Lotte Shopping vows to lead online grocery market with Ocado’s CFC

Lotte Shopping, South Korea’s offline retail giant under Lotte Group, is going all-out to catch up the country’s online grocery market leaders, like Coupang and overnight fresh food delivery platform Market Kurly, with British online supermarket leader Ocado Group’s robotic warehouse solution.

Lotte Shopping signed an agreement with Ocado, U.K.-based online supermarket Ocado.com’s major stakeholder, to bring the latter’s grocery fulfilment technology to Korea to enhance its online grocery business, according to Lotte Shopping on Tuesday.

Under a partnership deal with Ocado, the Korean retail giant will innovate its online grocery shopping and fulfilment systems by using the British firm’s customer fulfilment center (CFC) solution backed by artificial intelligent (AI), big data, and machine learning technologies.

Lotte Shopping will invest 1 trillion won ($704 million) by 2030 to adopt Ocado’s smart platform and build its first customer fulfillment center using Ocado’s technology by 2025 and add five more centers by 2030. It will purchase land to build the centers and pay commissions to use Ocado’s licensed technologies. Ocado will provide robots and maintenance for the partnership.

[Source : Ocado Technology Facebook]

With Ocado’s smart fulfilment technology, Lotte Shopping hopes to become a leader in the Korean online grocery market currently dominated by Coupang and smaller grocery startup Market Curly. It targets to achieve 5 trillion won in online grocery business by 2032. Grocery e-commerce takes 25 percent of the Korean whole grocery market worth 135 trillion won as of last year. However, its share has expanded fast since the pandemic.

Ocado, founded in 2000, has climbed to the top online grocery operator thanks to its online grocery operating system including CFC technology. It provides its automation technologies to 11 global retailers, such as Kroger in the United States, Coles in Australia, and Sobeys in Canada. The core of its smart platforms is the CFC, where robots pick out products ordered from customers and send them to be packaged.

Lotte Shopping shares were down 0.45 percent to 88,600 won in the morning session on Wednesday.

By Noh Hyun and Jenny Lee