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Lotte Mall West Lake Hanoi shopping mall in Vietnam, Nov. 28, 2024 / Yonhap
Retailers urged to expand overseas amid macroeconomic uncertainties
By Lee Min-hyung
Shinsegae Group and Lotte Group — two leading retail giants in Korea — are grappling with the challenge of finding new growth engines in markets overseas as private consumption continues to decline at home.
This is part of their efforts to offset falling revenues in Korea, as consumer confidence continues to dip in the aftermath of prolonged high interest rates. Of particular concern is that the macroeconomic uncertainty is unlikely to take a turn for the better in the near future.
In response, Shinsegae is adopting a two-track strategy of boosting overseas sales both online and offline. The company recently clinched a partnership with Alibaba Group to expand sales channels worldwide.
Under the latest deal, sellers from Shinsegae Group’s e-commerce arm, Gmarket, will be able to widen their sales networks to other countries by utilizing Alibaba’s globalized platform expertise.
The Korean retail giant is also on course to expand its overseas sales offline by setting up more E-Mart stores in Mongolia. The group aims to build 15 E-Mart stores there by 2030. E-Mart is Korea’s largest retail store chain.
An E-Mart store in Ulaanbaatar, Mongolia / Courtesy of E-Mart
The company identifies Southeast Asia as its next major revenue generator. Shinsegae operates a total of three E-Mart stores in Vietnam, and plans to expand its footing into Laos with a plan to open 20 E-Marts there over the next decade.
Lotte Group aims to tap deeper into foreign markets with a strategic focus on building more shopping malls. Lotte’s Time Villas mall is the next-generation cash cow for Lotte Department Store.
Under the drive, the company seeks to increase its sales portion abroad gradually. Time Villas is a new shopping mall brand pushed by Lotte. The first Time Villas shopping mall opened last October in Suwon, Gyeonggi Province. The company plans to open more Time Villas malls here and abroad.
In 2023, Lotte Department Store opened its much-hyped West Lake Hanoi shopping mall complex in the Vietnamese city.
“Such traditional retail giants have no choice but to resort more to overseas markets to defend against any unexpected macroeconomic shocks,” an official from a retail firm said. “More retail firms will follow similar footsteps, as the domestic consumption slump is feared to persist for a longer period of time.”
Convenience store chains are also ramping up their overseas expansion on growing demand particularly for Korean food products. According to GS25, a local convenience store chain, its exports reached around $9 million (13.2 billion won) last year.
This is a whopping growth from 2017 when the figure reached a mere 220 million won. GS25 operates a total of 355 stores in Vietnam and 267 in Mongolia, but plans to increase the number to more than 500 for each country by the end of 2025.
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