Lotte Shopping accelerates the opening of stores in Vietnam to leap to 'Southeast Asia's premium shopping destination.' It plans to open 10 additional stores, including department stores and hypermarkets, aiming to achieve 3 trillion won in sales in the Southeast Asia region.
According to the retail industry on the 8th, Lotte Shopping held a corporate briefing for domestic securities firms in Hanoi, Vietnam, over three days from the 2nd, announcing this plan. This event is the first of its kind since 2016, and is reportedly presided over by Chief Financial Officer Kim Won-jae.
Earlier, Lotte stated that it plans to expand overseas sales to 3 trillion won by 2030 and that it will establish Singapore Holdings as an international headquarters (iHQ) corporation in Singapore. In the mid to long term, it also aims to pursue an initial public offering (IPO).
This time, a specific plan for openings has been revealed. It is planned to open a total of 10 points, including 2 to 3 shopping malls and 7 discount stores, in Vietnam. Currently, Lotte operates 3 department stores and 15 discount stores locally. Analysts believe that if external capital is attracted through Singapore Holdings, which oversees Lotte Shopping's Southeast Asia operations, the scale of openings could increase.
Analyses suggest that the success of the previously opened complex shopping mall, Lotte Mall Westlake Hanoi, is the basis for Lotte's plans. Opened in September 2023 near West Lake in Hanoi, covering about 354,000 square meters (approximately 107,000 pyeong, equivalent to 50 football fields), Westlake attracted 10 million visitors within a year and achieved revenues of 100 billion won in four months and 200 billion won in nine months. In the first quarter of this year, it surpassed the break-even point.
The emergence of a premium shopping environment, combined with content featuring K-pop, K-beauty, and K-food, are cited as factors influencing its popularity. For Vietnam’s Lotte Mart showcasing K-food, the operating profit margin exceeds 10%. This is more than three times higher than that of domestic operations.
The improvement in Vietnam's income level is also a factor fueling expectations for local operations. As of last year, Vietnam's population was approximately 101.3 million, making it the 15th largest in the world. Additionally, the median age is 32, which is relatively young. Although the per capita GDP is $4,700 (approximately 6.43 million won), and the middle-class proportion is only 40%, infrastructure investments are anticipated to raise the middle-class proportion to 75% by 2030.
Joo Young-hoon, a researcher at NH Investment & Securities, noted, "As the income level of the population improves, the preference for high-quality products is increasing, suggesting that the growth rate of modernized retail channels, such as department stores, discount stores, and shopping malls, will be steeper." He stated, "Lotte Shopping is in a position to build premium stores compared to local competitors."
The fact that more than 90% of Vietnam's retail market is comprised of small shops and traditional markets, and is not modernized, is seen as an opportunity factor for Lotte.
Yu Jeong-hyun, a researcher at Daishin Securities, analyzed that "Vietnam, unlike China, is a country where foreign investment companies can operate their businesses stably," adding that "While the impact of expansion in Vietnam on results is currently small, it could positively contribute to overcoming the structural growth limitations of the domestic market."
Lotte Shopping is also expanding its business in Indonesia and Singapore, in addition to Vietnam. In Indonesia, it operates 1 department store and 48 discount stores, while in Singapore, it has collaborated with FairPrice, a local retail company, to develop Lotte Mart Express stores as shop-in-shop formats starting this year.
As of last year, Lotte Shopping's overseas business revenue reached 1.6 trillion won, a 5% increase compared to the previous year. During the same period, operating profit rose by 115% to 41.7 billion won. Of this, revenue from Vietnam increased by 20% year-on-year to 48.32 billion won, while operating profit surged by 231% to 22.3 billion won.