting department store operations in China

Date : 06 August 2018

South Korean conglomerate Lotte Group is looking to sell some of its department stores in China, edging closer to exiting the market completely. 

Sales impacted by THAAD and consumer sentiment

The retailer currently operates five department stores in China. Lotte department stores in Tianjin and in Weihai, Shandong Province are likely to close first, while stores in Shenyang and Chengdu in Sichuan province are expected to operate a little longer. Sales at Lotte's department operations in China fell 22% to KRW76bn (US$68m) last year, resulting in KRW70bn in operating losses.

Since March last year, the impact of THAAD has been widely reported, as has consumer sentiment towards Korean products and retailers. The retailer's supermarket business Lotte Mart, for example, has 14 stores remaining after selling its operations in Beijing and Shanghai.

New ecommerce department setup

Lotte has launched a new department in charge of the Group’s online businesses in South Korea. The move is part of a plan to capitalise on the country’s fast growing online market. Only three months ago, Lotte outlined its ecommerce investment plans over the next five years, targeting KRW20tn (US$15.2bn) in sales by 2022. The new ecommerce department has approx. 1,400 employees, and has plans to launch a mobile app in 2020 to provide optimised services supported by Big Data.

Lotte Duty Free store closes at Incheon

Meanwhile, Lotte Duty Free, the retailer’s duty-free business has closed its operations at Incheon International Airport. It decided to return three of its four money-losing concessions at the country’s main gateway in February. Lotte is now redirecting its attention by investing in downtown duty-free stores, overseas expansion and online services

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