Lotte Mart’s fresh food quality project bears fruit with grocery sales surge

[Courtesy of Lotte Mart]

Lotte Mart’s fresh food improvement project, initiated in 2022, is proving to be a resounding success, with a recent surge in grocery sales outpacing competitors by more than twice the rate. The Korean retail giant’s strategic efforts to revamp the entire process from agricultural seed selection to sales and to innovate its distribution structure by directly sourcing from nearby farms and seafood collection centers have successfully lured customers back to its stores.

According to industry sources on Thursday, Lotte Mart saw a 10 percent growth in grocery sales from early this year until February compared to the same period last year. This expansion in the grocery sector outpaced the overall product sales growth rate of 5 percent during the same period. When compared to rivals, Lotte Mart’s grocery sector growth rate appeared to be more than double. Notably, Lotte Mart already exhibited a robust growth rate in the grocery sector in the previous year, with a 5 percent increase compared to the overall product growth rate of 0.8 percent. The strengthening of grocery is also a big reason why Lotte Mart’s operating profit increased nearly fivefold over the same period.

Under the leadership of CEO Kang Sung-hyun, Lotte Mart commenced its Fresh Food Quality Improvement Project in May 2022. This initiative involved analyzing and enhancing the entire process from selecting seeds at the origin to harvesting and displaying the products. To date, more than 200 improvement tasks have been identified for over 50 items, including watermelons and pork belly, resulting in ongoing quality enhancement efforts.

A prominent case in point is watermelons. Lotte Mart manages the types of seeds, planting times, and optimal harvest periods for each farm through farm cultivation records. This meticulous process ensures that 95 percent of the total watermelon volume meets the standard of 11 Brix or higher in sweetness. Additional screening at the agricultural distribution center and random sampling checks for sweetness at the logistics center have collectively reduced the defective product shipment rate to below 0.1 percent.

Another factor contributing to the enhanced competitiveness of Lotte Mart’s fresh food lies in the innovation of its distribution process. Emphasizing locally produced and maximally fresh local foods, the retailer has positioned itself as a leading supporter of local foods. Local foods refer to agricultural products produced within a 50 km radius, skipping the long-distance transportation and multi-stage distribution processes. Lotte Mart has appointed local product planners, establishing networks with farms and supplying locally sourced foods that meet their in-house quality standards (L-GAP). Currently, Lotte Mart operates local food sections in over 100 stores, receiving positive feedback from customers for the high freshness of the products. Sales of local agricultural products increased by 40 percent compared to the previous year in 2021, and the trend continued with a 10 percent increase in both 2022 and 2023.