Accordingly, South Korean department stores provide some of the best service in the world. With a smile and a bow, sales assistants scurry after customers, attending to their whims while calming their tearful children. Lotte, South Koreas biggest department-store chain, thinks its experience at home makes it ideally suited to serving the new rich in other fast-developing economies. In July it plans to open a huge department store in China, in the Wangfujing shopping district in Beijing. It has set an annual sales target for the store of $150m. The wealthiest customers will be granted special parking spots and will be guided around the store by personal attendants. (Appealing to the very rich works well for Lotte at home: its richest 1% of customers accounted for 17% of its $5.8 billion in sales last year.)
Lottes Beijing store will be a test of the companys plans to launch nine more stores in other big Chinese cities. It has asked consultants to analyse the Chinese market and help it choose a combination of foreign and local brands to appeal to Chinese shoppers. Lotte plans to sell South Korean cosmetics and clothes, banking on the appeal of Korean pop culture, which is popular throughout Asia. Lottes Beijing staff have been sent to Seoul to learn about its procedures, marketing and service.
But Lottes experience in Russia, where it opened its first foreign store last September, suggests that expanding abroad may prove harder than it thinks. It has had to spend a lot on advertising, has found it difficult to attract experienced staff for its Moscow store, and has cut its annual sales target from $140m to $120m. It hopes China will not prove such a tough nut to crack, since the cultural differences with South Korea will be less pronounced. Many retailers find China tough, says Yi Il-min, Lottes director of international business development. Were quite comfortable.
The Economist Newspaper Limited 2008