Lotte Shopping’s recent revelation that it is to acquire Chinese hypermarket operator Times has once again re-emphasised the South Korean retailer’s new-found thirst for internationalisation.
Lotte Shopping is thought to have agreed a deal to buy a 72.3% stake in Times from chairman Kenneth Fang, having outbid rival Chinese retailers – most notably Wumart – to the deal.
Times operates about 52 hypermarkets and 14 supermarkets in eastern China and last year generated annual sales of about $1bn (£600m).
Over the past two years there has been a marked shift in Lotte Shopping’s global ambitions as it faced increasing competition in its home market from retailers such as Tesco and Shinsegae, as well as a consolidating sector.
In addition, the group’s core department store division is exposed to any shifts in consumer sentiment and spending. In 2008, the stores showed signs of being hit by the economic slowdown. To counteract this, Lotte Shopping decided to cast its eyes on a number of emerging markets in Asia, as well as Russia.
After investigating overseas expansion for almost a decade, Lotte Shopping now plans to become one of the world’s best luxury department store retailers in the world.
This strategic shift also coincided with an injection of funds following Lotte Shopping’s IPO in 2005. In its home market the group completed just one major acquisition – the Woori Home Shopping business in mid-2006.
Instead, Lotte Shopping invested in a number of international opportunities. After years of planning, it opened an upmarket department store in central Moscow in late 2007, representing its first overseas opening.
This was followed in December 2007 by the acquisition of Dutch-based SHV Makro’s Chinese operation, with the eight stores subsequently being rebranded to the Lotte Mart banner. Also in China, the first Lotte department store opened in time for the Olympics in August 2008.
In China as a whole, Lotte expects to have 100 stores in five years and 300 by 2018. Last October it also acquired the 19-store PT Makro cash-and-carry chain in Indonesia. A department store is expected to open in Ho Chi Minh City in Vietnam in 2014, while entry into India has also been mentioned.
With such big ambitions in the region, the Times deal is likely to be followed by further acquisitions in the near future.
➤Robert Gregory, research director, Planet Retail. For more information contact us on:
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