Lotte continues investing in digital transformation despite sluggish online business

Lotte ON CEO Na Young-ho and the e-commerce firm's corporate logo / Korea Times file

By Kim Jae-heun

Lotte Group will continue to expand investments into its e-commerce businesses, including urban air mobility (UAM) services and the metaverse, despite its growing losses from online shopping, according to company officials Tuesday.

Last year, its retail unit Lotte Shopping marked sales worth 15.58 trillion won and an operating profit of 215.6 billion won, down respectively by 3.7 percent and 37.7 percent year-on-year. Its e-commerce revenue declined by 21.5 percent to show 108 billion won, while its operating loss increased by 64 percent to reach 156 billion won in the same period. Only its department store business put up a good defense, while the rest did poorly.

However, Lotte shows no sign of making changes to its current plans for the e-commerce sector.

UAM is a transportation service using small aircraft, such as flying cars that can take off and land vertically. Lotte plans on utilizing its drones to deliver online orders to isolated areas that cannot be reached easily by road.

“Our UAM business is a result of the company's longtime efforts in development of new technologies. We expect it to create synergy effects in the areas of shopping infrastructure, air transportation and tourism,” a Lotte Group official said.

Lotte Group's convenience store brand, 7-Eleven, will also play a key role in strengthening its e-commerce. The retailer plans to utilize some 6,000 stores in the country as distribution centers for delivering online orders within an hour of purchase. It also recently acquired Mini Stop, which has 3,000 stores ― a move expected to boost Lotte Shopping's quick commerce initiative.

For its metaverse service, Lotte is almost finished developing its online platform. The retail giant has already showcased how its marketing services might work in a virtual space using its “Head Mounted Display,” at the Consumer Electronics Show held last month in Las Vegas.

Lotte's ultimate goal is to connect all of its retail subsidiaries with its metaverse service. This connection will enable customers to try out various items in the virtual world prior to making purchases online.