November 24, 2024

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A rendering of Lotte's Customer Fulfillment Center in Busan (Lotte Shopping)

Lotte Shopping, the retail arm of Lotte Group, said Tuesday it is set to start the construction of a new logistics center in Busan in partnership with UK retail tech firm Ocado.

Lotte held a groundbreaking ceremony for the new facility, called the Customer Fulfillment Center, which will be located on a 42,000 square-meter site within an industrial complex.

As part of a partnership with Ocado signed in November last year, Lotte plans to adopt the UK firm’s artificial intelligence-based new solutions for its logistics centers, with the Busan center becoming the first case.

The company said that the new solutions improve the facility’s overall operational efficiency, doubling the number of shipments to some 30,000 per day.

Some 200 billion won ($152.2 million) will be poured into the project.

By 2030, Lotte plans to expand the number of its advanced logistics centers to six nationwide, with the second one set to be located in Gyeonggi Province to meet the demand in Seoul and neighboring areas.

“It's meaningful that we are taking the first step of our new online grocery business in Busan,” Lotte Group Chairman Shin Dong-bin told reporters ahead of the groundbreaking event. “Starting with the Busan center, we will showcase the most competitive online grocery platform together with Ocado.”

Online grocery sales is a burgeoning industry here, where major retailers such as Shinsegae and Coupang, as well as startups such as Kurly compete head-on to secure an upper hand in the heated market.

By Hwang Joo-young  (flylikekite@heraldcorp.com)