Lotte to rely more on house brands

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Lotte to rely more on house brands

Lotte Mart, the third largest discount supermarket chain, will stock more of its own private label products because customers like them and they’re more profitable.

Lotte Mart said on Tuesday that it will increase the share of its house-brand products to 40 percent by 2017 from the current 20 percent in an attempt to raise profit margins.

The announcement was part of a set of new business strategies marking the 17th anniversary of Lotte Mart’s launch.

Private labels or house brands are made under contract by an outside manufacturer who can command less for the product than an independent brand. They also retail for less than independent brands, which customers like.

Different kinds of retailers, including convenience stores and supermarket chains, have launched their own store-branded water, dumplings and bread, to name but a few items.

“As customers become more careful about spending money and look for cheaper products, private label products have become an attractive option,” said Lotte Mart in a statement.

The chain will also change the way the products are arranged to reflect interests and values of consumers under the concept “Easy & Slow Life.”

“At big supermarkets, products are displayed with similar items on the shelves,” said Park Byung-gyu, a public relations official at Lotte Mart.

“But we’d like to take a different approach by placing household items in a miniature room or living room so that consumers can better imagine how they will fit in their houses,” he said.

The chain is also encouraging salespeople in the health food section to give advice to promote products.

“People are now taking great care with their health and this is why we consider this section so important,” Park continued, “Instead of putting nutritious food items here and there, we’d like to focus on certain items and explain why they are good so our consumers can make a better choice.”

The strategy also includes upgrading the grocery’s logistics chain and technological infrastructure to expand online and mobile shopping.

Revamping its online shopping platform is a priority for Lotte Group.

Lotte Super, a sister unit of Lotte Mart, launched an online grocery mall and delivery system dedicated to the Internet shopping mall last year.

A new e-grocer Lotte Fresh sells 4,200 products including baked goods and perishable side dishes and guarantees delivery within three hours. The service is available to residents of Seoul’s Gangnam and Seocho districts.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]

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