Driven by Market Saturation and Suffocating Regulations
Faced with domestic market saturation and suffocating regulations, the big three Korean grocery chains are accelerating efforts to enter overseas markets. In the wake of South Korea’s deployment of Terminal High Altitude Area Defense (THAAD) in 2016, they closed their stores in China, halting their efforts to expand markets overseas. But soon they have turned their eyes to Southeast Asian nations such as Indonesia and Vietnam.
Lotte Mart announced on Oct. 14 that it will open its 47th Indonesian store in Mataram City on Lombok Island, a famous tourist destination. In addition, it will launch three more stores within this year, with a plan to increase the number of its stores in Indonesia to 100 by 2023.
Lotte Mart entered the Indonesian market in December 2008 by acquiring 19 Makro stores in the country. Since then, it has steadily increased its stores to 47 including the one in Mataram City. It has concentrated its efforts in expanding its market share in Indonesia because the country, with fewer restrictions and large land resource, has a big potential for economic growth. Foreign markets account for 30 percent of Lotte Mart’s total sales, with Indonesia accounting for 80 percent of its overseas sales.
Despite its painful experience of withdrawing from China, E-Mart is also making aggressive efforts to enter overseas markets. On Sept. 6, the company opened its third Mongolian store in an apartment complex in Khan Uul District in Ulaanbaatar, the capital city of Mongolia. The three-story store with one underground floor has a floor space 13,550 square meters, the biggest among supermarkets and hypermarkets in the country. Last year, the company recorded sales of 72 billion won in Mongolia, a 37 percent rise from the previous year.
E-Mart is also expanding its investment in Vietnam. It will invest 460 billion won in its branch in the country by 2021, opening five to six additional stores in mid-to long-term. Currently, the company is operating its first store in Ho Chi Minh City in Vietnam. The second store, which was supposed to open next year, will be delayed in launching due to real estate restrictions resulting from the nation’s local political issues.