Lotte is considering entering the supermarket business in Vietnam, following its hypermarket operations there. The plan is to open a 300-pyeong (approximately 990-square-meter) pilot store in Ho Chi Minh City in the second half of this year to test the business's viability, then decide whether to expand based on its performance. The company aims to use its existing hypermarkets as supply hubs for fresh food and deli products, targeting demand for grocery shopping close to home and work.
According to reporting compiled by the Seoul Economic Daily on the 9th, Lotte Mart's Vietnam unit plans to open the supermarket pilot store in the second half of this year. It will review whether to expand the business based on the first store's operating performance. If it pursues additional openings, the company is expected to prioritize areas where existing Lotte Mart stores are located.
Shin Ju-baek, head of Lotte Mart's Vietnam operations, turned his attention to supermarkets because of local grocery shopping habits. In Vietnam, the share of people cooking at home is low and refrigerators are relatively small, so many consumers buy what they need as they need it.
"Bulk purchasing is not common in Vietnam," Shin said. "We want to test whether supermarkets fit a lifestyle of buying only what is needed, close to home or work."
Existing hypermarkets will serve as hubs for the supermarket operations. Under this model, large stores purchase and select fresh food, prepare deli and ready-to-cook products, and supply them to supermarkets in nearby residential and office districts. "It is difficult to achieve economies of scale with just one or two supermarkets," he added. "We need to build a system where large stores serve as hubs supplying products to surrounding supermarkets."
The supermarkets' differentiation strategy centers on deli and fresh food. Lotte Mart currently operates "Yorihada Kitchen," a specialty section for ready-to-eat food, at seven of its 15 stores in Vietnam, selling an average of some 400 products including Korean food, local dishes, sushi, and Western food.
Fresh food has also been tailored to local lifestyles. Salmon is sold in small packages by cut, and fish is cleaned and prepared so it can go straight into the pot. Pork belly has been segmented into products such as thinly sliced samgyeopsal and scored cuts for grilling.
These changes have expanded customers' shopping baskets. At the Hanoi Center store, the average number of items purchased per customer reaches eight. That is a notable figure given Vietnam's consumption culture of buying small quantities as needed.
"What we watch closely is how many products customers put in their baskets," Shin stressed. "Filling the basket means they kept discovering products they wanted to buy as they moved through the store."
The Vietnam business has also maintained its growth momentum. Lotte Mart's Vietnam unit posted net sales of 426.6 billion won last year, up 7.6% from the previous year. In the first quarter of this year, net sales rose 15.3% year-on-year to 134.3 billion won. Internally, there are expectations that annual net sales could exceed 500 billion won for the first time this year.
Shin views these results as an outcome, not the starting point, of the strategy. "This is the result of staying true to a mart's fundamental role, built on fresh food and deli," he said. "Beyond sales volume and profitability, creating a structure where the business can keep generating a virtuous cycle is also an important task."
Lotte Mart will also open its Bac Giang and Tay Ninh stores this month. With the two openings, its hypermarkets in Vietnam will increase from the current 15 to 17.
"Retail is a living organism that keeps changing with society, culture, and lifestyles," Shin emphasized. "When the market changes, products, systems, and stores must change with it."
