Lotte’s uncertain stance in retail market
Retail has been one of Lotte Group’s main businesses here, with the firm leading the market alongside its rival Shinsegae.
However, with the appearance of e-commerce firms including Coupang and Naver Shopping, their positions have been continuously threatened, especially since the outbreak of the COVID-19 pandemic.
Coupang’s sales have nearly doubled from 7 trillion won in 2019 to 13.5 trillion won last year, which is about 2.68 trillion won behind Lotte Shopping.
But considering how fast Coupang is growing, it is only a matter of time before the online retailer surpasses both Lotte and Shinsegae.
Feeling a sense of danger, the two traditional retail giants started their own online businesses three years ago, but they have failed to close the gap with Coupang and Naver in the online shopping sector.
Shinsegae formed a strategic alliance quickly with Naver and CJ Group to beef up its online business and is very close to acquiring eBay Korea, the third-largest e-commerce firm active here.
Lotte, on the other hand, is stuck in limbo. Acknowledging that its ambitiously launched online platform Lotte ON is not living up to expectations, the retail giant decided to join the bid for eBay Korea.
However, it dropped out at the last minute as the American e-commerce firm requested 5 trillion won as a buyout price.
Lotte also gave up its bid for Yogiyo, the country’s No. 2 food delivery player that was put up for sale when German firm Delivery Hero had to offload it to buy the No. 1 player Baedal Minjok.
Yogiyo can create big synergy with Lotte Shopping with its food delivery service for fast food restaurant chains and supermarkets.
It is unknown whether Lotte has a plan B or a secret weapon that can keep it in the competition with Coupang and Naver, but it seems it will soon be left with no way to even compete with Shinsegae.
Lotte said it is looking to the long term and will not hurry to invest recklessly.
“An M&A deal can instantly put us in the top 3 position but it won’t necessarily beef up our competitiveness,” Lotte Shopping CEO Kang Hee-tae said in an email sent to company staff last week.
Lotte Group Chairman Shin Dong-bin has also remained silent about the company dropping out from the eBay Korea acquisition.