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Lotte to inject W1tr to expand online grocery business

Lotte Shopping CEO Kim Sang-hyun (left) and Ocado Group CEO Tim Steiner shake hands after sealing an agreement at Lotte World Tower in Songpa-gu, in southeastern Seoul, Tuesday. (Lotte Shopping)
Lotte Shopping CEO Kim Sang-hyun (left) and Ocado Group CEO Tim Steiner shake hands after sealing an agreement at Lotte World Tower in Songpa-gu, in southeastern Seoul, Tuesday. (Lotte Shopping)

Lotte Shopping, the e-commerce arm under retail giant Lotte, said Wednesday it plans to inject some 1 trillion won ($705 million) to boost its online grocery business.

In partnership with Ocado, UK’s retail solutions provider, the company will adopt the Ocado Smart Platform, which uses artificial intelligence, big data and machine learning technologies to offer fast delivery service of fresh groceries.

The platform operates automated fulfillment centers where hundreds of robots sort and pick 700 ordered items per hour -- about 3 1/2 times faster than humans. The robots then pack the products and recommend the fastest routes for delivery.

Based on demand forecasting, the company said the warehouses stock the appropriate amount of groceries, thereby reducing food waste. The amount of food items past the expiration date at Ocado’s automatic robotic warehouses is just 0.4 percent, lower than that of local supermarkets here, it said.

By 2030, Lotte plans six automated fulfillment centers to be operated by the platform, with the first due to be built in 2025. It aims to post 5 trillion won in domestic online grocery shopping sales by 2032.

Lotte Shopping will foot the bill for constructing the fulfillment centers, while Ocado provides robots and software needed to operate the automated warehouses.

With Ocado’s fulfillment centers, the company can stock twice as many groceries so that consumers don’t receive out-of-stock notifications, a Lotte Shopping official said. “Also, we plan to match riders with orders from consumers every hour -- a total of 33 times in a day -- to reduce waiting time for the users.”

“In partnership with Ocado, we hope to spur growth in Lotte’s retail business to become the No. 1 platform for grocery shopping,” said Lotte Shopping CEO Kim Sang-hyun in a statement.

Founded in 2000, Ocado offers distribution solutions for 11 retailers in nine countries, including Kroger in the US, Sobeys in Canada and Coles in Australia. It logged 4 trillion won of sales last year.



By Byun Hye-jin (hyejin2@heraldcorp.com)
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