Lotte, Naver form alliance to reclaim dominance in Korea’s retail sector

(Lotte Retail)

South Korean retail giant Lotte Group has joined hands with IT giant Naver Corp. to expand their businesses amid rising competition.

Lotte’s retail units will adopt Naver’s artificial intelligence (AI) and other technologies to accelerate digital transformation across all business areas, while Naver will expand from online into offline shopping through Lotte.

The two companies announced on Sunday that they signed a strategic partnership on Friday at Naver’s headquarters in Bundang, Gyeonggi Province.

The agreement spans four areas—AI, shopping, marketing, and environment, social, and governance (ESG).

Senior executives including Lotte’s retail group head Vice Chairman Kim Sang-hyun, Lotte Mart and Super CEO Kang Sung-hyun, and Naver CEO Choi Soo-yeon attended the signing and discussed specific cooperation plans.

The centerpiece of the partnership is Naver’s involvement in Lotte’s high-stakes push for AI transition.

Lotte’s retail division hosted its first AI Conference on August 21 and presented a blueprint for an “agentic enterprise,” applying AI to shopping, merchandising, operations, and management support to boost efficiency. Naver will participate in developing the “agentic AI” to realize this vision.

In shopping, Lotte’s offline networks will be combined with Naver’s online platform.

Customers at Lotte Mart, Lotte Super, or Lotte Hi-Mart will be able to pay with Naver Pay for discounts and reward points, while products from 7-Eleven stores nationwide will be delivered via Naver’s quick commerce service “Delivery Now”.

Through this, Naver can collect offline payment data from Lotte to upgrade its services and strengthen Naver Pay’s market share against rivals Toss and Kakao.

In marketing, the partnership will leverage Naver Cloud’s AI advertising solution “NCLUE” to enable hyper-personalized targeting. Verified manufacturers from Naver’s online shopping platform will also gain offline sales channels through Lotte’s department stores and supermarkets as part of ESG-linked shared growth efforts.

The tie-up also bolsters Naver’s competitiveness in the fresh food market, an area long seen as its weakness. Reports suggest the two companies are even considering a joint subscription membership program. Industry observers see this as part of Naver’s bid to build alliances, including with Kurly, to challenge Coupang, the market leader.