It will open a large high-end department store — the first of a proposed nine nationwide — in a major Beijing shopping district later this month.
Having developed a following among affluent shoppers in its home market, Lotte is hoping to follow a similar path in China by offering perks to its wealthiest customers, such as priority parking and personal shopping assistants.
The store will reportedly look to capitalise on the popularity of Korean celebrities and the perception of Korea as an Asian fashion and beauty leader by stocking a range of Korean cosmetics and clothing brands alongside other foreign and local products.
But Shaun Rein, managing director of China Market Research Group, said although Korean popular culture resonated well with the Chinese, the store was likely to experience difficulties if it focused too heavily on the premium consumer.
“It’s still difficult for high-end retailers to make money in China,” said Rein, pointing out that of an annual US$6 billion spent by Chinese consumers, only $2 billion was spent in the domestic market.
Import duties make luxury goods 30 to 40 per cent more expensive in China than in markets such as Hong Kong. Lotte follows Lane Crawford, which re-established a presence in China last year after it had to close previous ventures in Shanghai, Hangzhou and Harbin due to underwhelming sales.
Charley Kan, Beijing managing director for MEC China, added that significant local insight would be needed to ensure a product range that appealed to a Chinese audience and was not already available in boutique stores.
Nonetheless, Rein said the company’s annual sales target of $150 million, while aggressive, was realistic as long as it did not alienate the middle class. The first shop will be located in Wangfujing, a high-traffic area of Beijing.
