Riding the K-culture wave in Southeast Asia: South Korean department store chain Lotte to open HQ in Singapore

Lotte Shopping, which operates the largest shopping mall chain in South Korea, will open its international headquarters in Singapore in 2026 to capture the wave of growing interest in Korean culture sweeping through Southeast Asia.

The new office will oversee Lotte’s businesses in Vietnam and Indonesia, where it has a sizeable retail presence.

An initial public offering (IPO) on the Singapore Exchange could also be on the cards as the company seeks funds to spearhead its future expansion in the region.

Lotte Retail group chief executive Samuel Sanghyun Kim told The Straits Times in an exclusive interview that he aims to position Lotte as the top shopping destination in Southeast Asia.

Lotte Shopping is a subsidiary of Lotte Retail Group. It aims not just to keep pace with the trends but also to set them, even as customer preferences continue to evolve.

The proliferation of South Korean pop music, films, and TV shows here has deepened consumers’ emotional connection to Korean culture, significantly boosting Lotte’s retail business and helping the company maintain long-term ties with its customers here, Mr Kim said.

Mr Kim, who was in town for the company’s CEO investor relations day, said the Republic was a “natural centrepiece” for Lotte’s businesses in the region.

He cited Singapore’s established infrastructure, its track record as a location for international headquarters, and a strong talent pool to lead Lotte’s regional operations.

The numerous consumer packaged goods companies and retailers based here also allow the group to capitalise on networking opportunities for future business growth, he added.

Mr Kim noted that Lotte will first focus on achieving financial stability and sustainable growth in the region.

He added that the Singapore office would house a lean team at the beginning before further expansion.

It will leverage artificial intelligence innovation across business functions to boost productivity for staff and the shopping experience for customers.

Another priority for the new office will be collaborating with local partners to deliver targeted advertising through a retail media network.

Founded in 1979 with the opening of its first flagship department store in Myeongdong, Seoul, Lotte Shopping has expanded to over 14,000 stores in the country, including hypermarkets and supermarkets.

But with e-commerce outpacing physical retail as the preferred shopping platform in South Korea, comprising 51 per cent of the country’s retail market, Lotte is now betting on South-east Asia for further growth.

An IPO here could thus be on the cards “by the end of the decade”, as the company seeks to attract more investors to scale up its retail presence in the region, where the Lotte brand is already strongly associated with tourism in Vietnam and Indonesia.

Lotte currently operates 49 stores in Indonesia and 19 in Vietnam, including its premium shopping mall Lotte Mall West Lake Hanoi – an integrated development comprising a luxury shopping centre, hotel, offices, and residences.

The 355,000 square metre complex houses over 400 stores, of which 40 per cent are brands that are new to the city or the country. It saw more than 10 million customers within a year of opening in 2023.

“Our store in Da Nang is also seen as the last stop before tourists return to their home countries because there’s so much that we offer there,” Mr Kim said.

He added that the region holds huge market potential compared with South Korea, as the population here is larger, younger and also internet-savvy, allowing them to grow familiar with Korean culture at a very fast pace and become early adopters of new products and experiences.

However, he noted that the company is exercising caution in its e-commerce expansion here to avoid potential heavy losses due to the significant investment required.

He added that Japanese retail company Aeon, which operates shopping malls in Southeast Asia, is also making further inroads in Lotte’s markets, posing strong competition.

But compared with its competitors, Lotte said it offers an unmatched curation of both Korean and local retail and food and beverage offerings.

The company said it plans to develop two to three more premium retail complexes in major Vietnamese cities by 2030. It aims to hit three trillion won (S$2.8 billion) in overseas sales in the same year.

It reported 1.6 trillion won in overseas revenue for 2024, up 6.7 per cent from 1.5 trillion won in 2023. Operating profit for 2024 was 40 billion won, up 81.8 per cent from 22 billion won in the previous year.

The outlook for 2025 is already looking positive, with overseas revenue for the first half of the year already at 900 billion won, up 12.5 per cent from the year-ago period, and operating profit up 54.5 per cent at 34 billion won.

Overall, Lotte’s overseas operations already contributed 12.9 per cent of its consolidated revenue and 18.1 per cent of operating profit for the first half of 2025.

In addition to its physical stores, the company is also venturing into a new “shop-in-shop” business model, where it operates a mini-store or dedicated section inside a store, rather than having a standalone one.

It launched Lotte Mart Express in Singapore in May 2025, set up inside FairPrice Xtra in VivoCity, and plans to replicate this concept in other markets.

The Korean group’s curated selection of Lotte’s “private brand” products is also available in over 100 stores of the Singapore supermarket chain.

A Lotte private brand product is developed and branded by Lotte itself, rather than by an external manufacturer or third-party brand.

Lotte also exports its private brand products to 13 countries, as demand for Korean food and lifestyle brands continues to grow.

While most of its exports from South Korea have so far been sheltered from US tariffs, Mr Kim said there are still knock-on effects in the form of cost increases for raw materials that have driven up the prices of the company’s products.

The company intends to set up a global sourcing operation in Singapore to diversify its supply chains in the region and reduce the impact of global threats on the prices of its goods.

Among the challenges facing the company is the threat of global warming, which has already impacted agricultural supply chains. Warmer climates have reduced the population of fish and other seafood in Korean waters, increasing the dependence on imports, which can be costly, Mr Kim said.
 

Source: The Straits Times ©️ SPH Media Limited. Permission required for reproduction.