TOP 5 ASIA OPERATORS: LOTTE DUTY FREE
The company is still insistent that it will eventually lead the world’s duty free business as the global number one duty free operator.
TRBusiness
to go out to tender in the short term and Lotte says it is obviously anxious to retain its licence for this business if it can. By contrast, the South Korean
Fighting talk from TFWA President
May 2017 20
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duty free market leader’s leading FIT Sogong downtown store also performed very impressively last year generating sales of $2.7bn of the $5.7bn total, but it was only able to achieve this after Lotte added an extra floor to the store to help take up the lack after the World Tower duty free floors were closed. The operator also made many
more changes to its downtown stores last year to provide additional customer capacity [for full details read the in-depth report on page 99-Ed]. The engine room of the business
nevertheless continued to be beauty, with perfume and cosmetics sales accounting for around 50% of all sales corresponding to nearly $3bn in sales. As per earlier trends, it was South
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The Lotte World Tower in Seoul is said to be Asia's third-largest and the world's fourth-largest duty free shop.
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names dominating, including Estée Lauder, Lancôme, Dior and YSL. Since the anti-Korean product drive kicked in this year, the French and Korean brands are now said to be running neck and neck in terms of sales performances.
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
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Korean cosmetic brands which were most popular with female Chinese tourists, although this pattern has since changed this year with the edict filtering down to Chinese customers today that to buy these products is to somehow be unpatriotic [back to the THAAD issue again-Ed]. But interestingly last year it was
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the big French imported cosmetics and perfume brands which took over the leading sales mantle from their Korean counterparts from June/July 2016, with the major
operation with sales close to $1bn from its P&C, L&T and fashion stores – including Louis Vuitton. [For more detailed figures see page 99-Ed]. Meanwhile, Lotte Duty Free
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continues to operate at three overseas locations in downtown Ginza (Tokyo) and Kansai Airport in Japan, at Guam International Airport and in Jakarta at the airport and downtown. Currently it points to its number
Shin Dong-bin, Lotte Chairman and leader. 50 TRBUSINESS
three position globally, although it was already number two according to TRBusiness’ extensively researched annual report – The World’s Top 10 International Operators 2016. However, most of these sales are made in its home market in South
Lotte’s online duty free sales also contributed around $1.25bn last year, without mentioning Busan, Jeju and Incheon International Airport locations where Lotte also has a strong position. Incheon is the remaining stand out
Fashion worth $850m Other major categories which contributed last year included fashion boutiques accounting for around $850m-worth of sales or 15% the mix and watches and jewellery with another $740m or 13%. In addition – and impressively –
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Korea and it will need to add some serious critical sales mass if it is to overtake the Dufry Group which ranked number one with $6.2bn in our 2016 Top 10 report and most recently reported the US dollar equivalent sales of $7.76bn in the last calendar year (+27.5%). This is another reason why Lotte
will be disappointed that it has not been able to realise its $4.5bn IPO cash injection – especially considering around $1.5bn of that sum is rumoured to have been earmarked for duty free investments and acquisitions. Nevertheless, the company is still
insistent that it will eventually lead the world’s duty free business in its quest to become the global number one duty free operator. Whether the five members of the
current Lotte dynasty – and crucially its Chairman and leader Shin Dong- bin – can get through the upcoming indictment relatively unscathed may dictate the pace at which Lotte will be able to expand its duty free and other businesses, in the short term at least. Potential investors will doubtless
want to feel reassured that the company is strong, stable and has continuity of management before underwriting its future – presuming the Lotte IPO comes back to the table in future. «
See TRBusiness’ special report on South Korea beginning on p89 and read more about Lotte Duty Free’s performance in 2016 on p99.
MAY 2017
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