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

Lotte Shopping, South Korea’s offline retail giant under Lotte Group, has hastened steps to catch up with domstic app-based grocery innovators Coupang and Market Kurly, through the employment of automated warehouse solution of British online grocery leader Ocado Group.

Lotte Shopping signed an agreement with the parent of U.K.-based online supermarket Ocado.com to apply its 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) through 2030 to build fulfillment center based on Ocado’s smart platform in 2025 and add five more centers over the following five years. It will purchase land to build the centers and pay commissions to use Ocado’s licensed technologies. Ocado will provide robots and maintenance assistance.

[Source : Ocado Technology Facebook]

Through fulfilment technology, Lotte Shopping hopes to stride in the Korean online grocery market dominated by Coupang and Market Curly based on their fast delivery system. 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. The 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