Last 6 December 2008, Lotte Shopping executed a license agreement with ‘Toys R Us’ (TRU), USA, the world’s largest toy specialist, in the Category Killer business.

Through this agreement, Lotte Shopping will have the right to the brand license and operation know-how related with Toys R Us, Toy box, etc.

An outlet for TRU normally occupies approximately 3305.8m² holding about 25,000 - 30,000 toys while Toy box is a small-scale, shop-in-a-shop outlet selling toys in a supermarket. The area is normally about 99.174m² ~ 231.406m² where the most popular toys are displayed. The intent is to meet the shopping convenience of customers and promote harmony and synergy.

After signing the agreement, Lotte is going to dispatch manpower to the U.S.A and Japan so that they can learn from professionals and increase their know-how from the on-site training. In addition, Lotte is getting support from the MD specialist, U.S.A who is dispatched from TRU to Korea for two years on the know-how related with the opening of an outlet including composition plan and design, shop operation and system development and the final plans to open the first outlet in 2008. For this, Lotte is establishing the new organization and manpower for the business department within Lotte Mart. After the opening of the first outlet, Lotte plans to expand up to 110 shops including 20 single outlets and 90 ‘Toy box’ shops until 2012.

Lotte plans to develop toy shops in complex styles by opening single outlets in the scale of 2644.64m² 49587m² in Seoul Metropolitan City, urban territories and local metropolitan cities; 2314.06m² in the newly opened Lotte Marts and the existing large-sized shops; and approximately 991.74m² in the newly opened department store.

In addition, Lotte will attempt to differentiate the sales strategy from the same industry by converting the toy shops established in the existing mart into Toy boxes. Furthermore, it is going to utilize the shops as major Anchor Tenants in the shopping malls and jointly promote toy sales when opening new department stores, discount stores, etc.

The TRU Business is expected to bring about high profitability and growth reaching annual turnover in the amount of W 500,000,000,000 within a few years. This is because its differentiated sales outlet and joint marketing greatly contribute to increasing the volume of customers. Except for the sales sector, Lotte expects to learn about direct purchase and individual product management that would bring about improvement in the profit ratio. It will study the effects of diversification in the operation of other commodities directly purchased and from global outsourcing.

Lee Il-min, Director-in-charge of International Affairs said, “We launched the category killer business after launching the department store, discount store, super market, fashion specialized store, shopping mall, home shopping, etc., and it will be a successful business in view of the situation of domestic market, such as zeal for education, high investment for children, etc. Now, we firmly believe that Lotte could succeed in securing customers like babies/children (Toys R Us); young adults (Young Plaza, Cinema); and adults (Department store, Discount store). We will continuously learn about how to source quality overseas commodities and the distribution know-how of advanced countries. These will be good background for enhancing our image as a global department store.”

☞ ‘Toys R Us’ Information

Year Established: 1948

Business Style: World’s Largest Toy Specialist (Category Killer)

Head Office: New Jersey, USA (Chairman: Gerald L. Storch)

Sales Turnover: W 11,000,000,000.000 (Located in 33 countries including U.S.A; 900 outlets in USA, 643 outlets overseas including Japan)

Major Commodities Handled: Toys, Baby Products, Sports Goods, Educational Commodities, etc.