As online grocery sales surpass offline for the first time in South Korea, retailers are racing to strengthen their digital capabilities. Lotte's latest expansion with Ocado, centred on a new customer fulfilment centre in Busan highlights how traditional retailers are responding to a rapidly changing market. 

Shifting channel shares in Korea 

Lotte's partnership with Ocado comes at a pivotal moment for South Korea's grocery market. Hypermarkets are facing mounting pressure, with their market share falling to 8.5%* as consumers increasingly favour convenience-led retail formats. Operators such as GS25 and CU continue to expand their footprint and sales, while 7-Eleven Korea, owned by Lotte, has struggled to keep pace with market leaders. 

At the same time, online grocery has reached a major milestone. In the first half of 2026, ecommerce accounted for 50.5%** of grocery sales, overtaking offline channels for the first time and underlining the extent to which shopping habits have shifted. Whilst Coupang has been the primary beneficiary of this transition, delivering rapid growth and significant share gains through its highly developed logistics network, recent data privacy concerns have created an opportunity for rivals to challenge its dominance. 

Against this backdrop, Lotte's investment in Ocado's automated fulfilment technology represents more than a logistics upgrade. The new Busan customer fulfilment centre forms part of a broader strategy to strengthen Lotte's online proposition, improve service levels and regain relevance in a grocery market increasingly defined by digital convenience. 

For deeper insights into the South Korean Grocery Market, check out our Country Presentation.  

The market that could validate Ocado’s model 

The partnership aligns closely with Ocado Technology Solutions' strategic priorities, expanding its relationship with Lotte, scaling the Ocado Smart Platform (OSP) and providing another showcase for its latest fulfilment technology. 

The partnership is particularly important given Ocado Group’s recent challenges. Over the past year, the company has experienced two major share price drops following the closure of three Kroger CFCs in late 2025 and one Sobeys CFC in early 2026. These closures raised concerns around the economic viability of Ocado’s CFC model, particularly in developed economies. As South Korea is a highly developed and competitive economy, the success of the Lotte partnership will provide an important test of whether Ocado’s model can deliver sustainable value in these markets.  

Ocado's Technology Solutions and Logistics businesses reported a combined loss of £354 million before tax in FY2025/26, increasing pressure to demonstrate the commercial viability of its model. A successful partnership with Lotte could generate additional revenue, support future expansion, and strengthen investor confidence. For Lotte, the partnership enhances its ability to compete with online grocery leader Coupang, while for Ocado it provides a valuable opportunity to attract new retail partners in other markets.  

Learn more about Ocado’s strategic priorities. 

Inside the Busan fulfilment centre 

Building on the initial implementation of the OSP for use in Lotte’s online retailing, which launched in 2025 named Lotte Mart Zetta, the partnership has now progressed into large-scale automated fulfilment with the launch of this Ocado-powered CFC in Busan. The facility will serve approximately four million households across Busan and the surrounding Yeongnam region, significantly expanding Lotte’s online grocery reach in one of the world’s most advanced e-commerce markets. The CFC is also among Ocado's most advanced sites globally, incorporating several new innovations, including a fully automated freezer. This tech uses Ocado’s established bot and hive tech to work in temperatures as low as -25°C and is expected to double the productivity of traditional manual freezer operations. The CFC has additionally been designed to support South Korea’s model of dawn grocery deliveries, enabling fresh grocery orders to be delivered before 7am, a key point of competition in the market. 

Beyond operational efficiency, the CFC is expected to be Ocado’s most environmentally efficient CFC to date, this is through the use of a fully electric daytime delivery fleet, energy-efficient 3D-printed robots, multi-temperature totes, and Lotte plans to install solar panels across the centre cutting an estimated 1,000 tonnes of carbon emissions annually.  

The road to nationwide coverage 

For Lotte, the Busan CFC provides the infrastructure needed to compete more effectively on service levels and fulfilment economics. More importantly, it gives the retailer a platform to accelerate online growth without relying solely on traditional store-based picking models. The decision to target Busan and the wider Yeongnam region also demonstrates Lotte's ambition to build a national online grocery network capable of serving consumers beyond Seoul. 

Looking ahead, Busan is unlikely to be the endpoint of Lotte's Ocado journey. The retailer has already outlined ambitions to expand its automated fulfilment infrastructure further, with a similar rollout in the Seoul metropolitan area expected before the end of 2026. Expansion into additional provinces is then likely to follow in 2027 as Lotte seeks to increase online grocery penetration nationwide and build a fulfilment network capable of competing with Coupang's scale and reach. 

For Ocado, South Korea could become one of the most important proof points for its automated fulfilment model. The country's high ecommerce penetration, dense urban population and strong demand for rapid delivery make it one of the few markets where the full benefits of Ocado's technology can be realised at scale. If the Busan facility delivers the expected operational and commercial benefits, it will strengthen the case for further investment across Korea while providing a compelling reference point for future Ocado partnerships globally. 

Ultimately, this partnership is about positioning for the next era of Korean grocery retail. The retailers that can deliver convenience, reliability and efficiency at scale will be best placed to capture future growth, and both Lotte and Ocado are betting that advanced fulfilment technology will be a key differentiator in that race. 

^{* https://en.sedaily.com/finance/2026/07/29/hypermarkets-fade-market-share-halves-in-five-years} 

^{** https://en.sedaily.com/finance/2026/08/07/online-overtakes-offline-in-koreas-food-retail-for-first}