LOTTE HOLDS KEY SUMMIT Lotte DF CEO holds key summit to fight crisis


In June, Lotte Duty Free announced that more than 40 of its senior executives were volunteering to return 10% of their salaries this year to help ‘revitalise’ the company, boost cost-reduction and fight ‘excessive competition’ in the market – including what the company describes as challenging airport contract profitability. Doug Newhouse reports.


replace lost Chinese tourists, with various ideas discussed on how this might be achieved. The company said: “In addition,


we discussed ways to revitalise sales at seven overseas stores, including Japan, as well as various cost- reduction measures.” Meanwhile, Lotte Duty Free


management said that those senior executives who have decided to return a portion of this year’s salary have an average of more than 15 years of experience and all are tax-exempt veterans.


Above: The flagship Lotte World Tower store in Seoul, which reopened for ‘duty free business’ late last year after Lotte regained its duty free licence at the location.


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Crisis ‘to be prolonged’ Most have also apparently worked at the company throughout the testing times posed by the SARS (2003) and MERS (2015) crises. They have obviously added


ccording to a statement issued in June, Lotte announced some key


resolutions at a recent summit meeting led by Lotte Duty Free CEO, Jang Seon-wook. The world’s number two duty free


operator said measures were agreed at a Management Strategy Meeting, where executives discussed ways to help overcome ‘corporate crises’. This gathering’s discussions


included encouraging and incentivising other


visitor


nationalities from south-east Asia to travel to South Korea to


“The decline in sales is a shock that has been unprecedented since the founding of Lotte Duty Free in 2003, except for the SARS crisis.”


Jang Seon-wook, CEO, Lotte Duty Free


huge experience to these ‘regular strategy meetings’ which were introduced by President Jang Seon- wook last year to help the company react much faster to changing events in the marketplace and coordinate measures. According to the statement from


Lotte, Jang Seon-wook also wrote a letter to employees last year (dated 12 December), which sought to explain the current crisis and convey the company view that it expects the crisis ‘to be prolonged’. Jang Seon-wook stated: “The


decline in sales is a shock that has been unprecedented since the founding of Lotte Duty Free in 2003, except for the SARS crisis.” He then called upon his colleagues


to draw strength from more than three decades of success at the company and urged them to concentrate all available ‘internal capabilities’ to tackle the crisis and push forward to make Lotte Duty Free the number one duty free retailer in the world.


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In a rallying call, Jang Seon-wook also referred to the way in which the company had overcome the loss of the World Tower duty free contract and then fought to reacquire the contract last year. This was an example of how everyone can pull together, he said. He also suggested that more of this


same spirit – along with wisdom and enthusiasm – could help Lotte Duty Free to take the number one global duty free operator spot [presently held by Dufry-Ed]. Turning to the marketplace as


a whole, attendees at the recent meeting were also told (what most of them already knew) that the domestic tourism industry has suffered due to the situation of ‘zero’ Chinese tour group tourists – excluding FIT visitors who continue to travel outside the often rigid control of ‘organised’ tours.


Decline in foreign tourists In its statement issued on 22 June, Lotte Duty Free said that according to the Korea Tourism Organization (KNTO) the number of foreign tourists visiting Korea decreased 26.8% year-on-year in April, and tourism revenues also dropped 28% YoY. “In particular, the number


of foreigners using duty-free shops in Korea dropped by 46% in April compared to the same period last year.” Interestingly, Lotte Duty Free


added that according to a survey of foreign tourists by the Korea Tourism Organization (KTO) last year, the average time it takes for foreign tourists to visit Korea is 2.7 months. This represents the time they


take in which to make their decision to book and when they actually physically travel. «


JULY 2017


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