Lotte chief has high hopes for one-stop shopping mall biz

Lotte Group Chairman Shin Dong-bin is known to be focusing on the one-stop shopping mall business. He is reportedly taking care of the Lotte Mall Gimpo Airport slated to open on Dec. 9 and issuing orders to related executives.

According to a Lotte Group source Thursday, Shin ordered a change in the name of the operation site from Lotte Shopping Town to Lotte Mall to emphasize the concept of the one-stop shopping mall, which emphasizes a venue for families to leisurely spend time together.

To back distribution businesses and generate synergetic effects among affiliates, the chairman began fostering the one-stop shopping mall business, group sources said.

○ Higher profile of Lotte Asset Development Co.

Ahead of the opening of Lotte Mall Gimpo Airport, the profile of Lotte Asset Development Co., the developer and operator of the one-stop shopping mall, has received a big boost. Under Shin’s order, the company was founded in November 2007 to develop and operate a gigantic shopping town comprising a shopping mall, department store, mart and theme park.

Lotte is the first of Korea’s three distribution giants –- Lotte, Hyundai and Shinsegae -– to set up a company specializing in real estate development and operation.

Lotte Mall Gimpo Airport, which will have 315,040 square meters of floor space, is trying to become a "malling park" where customers can shop, stay at a hotel, and enjoy entertainment and eco-friendly landscape architecture. Considering Korea`s rapidly aging population, a big part of the gigantic shopping town will be stairless.

Lotte Asset Development plans to open gigantic shopping towns across the country, including at Suwon Station in 2013 and the Songdo International Business Complex in 2015. The real estate developer will also build 20 one-stop shopping malls in Asian countries such as China and Vietnam.

Chairman Shin is also known to have keen interest in a project to build Universal Studio Korea Resort by 2016 on 4.35 square kilometers of land in Hwaseong, Gyeonggi Province.

○ One-stop shopping mall business: the next big thing?

Lotte began focusing its energy on the one-stop shopping mall business under the judgment that existing distribution channels will no longer grow due to changing consumption patterns, increasing income levels, and the expansion of the five-day workweek.

Yim Joon-won, in charge of the shopping mall business at Lotte Asset Development Co., said, “One-stop shopping malls began booming in advanced countries such as the U.S. and Japan around the time when their per-capita incomes started exceeding 20,000 dollars.

“The number of ‘value customers’ who purchase both luxury items and cheap SPA (specialty store retailers of private label apparel) brands. This is another reason for the bright prospects for one-stop shopping malls, which give shoppers wider choices by encompassing department stores, discount stores, etc.”

Such gigantic shopping towns are in line with the government’s measure to foster small- and mid-size companies as they charge low rental fees and accommodate a large number of shops.

Seo Jeong-yeon, an analyst at Shinyoung Securities, said, however, “Distribution companies have recently been pursuing experimental and gigantic projects never seen in the past. It’s premature to analyze their returns on investment.”

bright@donga.com