Those with even a passing interest in the Asian grocery sector cannot have failed to notice the rise in recent years of South Korea’s Lotte Shopping.

As recently as five years ago, the retailer only operated in its domestic market. However, stung into action by its major rivals Tesco and Shinsegae, the company is fast becoming a regional powerhouse. In recent years it has entered China, Indonesia, Vietnam and Russia, as well as cementing its position in its home market through a number of acquisitions.

Further acquisitions and markets should not be ruled out as it attempts the ambitious aim of becoming one of the world’s top 10 retailers by 2018.

Last week, Lotte Shopping reported a strong set of results

for its full year 2010. Gross sales for the year soared 17.3% to KRW14.1trn (£7.9bn). Operating profit rocketed 30.8% to KRW1.1trn (£640m), while net profit was up by 41.1% to KRW1.01trn (£564m). This means Lotte Shopping has become the first South Korean retailer to achieve annual operating profits in excess of KRW1trn (£546m).

Department store sales were up 12.6% to KRW6.9trn (£3.9bn), while Lotte Mart experienced 22.1% sales growth to KRW5.4trn (£3bn). The Lotte Super supermarket chain grew sales by 36.6%, while Lotte Home Shopping and Korea Seven (operator of the 7-Eleven convenience store chain in South Korea) increased sales by 36.5% and 14.5% respectively.

Some of the retailer’s best performing operations were its non-domestic stores. Like-for-like hypermarket sales outside of Korea averaged 8.8% in 2010, with Vietnam being the best performing with 32.3% like-for-like sales growth. This rapid growth may point to Lotte Shopping’s future direction.

While still committed to expanding in its home market, there seems little doubt the grocer is looking elsewhere in Asia for acquisitions. Lotte Shopping was considered to be a bidder for the Carrefour Southeast Asian operations at the end of last year, while speculation has also focused around further bolt-on acquisitions in Indonesia and Vietnam.

Given its strong growth and ambitious regional plans, Lotte Shopping is shaping up to be one retailer in Asia that is going to be increasingly influential - and one that will increasingly face direct competition from global rivals as it expands its reach.

➤ Robert Gregory, global research director, Planet Retail. For more information contact us on:

Tel: +44 (0)20 7728 5600

Email: info@planetretail.net

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