What: Lotte's retail division redefines its strategy by prioritizing customer trust and value creation in an increasingly digital South Korean market.

Why it is important: The transformation reflects the evolution of traditional retail conglomerates adapting to digital-first markets while maintaining physical retail relevance through strategic partnerships and customer engagement.

In a revealing discussion at the NRF Big Show Asia Pacific, Lotte's vice chairman and group CEO Samuel Sanghyun Kim outlined the company's strategic evolution in response to South Korea's predominantly digital retail landscape. With half of the country's retail activity occurring online, Kim emphasised a fundamental shift from traditional selling to customer conviction, underpinned by structural reorganisation and technological innovation. The company's approach focuses on strengthening core business fundamentals across its diverse portfolio, from enhancing grocery freshness to elevating luxury experiences and creating engaging digital content. Central to this transformation is Lotte's relationship with its 43 million loyalty programme members, emphasising authentic connections over transactional interactions. The strategy extends to private-label development, including brands like Yorihada and Plux, while leveraging AI-driven personalisation. International expansion, particularly in Vietnam and Indonesia, is pursued through strategic partnerships, exemplified by the successful Lotte Mart Express collaboration with FairPrice Group in Singapore. Despite demographic challenges in the domestic market, Lotte maintains its commitment to experimentation and ground-level retail engagement, ensuring relevance in an increasingly complex retail environment.

IADS Notes: Recent market data underscores Lotte's successful transformation. In July 2024, the company pioneered comprehensive AI integration across operations :cite[cc], followed by an October 2024 announcement of a 7 trillion won investment in modernisation :cite[1f]. The strategy proved effective, with January 2025 reports showing a 4.7% increase in overseas sales :cite[mv], particularly in Southeast Asia. By May 2025, Lotte achieved an impressive 44.3% year-on-year operating profit increase :cite[ri], despite challenging market conditions. The company's balanced approach to physical and digital retail is evident in its April 2025 flagship store renovations :cite[pf], while its 'On & The Luxury' e-commerce platform consistently achieved over 20% annual growth :cite[ko]. This success demonstrates Lotte's effective navigation of retail transformation while maintaining strong market position through innovation and customer-centric strategies.

Lotte’s Samuel Kim on the company’s strategy to keep up with changing times