Lotte to boost investment in tourism, retail, construction

Lotte Group, the country’s fifth-largest conglomerate, announced Sunday that it would invest a record 7.5 trillion won ($6.8 billion) in the retail, tourism and construction sectors.

The investment plan expanded about 31.5 percent from 5.7 trillion won last year.

“Despite the worsening business environment, we shouldn’t hold back on investments (to seek growth),” Lotte Group chairman Shin Dong-bin was reported as saying in a recent executives’ meeting.

“We have to build momentum for growth, while preparing for changing (consumer) trends.”

The group’s record investments are in line with its market expansion in the retail sector, including fashion outlets and supermarket businesses at home and abroad.

The retail giant will allocate 3.4 trillion won, the largest share of its 2015 investments, into its retail businesses, focusing on omnichannel retailing, according to officials.

“Omnichannel retailing” refers to convenient shopping experiences across online platforms and offline stores. Global retailers have been gradually adopting this retail business trend, which offers customers more flexibility when making purchases.

“If Lotte succeeds in building the omnichannel system, it will be competitive enough to cope with ... global retailers such as Amazon,” Shin said. 

The group will also inject some 1.5 trillion won in its heavy chemical and construction businesses, two of its other core businesses, as part of its efforts to improve cost competitiveness by diversifying raw materials.

Lotte Chemical, the chemical arm of the group, said it would start construction on an ethane cracker plant in the U.S., a first for a Korean petrochemical firm.

Lotte also plans to invest about 1 trillion won in the food sector, especially in creating premium products, and 1.1 trillion won in tourism and service.

Starting with Lotte City Hotel in Ulsan, the country’s seventh-largest metropolis, the group plans to open three hotels in the country this year. It will open Lotte City Hotel in October and Lotte Lifestyle Hotel in December, both in the Myeong-dong area.

“It is part of our business goal to operate a total of 40 hotel chains in the country and abroad by 2018,” a group official said.

The group has recently been boldly expanding its travel business overseas. Last week, it won the largest portion of the duty-free zones at Incheon International Airport, which bring in total revenue of up to 8.3 trillion won.

By Suk Gee-hyun (monicasuk@heraldcorp.com)