Customers should come first in an era of tariff-driven trade barriers: Lotte Retail group CEO

Key Concepts:

• Macroeconomic improvement vs. tariff war and sluggish domestic demand
• President Lee's economic reboot promises: business-friendly policies, demand stimulation
• Lotte Corporation: diversified conglomerate (food, retail, chemicals, etc.)
• K-wave (K-beauty, K-food, K-fashion) demand
• E-commerce dominance in Korea (over 50%)
• AI technology and e-commerce platform development (Okato solutions)
• Inflation and tariff concerns
• Deregulation for retail growth
• Private label brands (Yorihada, Good Today, Plux) for value
• Export strategy: US (long-term), Asia (immediate focus)
• Southeast Asia expansion: Vietnam, Indonesia, Singapore
• International headquarters in Singapore
• Economic nationalism and tariff-driven trade barriers
• Customer-centric approach: superior shopping experience

1. South Korea's Economic Outlook Under New Leadership

• Main Point: Despite macroeconomic improvements, South Korea faces challenges from the tariff war and weak domestic demand. The election of President Lee Jong is expected to bring stability and business-friendly policies.
• Details: Former President Yunuk's failed martial law declaration caused turbulence. President Lee promised to reboot the economy and stimulate growth.
• Lotte's Perspective: Lotte anticipates growing optimism due to President Lee's commitment to economic stimulation and consumer confidence.

2. Lotte Retail's Strategy in the Korean Market

• Main Point: Lotte Retail is leveraging the K-wave and Korea's advanced digital landscape to drive growth.
• Details:
  • K-Wave: Capitalizing on the growing global demand for K-beauty, K-food, and K-fashion.
  • Digitalization: Utilizing AI technology and developing e-commerce platforms (e.g., new shopping app, Okato solutions) to attract investment and enhance customer experience.
  • Korea is the first economy that has crossed over 50% in e-commerce.

3. Policy Support and Challenges

• Main Point: Lotte seeks government support to stimulate consumer confidence and deregulation to accelerate retail growth.
• Details:
  • Inflation and Tariffs: Addressing concerns about inflation and the impact of tariffs on prices.
  • Deregulation: Advocating for a more deregulated environment to facilitate the expansion of retail formats both domestically and internationally.

4. Navigating Tariffs and US Market Exposure

• Main Point: Lotte minimizes direct US exposure by focusing on value offerings through private label brands and expanding exports to Asia.
• Details:
  • Private Labels: Developing private label brands like Yorihada (home-cooked meals), Good Today (private label brands), and Plux (electronic appliances) to offer competitive prices.
  • Export Strategy: Targeting the US as a long-term project while prioritizing expansion in Asia.

5. Southeast Asia Expansion: Focus on Vietnam, Indonesia, and Singapore

• Main Point: Lotte is strategically expanding in Southeast Asia, particularly in Vietnam, Indonesia, and Singapore.
• Details:
  • Vietnam: Lotte Mall Westlake Hanoi attracted over 10 million visitors in its first year.
  • Singapore: Partnership with FairPrice to bring Lotte Mart Express and private label brands to over 100 FairPrice stores. Lotte Duty-Free presence.

6. Singapore as an International Hub

• Main Point: Singapore serves as a strategic hub for Lotte's international business, providing capability and accessibility.
• Details:
  • International Headquarters: Developing an international headquarters in Singapore to strategize expansion plans for Southeast Asia and other regions.
  • Global Reach: Already selling private label brands in a dozen countries, including Hong Kong and Mongolia.

7. Addressing Economic Nationalism and Trade Barriers

• Main Point: Lotte prioritizes customer experience (environment, services, quality, and value) to overcome challenges posed by economic nationalism and trade barriers.
• Quote: "At the end of the day, it's all about the customers...creating a superior shopping experience...which can overcome any other challenges that we may have." - Samuel Sang Hyun Kim
• Customer-Centric Approach: Focusing on customer insights to better meet their needs and outperform the competition.

8. Conclusion

Lotte Corporation is navigating a complex economic landscape by focusing on customer value, leveraging digital advancements, and strategically expanding in Asia. The company's emphasis on private label brands, coupled with its international hub in Singapore, positions it for sustained growth despite global economic uncertainties. The key takeaway is Lotte's commitment to a customer-centric approach as the primary driver of its success.