Lotte Group Chairman Shin Dong-bin. (Photo: Lotte Group)

Lotte Shopping is teaming up with the fund IMM Private Equity, a leading private equity fund, to acquire Hanssem, the nation’s largest furniture and home furnishing company.

The move may be construed as Lotte Shopping’s bid to make inroads into the furniture market, which is emerging as a promising part of the department store business.

Lotte Shopping said Oct. 10 the company was participating as a sole strategic investor with a private equity fund, established by IMM Private Equity, to acquire Hanssem.

Lotte Shopping held a board meeting to approve a 299.5 billion contribution to the private equity fund.

An inside view of Hanssem Design Park in the Yongsan IPark mall in Yongsan, Seoul.

IMM Private Equity struck an MOU to take a 30.21 percent stake in Hanssem from Hanssem Honorary Chairman Cho Chang-geol and related persons in July, and the private equity fund was searching for a strategic investor.

LX Hausys disclosed its intention to invest 300 billion won, but IMM Private Equity chose Lotte Shopping, citing greater synergetic effects.

IMM Private Equity is responsible for managing Hanssem. Lotte Shopping plans to maintain collaboration for synergetic effects.

Lotte Shopping is known to have secured the right to its first refusal toward Hanssem, so chances are high that the former might acquire the management of the latter.

The reason behind Lotte Shopping’s acquisition of Hanssem is that the living sector has emerged as one of the core contents of the department store industry.

Ten years ago, furniture brands saw their standing ranked lower at department stores, so fewer people bought luxury furniture there.

Things have changed of late. Department stores have rushed to ramp up living contents, as people are spending more money on such products, owing to rising income levels and the effects of the pandemic.

Living sections have moved from the top floors of department stores to the third or fourth floor. Department stores tend to turn to big-ticket strategies to fend off competition from the e-commerce sector, like Coupang.

“Living items have become a core content along with brand products,” a department store official said.
Unlike Hyundai Department Store, which runs Hyundai Livart Furniture and Shinsaegae Department Store, Lotte Shopping has no furniture company.

Hanssem is Korea’s sole major brand specializing in the total interior business of handling the whole of the house. Hanssem Nexus and Hanssem Domus import big-ticket furniture from abroad to meet high-end demand.

If Hanssem is allowed to open its shops at 53 department stores of Lotte Shopping, including 21 outlets, it is expected to have greater synergetic effects.

Lotte Group plans to ramp up synergetic effects among Lotte Hi-Mart, Lotte E&C and other subsidiaries.

When officials with Lotte consult on the interior of Hanssem, they may solicit to make a pitch for home appliances at Lotte Hi-Mart.

When Lotte E&C builds apartments, the company may have them furnished with Hanssem furniture.

Of late, Lotte Group has inaugurated the bio team and the health care team under the direct control of Lotte Group Chairman Shin Dong-bin. In a related development, the business group is predicted to launch massive M&As to find future growth engines.

A view of Hanssem building in Sangam-dong, Seoul. (Photos: Hanssem)