Lotte Shopping (023530), which operates Lotte Department Store, Lotte Mart and the Lotte On e-commerce platform, will begin offering shareholders discounts and loyalty points when they shop at its retail channels. The move is drawing attention as a possible catalyst for shareholder perks programs — still in their infancy in South Korea outside of dividends — to spread across the retail and consumer goods industries.
Lotte Shopping said on the 13th that it will launch the shareholder benefits program, called L.HONORS CLUB, starting next month. Linked to L.Point, the Lotte Group's integrated membership program, it will offer tiered benefits based on the size of a shareholder's holding and how long it has been held.
Shareholders who own at least one share will receive coupons for 10% to 20% off at the company's department stores, discount stores, supermarkets and e-commerce platforms when they enroll. They will also earn points worth 1% to 3% of their purchases, depending on how much they spend, at thresholds of 1 million won, 2 million won and 3 million won. Shareholders who have held at least 1,000 shares for a year or more will receive additional premium benefits, including access to department store lounges, valet and regular parking vouchers, and free shipping coupons.
"We are introducing a shareholder benefits program, the first by a major South Korean company, to provide tangible benefits to our shareholders and enhance shareholder value," said Lim Jae-chul, head of Lotte Shopping's finance division. "We will do our utmost to build long-term relationships of trust with shareholders and raise the company's value."
Lotte Shopping is the first among South Korea's large business groups to adopt a shareholder perks program that offers shopping benefits rather than dividends or share buybacks and cancellations. Within the country, Ottogi has been the best-known example, giving a 20% discount at its online store to anyone holding at least one share. In August, Dalba Global also opened a shareholders-only online store, offering up to 12% off on 10 products on top of existing discounts. The company says shareholders who own at least one share can buy its products at the lowest prices available in South Korea.
Such programs are already well established in Japan. According to Japan's Daiwa Group, 1,624 Japanese listed companies, or 41.2% of the total, were running shareholder perks programs as of the end of last year. Adoption is especially high among food and retail companies: 83.7% of listed food companies and 80.1% of listed retailers offer shopping benefits or similar perks to shareholders. Among companies with such programs, 73.3% said they had seen an increase in individual shareholders, followed by 35.2% who said long-term shareholders had increased.
Lotte Shopping appears to have drawn on the practices of large companies overseas. LVMH, the luxury group that ranks among Europe's flagship listed companies, runs a shareholders' club that offers free visits and experiences at sites including its foundation's art museum, wine cellars with centuries of history and Louis Vuitton workshops. AEON, Japan's largest retailer, has operated a shareholder perks program for more than 40 years since 1985, returning 1% to 7% of purchases depending on the number of shares held and giving gift cards to shareholders who have held their stakes for three years or more.
Industry watchers expect more South Korean companies, particularly in food and other consumer goods, to adopt similar programs. "You can encourage medium- to long-term investment by offering various benefits to small shareholders, while also gaining a marketing effect," an industry official said. "There are even shareholders who buy a single share just to use the discount store, so the promotional effect is real and it gives companies a way to expand their touchpoints with consumers."