Lotte Mart and Supermarkets, Breaking Boundaries for Integrated Sourcing Synergy

Q3 Operating Profit Forecast +31%, +17%
Clear Performance Improvement Trend Since Q2 This Year
Reduced Workforce Waste and Additional Costs Through Integrated Sourcing

Lotte Mart and Super have made significant progress in integrated sourcing work, signaling a "green light" for their third-quarter performance this year. The duplication of tasks that previously existed between the Mart and Super has been greatly reduced, resulting in maximized operational efficiency.

Lotte Mart Seoul Station Branch Exterior [Photo by Lotte Mart]

According to financial information company FnGuide on the 25th, Lotte Shopping's discount stores (Mart) and Super are expected to record operating profits of 42 billion KRW and 7 billion KRW respectively in the third quarter, an increase of 31% and 17% compared to the same period last year. Sales are forecasted at 1.566 trillion KRW and 325 billion KRW respectively, slightly increasing or remaining similar compared to the same period last year (1.559 trillion KRW and 352 billion KRW). Although the department store division, which holds the largest share within Lotte Shopping, saw its operating profit drop by about 17% to 90 billion KRW, and home shopping’s operating profit fell by about 71% to 6 billion KRW compared to the previous year, these declines are expected to be offset by the discount stores and Super, resulting in overall sales and operating profits meeting expectations (3.82 trillion KRW and 142.4 billion KRW).

Experts analyze that additional costs and manpower waste that had occurred between Mart and Super have been significantly reduced through integrated sourcing, and unnecessary duplicated tasks have been eliminated, allowing the two business divisions to start generating synergy effects. Until now, although Mart and Super handled similar products, their product codes and sourcing systems were all different, making it difficult to create mutual synergy. In response, CEO Kang Sung-hyun has been promoting integrated sourcing work since the end of last year to enable all tasks such as ordering, product management, and data analysis to be carried out integrally by both Mart and Super. On July 1st, the integration of Lotte Mart’s and Lotte Super’s online malls?Lotte Mart Mall and Lotte Super Fresh?was also completed. Lotte Mart Mall now operates by fully absorbing the services previously provided by Lotte Super Fresh.

The results of these efforts have begun to appear as a clear trend of performance improvement from the second half of this year. In the second quarter, Mart’s sales were 1.422 trillion KRW, a 1.3% decrease compared to the same period last year, but the operating loss significantly decreased from 7 billion KRW to 3 billion KRW. Super’s sales decreased by 2.2% to 325 billion KRW, but operating profit turned positive at 5 billion KRW.

Lotte Mart plans to complete the integrated sourcing work by 2025. Going forward, both Lotte Mart and Super aim to gradually transform from their existing standardized formats into specialty stores focused on groceries. A Lotte Mart official stated, "Since integrated sourcing is a concept that changes all existing frameworks, it is expected to take another 2 to 3 years, but internally we are confident about the results and are pushing forward." He added, "As the work progresses, we expect the trend of performance improvement to become even more distinct."

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