Lotte Group to invest Rp 9 trillion in Indonesia

The Jakarta Post, Jakarta | Wed, 01/21/2009 12:52 PM  

Lotte Group, a South Korean retail giant, will invest Rp 9 trillion (around US$870 million) in the next four years, aiming to become the leader in the country’s lucrative retail market. 

Through a subsidiary PT Lotte Shopping Indonesia — which took over hypermarket chain PT Makro Indonesia last year, the Group plans to build 26 new outlets up until 2013, under the brand ‘Lotte Mart’ to replace the previous ‘Makro’ brand. 

By 2013, there will be 45 Lotte Mart outlets spread across Indonesia, Lotte Shopping president director Moon Young Pyo told a media conference Tuesday, contributing around 16 percent to the Group’s global sales valued at about Rp 17 trillion. 

“We expect to be the No. 1 retailer in Indonesia in five years,” Moon said.

At the moment, the existing Indonesian subsidiary contributes about 10 percent of the global earnings of the Group. 

“We target Rp 5.7 trillion of revenue for this year, increasing by 20 percent up on Makro Indonesia’s revenue last  year,” Moon said. 

Globally, there are 91 Lotte Marts in Korea, China, Indonesia and Vietnam. In Korea, its subsidiary Lotte Mart currently holds a market share of 20 percent. 

Before the acquisition, Makro hypermarkets, which employ around 2,200 workers, targeted consumers such as resellers, hotels, and restaurants, to buy goods wholesale and in large volumes using membership systems.

According to Moon, Lotte Mart will maintain Makro’s membership system, as well as combining it with their own ‘loyal customer’ system. 

He added the company would use the strategy of selling specific products at specific prices for certain areas according to their needs. 

“Lotte Mart will double its product diversity to 30,000 categories,” he added. 

“Lotte Group is targeting Rp 63 trillion in worldwide revenue this year,” Lotte Mart CEO Noh Byung Yong said. 

According to Noh, the company sees a huge potential in Indonesia due to its growing retail market and large population of well over 220 million. 

“The nation’s economic growth has also been constantly above 6 percent, which is a good sign.” 

Lotte Group, whose assets are recorded as being 31 billion euro with a net profit of 23 billion euro in 2007, acquired all of PT Makro Indonesia’s shares from SHV Holdings NV in October last year. 

The group, recognized as the fifth largest in Korea, spent $221 million to buy 75 percent of Makro shares through Lotte Shopping before acquiring the rest through its  subsidiary in Singapore. 

The Group also pledges that no dismissals would take place after the takeover. 

“There will be no layoffs of Makro workers,” Lotte Shopping operational director Jusuf Halim said. 

“We are also keeping our suppliers up to date with this news.” He added that Makro worked with 1800 local suppliers in Indonesia. 

Lotte’s massive expansion will pose a tough challenge for other retailers, including European giant Carrefour SA, which has strengthened its presence in the country by taking over PT Alfa Retailindo last year. (dis)