Lotte Mart CEO unveils store revamp strategy

Store layout revised, prioritising FMCG at the front now occupying 80% of space up from 70%.

GRACING the Retail Asia Forum 2024 at Shangri-La Jakarta last 16 May, Kim Tae Hoon, CEO of PT Lotte Mart Indonesia and PT Lotte Shopping Indonesia, opened up on the shift from traditional big box retail. “We’ve traditionally relied on large spaces for sales, but we’ve lost ground to smaller and online retailers,” he confessed.

But companies like his are pushing back to regain control of consumer interest in retail. “We’ve repurposed our spaces to enhance convenience and customer experience,” said Kim.

One notable example is the Lotte Mart store in Gandaria City, where they reduced the selling space by about 30% to install Yurihara Kitchen, an open kitchen offering authentic Korean food.

This initiative, supervised by Korean celebrity chefs, has generated significant buzz and contributed to a 60% increase in footfall.

Also, the store layout was revised to position fast-moving consumer goods (FMCG) at the front, now occupying 80% of the selling space, up from 70%.

Technology integration is crucial for modern retail, Kim told the forum. He explained how Lotte Mart has revamped its point app to provide customers with easy access to promotions and personalised offers based on loyalty data.

“Indonesian customers have been used to getting access to promotions through social media or our websites, but having to scroll through all the websites is becoming somewhat of a hassle,” he said.

The app now offers a more streamlined and customised shopping experience.

Leveraging technology

Regarding future technological implementations, Kim mentioned that they are working closely with their headquarters in Korea to explore the potential of AI, recognising it as a significant opportunity for the future.

Lotte Mart uses its point app as a key source for understanding customer behaviour, such as basket size, shopping frequency, and preferred items. This data helps provide customised offers and information to enhance the shopping experience.

“We’re integrating that into our insights and then trying to provide more customised offers and information to our customers through our app,” he said.

With 48 stores across Indonesia, including 36 Lotte Grocer stores, Lotte Mart aims to serve both professional customers and mid to mid-low income families.

The focus is on providing value and quality through private brand products and staple brands familiar to Indonesians. The 12 Lotte Mart stores, primarily in big cities, cater to middle-income families by offering a one-stop solution with basic F&B options and services such as key duplication and laundry.

Adapting to market needs

Lotte Mart has partnered with Odalko to offer buy now, pay later options for professional customers whilst also addressing their cash flow needs. This initiative underscores Lotte Mart’s commitment to providing flexible payment options.

Looking ahead, Kim expressed optimism about the future of retail in Indonesia, citing the young median age, growing population, and expanding middle class. He emphasised the importance of understanding the diversifying needs of customers and exploring various formats and offerings.

“We already have great assets in our 48 stores. We’re continuously sharpening them to better meet the needs of our customers in those specific areas,” he said.

Kim acknowledged the challenges posed by online grocery shopping but stressed the importance of improving the offline experience to compete. “We’re focusing on providing better quality fresh products and meal solutions that customers can see and taste in-store, which they cannot do online,” he said.

Lotte Mart plans to expand its presence in Tier 2 and Tier 3 cities through wholesale stores that cater to professional customers. Additionally, they are exploring smaller formats for premium malls, leveraging the success of their F&B offerings and higher-tier products.

“Lotte Mart is adapting to the changing retail landscape by repurposing spaces, integrating technology, leveraging data, ensuring affordability, and exploring new formats and locations,” Kim said, noting his firm’s commitment to meeting the evolving needs of Indonesian customers and sustaining growth in the competitive retail market.