Lotte Department Store is making a bold move to reshape South Korea’s retail landscape. At a press conference in Seoul on October 23, CEO Chung Joon-ho announced the company’s long-term strategy to invest 7 trillion won (approximately $5.07 billion) by 2030 in expanding its new shopping mall brand, “Time Villas.” The goal is to establish 13 locations by the end of the decade, marking a significant shift in Lotte’s business model as it pivots towards shopping malls, which are poised for explosive growth.
This strategic shift is in response to changing consumer behaviors, with a focus on enhancing customer experience and evolving retail spaces beyond mere shopping destinations.
Time Villas: The Vision Behind Lotte’s New Shopping Mall Brand
“Time Villas” is a concept designed to merge the notions of time and luxury, symbolizing a space where “a new era unfolds.” The first Time Villas location opened in Suwon, and Lotte plans to expand this brand to major cities like Songdo, Daegu, Seoul, and Jeonju. Additionally, six existing Lotte mall locations will be revamped and converted into Time Villas malls, including those in Gunsan, Busan, and Gyeonggi Province.
- Four new locations: Songdo, Suseong, Sangam, Jeonju
- Six revamp locations: Gunsan, Suwan, Dongbusan, Gimhae, Eunpyeong, Suji
- Total investment: 7 trillion won by 2030
CEO Chung explained that the new malls would be more than just retail hubs. “Shopping malls are evolving from simple retail spaces to environments where people eat, spend time, and enjoy a wide range of experiences,” he said. The success of Lotte’s existing malls, such as Lotte World Mall in Jamsil and Westlake in Hanoi, has encouraged the company to double down on this strategy.
Shift in Business Focus: Malls to Overtake Department Stores in Sales
Lotte Department Store’s investment plan signals a major shift in its business portfolio. Currently, department store sales account for 75% of the company’s total revenue, but this figure is expected to drop to 60% by 2030, as shopping malls rise to take a 30% share, up from just 1% today. Meanwhile, outlet stores are projected to decrease from 24% to 10%.
Year |
Department Store Revenue |
Shopping Mall Revenue |
Outlet Store Revenue |
---|---|---|---|
2022 |
75% |
1% |
24% |
2030 (Projected) |
60% |
30% |
10% |
Chung stressed that while the department store sector is expected to see modest growth of just 2% annually, shopping malls are forecast to grow by 17% annually, driven largely by the preferences of younger consumers.
Evolving Consumer Preferences and the MZ Generation
The shift to malls is also fueled by changes in how people shop. According to Chung, 79% of the MZ Generation—those born between the early 1980s and early 2000s—prefer to shop independently, without assistance. This contrasts with older generations who favored personal service during their shopping experiences.
The MZ Generation seeks more than just shopping; they want a complete lifestyle experience. Time Villas malls are designed to meet this demand by integrating fashion, food, entertainment, and cultural activities in one place. Lotte is betting big on this trend, turning shopping malls into destinations where customers can enjoy a variety of activities beyond retail.
Expanding Internationally: Learning from Success in Vietnam
Lotte’s success with its international shopping mall venture, Westlake Hanoi in Vietnam, serves as a blueprint for its future growth. Opened in 2023, Westlake attracted 10 million visitors in its first year and generated 280 billion won in sales. The success of this venture has encouraged Lotte to explore additional opportunities abroad, both through new store openings and consignment operations.
CEO Chung revealed that the company will continue to expand internationally, leveraging the strong performance of its overseas malls to strengthen its global footprint. Westlake Hanoi’s success has provided a clear path forward, demonstrating the potential of mixed-use malls in international markets.
The Future of Time Villas: More Than Just Shopping
The future of Time Villas lies in Lotte’s vision to create a truly immersive experience for shoppers. Collaborating with renowned architects, such as Pritzker Prize-winning Richard Meier and British firm LDA, Lotte aims to build malls that are not only functional but also aesthetically striking. These landmarks will incorporate a wide range of activities and experiences, blending luxury with convenience.
“Time Villas will offer far more than just shopping,” Chung said. “From fashion and food to entertainment and even travel, Time Villas will set the standard for future retail spaces that focus on connecting all aspects of the customer experience.”
Lotte plans to incorporate elements from its group affiliates, including Lotte Hotels and Lotte Trading, to create a multi-use complex that can serve as a destination for a variety of activities. The company also plans to introduce unique brands like Bacha Coffee, which focuses on high-end gifts rather than coffee alone, to create differentiated content for shoppers.