Lotte brings domesticism beyond demand

In the online shopping era, the impact wave of physical retailing may be global, which is not an exception for Lotte Department Store. So how does Lotto continue to maintain sales and profit growth?

“Actually, if there is no consumption of Chinese tourists, the growth rate will decline.” A set of data may be able to explain the problem: In 2014, the total sales volume of Lotte Department Store headquarters accounted for about 19% of the total foreign tourists’ spending. This is an increase of 45% over the previous year. The consumption of foreigners is mainly from Chinese tourists. According to the forecast of Korea Tourism Organization, the number of Chinese tourists visiting South Korea will increase at an average annual rate of 19.8%, which will greatly stimulate the consumer market in South Korea.

The indispensable link for Chinese tourists to South Korea is “buying, buying, buying,” whether it is a department store, a duty-free shop, or a large supermarket, all of which are busy Chinese tourists. According to forecasts by South Korea Tourism Corporation and Hana Datou Securities Co., the amount of Chinese tourists shopping in Korea will reach 30.5 trillion won by 2020, accounting for 7.7% of the total retail market in Korea (398.3 trillion won) in 2014.

In the past two years, affected by the global economic downturn and the continued sluggish domestic consumption in South Korea, Korean consumers' consumption habits have undergone tremendous changes, and they have begun to spend more on online and peripheral convenience stores. In this situation, retail companies led by Lotte Shopping have responded to challenges in a variety of ways: by broadening the network at home and abroad, diversifying retail channels, and innovating in products and stores.

Chinese tourists boost South Korea's "domestic demand"

The Myeongdong business district has entered the door of the Lotte Department Store main store, which represents the pioneer of the Korean circulation industry. At first sight, it can see the eye-catching "Chinese translation" help desk. "About seven or eight years ago, Lotte Department Store headquarters realized that the purchasing power of Chinese tourists provided such services," said Zheng Lie, senior manager of Lotto Department Store's global marketing department.

As it turns out, Lotte's judgment is not wrong. Four years ago, among the people who were consuming at this department store, the Japanese accounted for the highest percentage. Today, Chinese tourists account for 18%, and Japan only 2% to 3%.

Another set of data may be more illustrative of the problem: In 2014, the total sales volume of Lotte Department Store headquarters accounted for about 19% of foreign tourists' spending, up 45% from the previous year. The consumption of foreigners is mainly from Chinese tourists. "If there is no consumption of Chinese tourists, the growth rate will drop." Zheng Lie probably stated the voice of the entire Korean retail industry. During the National Day 2014, the consumption of overseas famous brands accounted for 62% of Hyundai Department Store Apgujeong Main Store and Trade Center store UnionPay cards. Likewise, the sales of Galeria Fashion Museum, a famous high-end department store in Gangnam District, rose by 40% year-on-year, including China. Tourist spending accounts for 90%.

According to the Yonhap News Agency, South Korea Tourism Corporation and Hana Datou Securities Company predict that the number of Chinese tourists visiting South Korea will increase at an average annual rate of 19.8%, reaching 14.88 million by 2020, which is about 3.5 times that of 2014. “As Chinese tourists soar, the amount of shopping in Korea (excluding transportation and accommodation expenses) is expected to reach 30.5 trillion won by 2020, which is equivalent to nearly 5 times of 2013. This figure accounts for the total retail market in Korea in 2014 ( KRW 398.3 trillion (7.7%)."

Link online with physical store

It is worth noting that Korea’s online shopping sales in 2008 exceeded department stores, and in 2010 it exceeded the sum of department stores and supermarkets. Lotte, who had earlier predicted this trend, took the lead in establishing Korea's largest online mall “lotte.com” and later established an online duty-free shop. In 2013, Lotte Online Mall sales growth reached 185.5%. “If a customer does not purchase a product because of a price issue in the store, Lotte will proactively propose that the customer purchase it in an online store, so that the price is more favorable.” For example, Shen Qiche, a director of the future strategic center of Lotte Group, said, “Also, if A customer ordered the product online, but he was very close to the department store. Lotte would leave things in the offline store. Ask the customer to mention it. ""Provide all sorts of conveniences, find ways to put online markets and Linked to the physical store, it has reached growth.” Shen Qiche explained. In fact, omni-channel shopping is one of Lotte's important tactics to meet challenges. Lotte has specially developed online and offline platforms so that consumers who have changed their consumption habits can enjoy convenient services in a timely manner.

According to Shen Ruche introduction, Lotte has developed a corresponding application for smart phone download. In this system, the customer has inquired about what products, the customer is now most interested in what products, all can search, through analysis, To understand which product is currently the most popular among customers, merchants can regularly launch corresponding coupons and events to attract customers.

Big data service focus on customer needs

In more than 40 years of operation, Lotte has formed mature CRM (Customer Relationship Management). "Lotte is in a multitude of formats and it is very important to focus on the needs of customers." In 2005, when Lotte invested about 4 billion to 5 billion won to build this system, many people questioned, "Is there a need to invest in such a large system?" Now it seems that this is an extremely correct decision.

Shen Qiche introduced that the main function of the Lotte CRM system is to analyze whether customers buy more products and what products are popular. In the next quarter or next year, the proportion of such products can be expanded accordingly.

The total population of South Korea is about 50 million, and the number of Lotte members is 30 million. Lotte people are always very proud of this. “It can be said that most of the Koreans are Lotte members.” After mastering customer needs through market analysis, Lotte will regularly send out coupons to members by SMS or email to attract more. Many customers. And the design of such coupons is often "interlocking" - for example, after a customer spends Lotte Mart, the coupons they receive can be used in multiple fields. With a membership card, they can get a lot of discounts.

In addition to customers, Lotte has built a virtuous circle with suppliers and brands. Shen Yu Che told reporters that all brands wanting to enter Lotte Department Store have no so-called threshold fees, and there is no rent, which is very different from domestic department stores when the "second landlord".

After the brand's entry, Lotte tried every means to set up a green light for its sales and helped sell and promote. According to Zheng Lie, Lotte Department Store's main store on the 9th floor is lined with merchants waiting for admission every day. "The Lotte Department Store earns 30% through commissions, and afterwards passes various discount coupons and coupons to consumers, attracting them to spend again, forming a virtuous circle."