"Lotte Shopping Invests 1 Trillion in Grocery Logistics, Partners with UK Ocado... Aiming for 5 Trillion Sales in 10 Years (Comprehensive)"

Lotte Shopping Partners with Global Retail Tech Company Ocado
Introducing Ocado's Advanced Solution (OSP)... First Automated Fulfillment Center (CFC) to Open in 2025
Six CFCs to Open by 2030... Currently Shortlisting One Site Each in the Capital Region and Provinces
Targeting 5 Trillion KRW Sales in Online Grocery Market by 2032

(From left) Kim Sang-hyun, Vice Chairman and General Manager of Lotte Distribution Group, and Tim Steiner, CEO of Ocado Group, are taking a commemorative photo after signing a partnership agreement to strengthen online grocery competitiveness at Lotte World Tower in Songpa-gu, Seoul. Photo by Lotte Shopping.

[Asia Economy Reporter Yuri Kim] Lotte Distribution Group has declared itself the number one in Korea’s online and offline grocery market and will invest 1 trillion KRW to strengthen its logistics solution competitiveness. Partnering with the UK retail tech company 'Ocado,' it plans to open an automated fulfillment center (CFC) in 2025, expand to six centers by 2030, and achieve sales of 5 trillion KRW in the online grocery market by 2032.

◇ Introduction of UK Ocado’s Smart Platform… Goal of 6 Automated Fulfillment Centers and 5 Trillion KRW Sales

Lotte Shopping announced on the 1st that it has signed a partnership agreement with UK-based global retail tech company Ocado to collaborate on the domestic online grocery business. Through this agreement, Lotte Shopping will introduce the integrated solution 'Ocado Smart Platform (OSP),' which covers the entire process of online grocery ordering and delivery, and will actively strengthen its competitiveness in the domestic online grocery market.

In July, Lotte Distribution Group established a new vision as 'the customer's first shopping destination,' moving away from managing portfolios by distribution channels to maximizing synergy among related businesses under the broad themes of 'lifestyle' and 'grocery' from the customer's perspective, aiming to create a better customer experience. Through the partnership between Lotte Shopping and Ocado, Lotte Distribution Group plans to target the domestic online grocery market while strengthening competitiveness in fresh food based on integrated sourcing, with the goal of becoming the most trusted and enjoyable 'number one grocery destination' for customers.

Starting as a storeless online supermarket in the UK, Ocado has risen to become one of the world’s top online distribution companies in about 20 years through the development of automated online delivery systems. Recently, building on this success, Ocado has been conducting its end-to-end integrated solution business, the 'Ocado Smart Platform (OSP),' which covers the entire online grocery ordering and delivery process?from demand forecasting to picking and packing at automated fulfillment centers, delivery, and dispatch?using cutting-edge technology. OSP helps retailers efficiently carry out fast and accurate deliveries by utilizing automated fulfillment centers (CFC), proprietary robots, artificial intelligence (AI), and big data. Currently, major global retailers such as Kroger in the US, Sobeys in Canada, and Coles in Australia have partnered with Ocado and adopted this solution.

Through this partnership, Lotte Shopping plans to open its first CFC in 2025 and expand to six CFCs by 2030. The goal is to achieve 5 trillion KRW in sales in the domestic online grocery market by 2032. A separate platform enabling personalized marketing based on individual purchase history and preferences will also be launched. Lotte Shopping expects that by adopting OSP, it will dramatically improve common inconveniences experienced by domestic consumers in online grocery shopping, such as product spoilage, stockouts, missing items, wrong deliveries, and delayed deliveries, and build a big data-based customized online shopping environment.

With the introduction of the CFC equipped with Ocado’s technology, the types of products that can be stored will more than double compared to the existing capacity. Customers will be able to order a wider variety of products at once and receive them without stockouts or missing items. With 33 dispatches every hour, customers can specify exact delivery times and receive their orders without delay. Ocado’s online supermarket in the UK boasts on-time delivery and shopping cart accuracy rates of over 97%. Similarly, Sobeys in Canada, which operates with Ocado’s OSP, achieves on-time delivery and cart accuracy rates of 98%. Lotte Shopping plans to invest about 1 trillion KRW by 2030 for the adoption and operation of Ocado’s OSP.

Lotte Shopping will cover costs for CFC sites, construction, and OSP usage fees, while Ocado will provide hardware such as robots and grids for automated fulfillment within the CFC, as well as operational software, and will continuously handle maintenance. Ocado plans to support efficient operation of OSP by developing additional technologies tailored to the characteristics of the Korean online grocery market, where deliveries must be made in densely populated urban areas.

◇ Korean Grocery Market Size of 135 Trillion KRW… 25% Penetration Rate Indicates Growth Potential

As of 2021, the domestic grocery market is worth 135 trillion KRW. The online penetration rate is about 25%, which is still low compared to other product categories. Traditionally, grocery has been the sector with the lowest online penetration, but due to strengthened supply chains by retailers and the recent impact of COVID-19, it is experiencing global growth. As more consumers experience the convenience of online purchasing, the online grocery business is expected to continue growing even after the end of the pandemic. Accordingly, Lotte Shopping plans to proactively invest in the online grocery business, which has high growth potential, aiming to become a game changer in the online grocery market by providing a higher level of customer experience. Since grocery products best reflect individual lifestyles, securing a leading position in this market is expected to translate into influence in both online and offline distribution markets.

At the signing ceremony, Kim Sang-hyun, Vice Chairman and General CEO of Lotte Distribution Group, Tim Steiner, CEO of Ocado Group, and Luke Jensen, CEO of Ocado Solutions, attended. Shin Dong-bin, Chairman of Lotte Group, was also present and expressed hope that the cooperation between Lotte and Ocado would become an opportunity for mutual growth. Tim Steiner, CEO of Ocado Group, said, "This partnership between Lotte and Ocado will be an opportunity to introduce the most innovative technology to one of the world’s most mature e-commerce markets," adding, "We are pleased that Lotte is moving forward as an innovative global retail distributor with Ocado." Luke Jensen, CEO of Ocado Solutions, stated, "Korea is one of the most dynamic and advanced e-commerce markets in the world," and added, "We look forward to quickly introducing new experiences to Korean customers together with Lotte, a leader in the Korean grocery market with ambitious goals to significantly expand its influence in the online grocery sector."

Kim Sang-hyun, General CEO of Lotte Distribution Group, also said, "We are pleased to partner with Ocado, one of the most innovative companies worldwide, to provide customers with a new online shopping experience," and added, "Through this partnership, we expect Lotte Distribution Group to upgrade its grocery competitiveness and leap forward as Korea’s 'number one grocery destination.'"

This content was produced with the assistance of AI translation services.