Lotte picks Gold­man to man­age su­per­mar­ket sales in China


South Korea’s Lotte Shop­ping has picked Gold­man Sachs to man­age the po­ten­tial sale of its su­per­mar­kets in China, an of­fi­cial at the par­ent group said on Thurs­day.

The of­fi­cial added that it had not been de­cided whether the re­tailer would sell all of its su­per­mar­kets in China or part of them.

Lotte Shop­ping pre­vi­ously said it was con­sid­er­ing sell­ing its su­per­mar­kets in China and other op­tions.

Shin Dong-joo, the el­der son of Lotte Group’s founder, said Lotte Shop­ping should “im­me­di­ately” with­draw from the Chi­nese mar­ket, after most of its stores were shut down.

The el­der Shin de­cided pre­vi­ously to sell most of his stakes in Lotte Shop­ping and three other units of South Korea’s No 5 con­glom­er­ate, his com­pany said with­out pro­vid­ing the value of the sale.

On Mon­day, Lotte Group de­nied ru­mors in­di­cat­ing its with­drawal from the Chi­nese main­land mar­ket, and said it will keep do­ing busi­ness in China, re­ported New­sis, a South Korean news­pa­per.

Ac­cord­ing to Euromon­i­tor, a mar­ket re­search provider, Lotte Mart, a hy­per­mar­ket for­mat, ranked No 17th in terms of mar­ket shares in China in 2016, at 1.1 per­cent.

Mar­ket leader Auchan Group SA’s RT Mart took up 11.9 per­cent and Stores Inc had 10.1 per­cent. The re­tail for­mat — out­lets with a sell­ing space of more than 2,500 square me­ters — has wit­nessed a slow growth in the past three years. The hy­per­mar­ket sec­tor has grown from 655.8 bil­lion yuan ($100.05 bil­lion) in 2015 to 658.4 bil­lion yuan in 2016.

Ja­son Yu, gen­eral man­ager of Kan­tar World­panel China, said Lotte is in a very dif­fi­cult po­si­tion in China. Like other in­ter­na­tional re­tail­ers, it was un­der pres­sure from both fast grow­ing Chi­nese re­tail­ers and e-com­merce gi­ants, he said.

Lotte Mart’s lim­ited pres­ence in China also makes it tough to build any econ­omy of scale and ef­fi­cient sup­ply chain, Yu said. “I think some re­gional play­ers in the north or east may pick se­lected Lotte Mart stores if they were up for sale,” said Yu.

“Some lo­cal play­ers are still look­ing for store ex­pan­sions in Bei­jing or Jiangsu prov­ince in East China if the stores are in good lo­ca­tions,” said Yu.

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