- Lotte Mart has continuously lost money for 13 years since entering the Vietnamese market.
- The continuous expansion has caused them to “fall behind” in the context of too many big players constantly pouring money into the retail segment.
Business without profit for 13 years
According to KoreaTimes, in the third quarter of this year, Lotte Shopping, the Korean “giant” retailer, had inefficient business results in Southeast Asian markets, including Vietnam.
Lotte Mart, belonging to Lotte Shopping, recorded a loss of 2 billion won ($1.69 million) in Vietnam. They are operating 14 stores in Vietnam, however, its sales are dwindling. Lotte Mart’s accumulated revenue in the first 9 months of 2021 reached 911 billion won, down 13% compared to the same period last year.
According to LOTTE Holdings’ data, the annual revenue of Lotte Mart Vietnam continuously grew in the period 2016 – 2019 with a compound annual growth rate of up to 7.8%/year. However, they constantly reported losses during its operation in Vietnam.
On July 1, 2021, they decided to close Lotte Mart Dong Da, the largest supermarket in Hanoi with a scale of up to 20,000 m2 after more than 7 years of operation. Although located in a rather busy central area of the capital, this place is not interested in many consumers, so this is also a necessity to ensure the company’s operations.
The reason why Lotte Mart can’t find a foothold in Vietnam
The reason why Lotte Mart Vietnam’s continuous loss is the business has put many trade centres into operation. In 2008, they opened the first trade centre in District 7 (HCMC), from 2009 to 2013, they opened 5 more trade centres and hypermarkets. And that number grew to 12 between 2014 and 2016.
According to Mr. Jeong Seong Won, Finance Director of Lotte Vietnam Trade Center Joint Stock Company, some of the company’s projects have not yet achieved the planned results. During the first 10 years in Vietnam, the group spent nearly 9,000 billion VND to invest in 13 trade centres and hypermarkets.
The continuous expansion of the shopping centres, leading not to reach the break-even point, has caused them to “fall behind” in the context of so many big players constantly pouring money into the retail segment.
In 2020, due to the impact of the COVID-19 pandemic, they tried to promote online ordering and purchasing forms through the SpeedL application. However, after more than three years of operation, convenience stores and e-commerce platform SpeedL of Lotte Mart Vietnam are not very efficient and are known by few customers.