Lotte Mart bulks up in SE Asia to make up for China failure

Indonesia was the destination for Lotte Group Chairman Shin Dong-bin’s first overseas business trip in August, after being granted a special pardon by Korean President Yoon Suk-yeol. Shin went to Southeast Asia’s No. 1 economy to inspect not only a $3.9 billion petrochemical project but also a supermarket chain branch in Jakarta.

Korea’s fifth-largest conglomerate is seeking to ramp up its distribution business in Indonesia, including both wholesale and retail sectors, after Shin named the world’s fourth-most-populous country as a core market in Southeast Asia alongside Vietnam.

Lotte Mart, the group’s hypermarket operator, said on Sunday it opened the Food Innovation Lab (FIL), an R&D center for home meal replacement (HMR) and ready-to-eat meals, especially Korean, Indonesian and Japanese foods.

The lab team, consisting of six star chefs including Kang Leo, plans to introduce a menu exclusively for Lotte Mart’s Indonesian business by devising new recipes and selecting optimal local partners for commercializing menu items.

EXPANSION BUILT AROUND K-FOOD

The company already operates a similar unit in Korea – the Food Innovation Center – that has launched famous meals such as the half-price sweet and sour pork.

Lotte Mart will expand its distribution business in Indonesia with K-food, tapping into the growing popularity of Korean content among the 20- and 30-somethings who prefer spicy foods.

“We aim to make Lotte Mart recognized as the top K-food seller based on outstanding products developed by the FIL in Indonesia and eventually grow it into the best specialty grocery store in the country,” said Song Yang-hyun, head of Lotte Mart’s wholesale business in Indonesia.

Lotte Mart at Gandaria City Mall, its flagship branch in Jakarta, has enjoyed a more than 70% surge in HMR sales since launching some 20 K-foods in July.

FOCUS ON SOUTHEAST ASIA AFTER FAILING IN CHINA

Lotte Mart’s Indonesia unit, with 49 supermarket branches across the country, reported a 10.9% growth in sales to 804 billion won ($570 million) in the first three quarters of 2022 compared with the same period last year.

Lotte Group seeks to expand its retail business in Southeast Asia after failing in China. The group, which had operated more than 100 department stores and hypermarkets in China, pulled out of the country as Beijing’s retaliation against Korea’s decision to deploy THAAD, the US Terminal High Altitude Area Defense system, hammered its business on the mainland since 2017.

The group has been stepping up its efforts in Southeast Asia to make up for the losses in China. It decided to spend 1.2 trillion won to build a large shopping complex in Ho Chi Minh City, Vietnam, while also planning to complete construction of Lotte Mall Hanoi next year.

Write to Jong-Kwan Park at pjk@hankyung.com
Jongwoo Cheon edited this article.