SOUTH KOREA REPORT: LOTTE DUTY FREE
brands have been moved to the 11th floor,” Kim explained. “We moved our last South Korean cosmetics brands from the ninth floor to the 11th floor at the beginning of March.” “Now we are constructing our
May 2017 20
YEARS 1997-2017
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Lotte Duty Free announced plans to expand its flagship Sogong downtown store in the Lotte Department Store in central Seoul.
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perfume & cosmetics sales were growing, but imported cosmetics brands growth was more rapid. Now our sales of South Korean and imported brands are almost equal.” Fashion boutiques account for
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15% of Lotte’s total sales, equivalent to about $850m in 2016, while revenue from watches and jewellery was 13% of revenue or around $740m last year. “Liquor and tobacco sales
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LAGARDÈRE IN ROME | ACI CONFERENCES’ REVIEW | LOTTE DUTY FREE | DFS GROUP SHILLA | SUNRISE | EVER RICH | CHANGI AIRPORT | SINGAPORE CRUISE CENTRE | CHINA DUTY FREE | INCHEON AIRPORT | HDC SHILLA | HANWHA GALLERIA | SM DUTY FREE WILLIAM GRANT & SONS | PERNOD RICARD | BROWN-FORMAN | BEAM SUNTORY | BACARDI BEAUTY IN ASIA REPORT | COTY’S PHILIPPE MARGUERITTE | PEOPLE NEWS | NOW & THEN
what is believed to be the highest proportion of FIT customer purchases among all of South Korea’s duty free shops. In order to cater for the expected
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are very small as we only sell liquor and tobacco at Incheon International Airport and not downtown,” Kim said. “Also, it’s not a Lotte Incheon
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monopoly as there are many operators selling liquor and tobacco at Incheon so our portion is decreasing.” Interestingly, Lotte Duty Free’s
Sogong main store accounts for almost half the company’s total revenue and registered sales of $2.7bn in 2016; an increase of about 38% compared with 2015. The Sogong shop also records
“Our total Lotte online sales total was US$1.25bn in 2016. We expected over 30% online sales growth this year without recent diplomatic problems involving South Korea and China.”
Kim Te Ho, Managing Director of Lotte Duty Free’s Merchandising Strategy Division
100 TRBUSINESS
VIP lounge facilities added The 12th floor of Lotte’s department store, which previously served as a food court with a wide range of restaurants, was converted into the store’s main perfume and cosmetics area. Boasting a total display area of
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3,500sq m, the 12th floor includes a spectacular glass domed retail hall that includes VIP lounge facilities on a raised stage offering an exclusive panoramic view of the cosmetics counters and displays. Renovation work continues on
the rest of the Sogong main store, including the shift of South Korean cosmetics to the floor directly below the international P&C brands floor, which was recently completed. “We moved our ninth floor
international perfume and cosmetics floor to our new 12th floor, and now all our South Korean cosmetics
surge in customer numbers at the Sogong store after the Lotte World Tower store closed in May, Lotte added a new floor to the Sogong flagship store in June, increasing the duty free area by almost one third, just in time for the peak summer tourist season.
new leathergoods section on Floor nine. It will be finished at the end of April. All leather goods on Floor 10 will move to Floor nine.” The renovated ninth floor will
house most of the store’s existing fashion accessory brands along with some new names, including Alexander McQueen Other fashion goods sections
are planned to move location this year as part of the Sogong store renovation programme. “Sunglasses will move to a new
location on the 10th floor,” added Kim. “Watches will also move to new positions on the same floor. Everything will be finished by the end of August. “There are some small
changes in merchandise as we are changing some items; also, some brands want to change their location. We are starting with perfume & cosmetics.” In addition to enlarging its Sogong
flagship store and introducing a new ‘wow’ factor with the 12th floor P&C hall architectural design, when completed the store will be able to accommodate increased customer traffic, and retail space allocated to each brand will better reflect their relative sales performance. “Our 12th floor perfume and
cosmetics design concept is totally different with a high ceiling this time,” Kim remarked. “On our ninth floor the pathway is too narrow so we are widening it for customer convenience and to provide a bigger space for some brands. In a small space it’s difficult for Chinese customers to find some items, also the walkway was too small for some groups.” Although Lotte’s bricks & mortar
stores clearly make up the majority of the group’s revenue, the company’s online sales also grew rapidly in 2016 driven by South Korean and Chinese customers. Perfume and cosmetics account
for the largest share of online sales with international and South Korean
MAY 2017
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