What: Lotte Department Store announces a 7 trillion won investment plan to expand its shopping mall business by 2030, aiming to increase its domestic mall count from 7 to 13.

Why it is important: This investment signifies a major shift in Lotte's business strategy, reflecting changing consumer preferences and the need to diversify revenue streams in the face of e-commerce competition.

Lotte Department Store has unveiled an ambitious 7 trillion won (USD 5.06 billion) investment plan to expand its shopping mall business by 2030. The company aims to increase its domestic shopping mall count from the current seven to 13, with a target of achieving 6.6 trillion won in mall sales by 2030 . This expansion includes fully upgrading seven existing department stores and building four new ones to meet changing market demands. Lotte expects shopping malls, such as Lotte World Mall in Jamsil, to become its mainstay business, catering to consumers in their 20s and 30s with a variety of fashion, food, and experience-focused stores . The company also has plans for international expansion, with one overseas shopping mall already operating in Vietnam (Lotte Mall West Lake Hanoi) and potential for more in the future. By 2030, Lotte Department Store aims to derive 60% of its overall sales from the department store business, 30% from the shopping mall business, and the remainder from the outlet business. This strategic shift reflects Lotte's efforts to adapt to changing consumer preferences and compete with the growing threat from e-commerce platforms like Coupang . Additionally, Lotte is investing in technological advancements, such as AI integration in its operations, to enhance efficiency and customer experience .

IADS Notes: Lotte's investment plan aligns with broader trends in the South Korean retail sector, where major department stores are adapting to changing consumer behaviors and economic challenges. Despite recent difficulties, including sales declines in duty-free stores due to changing shopping patterns among Chinese tourists , department stores like Lotte have shown resilience. In early 2024, major retailers including Lotte posted modest sales growth , indicating potential for success in this strategic shift. The focus on creating experiential retail spaces and integrating technology reflects the industry's transformation, as retailers strive to remain competitive in an increasingly dynamic and digital retail environment . This approach also demonstrates Lotte's commitment to balancing traditional retail strengths with innovative solutions to meet the evolving needs of consumers, particularly younger demographics.

Lotte Department Store to invest $5B with new malls on the way