SOUTH KOREA REPORT: LOTTE DUTY FREE
THAAD easing hopes Although Lotte recently handed back three of its four Incheon T1 duty free licences: perfume and cosmetics (DF1), leather goods and fashion (DF5) and all goods (DF8)], the company is targeting double-digit revenue growth this year. Like all other South Korean
operators, Lotte is working on the assumption the THAAD crisis and diplomatic relations with China will be resolved shortly. “For 2018 our target is about 12%
growth, over $6 billion in sales,” confirms Kim. “We want to focus our energy on our Lotte Sogong-dong and Lotte World Tower stores; and to make a profit at Incheon Airport, especially in our new Terminal 2 shops. “We expect the THAAD issue
to ease in the second half of this year. We expect Chinese FIT (free independent traveller) customers and group tours to start coming back in June or July. “The United States and North
Korea have agreed to meet and that will help the THAAD issue. China will have no reason to ban people from visiting South Korea.” Lotte’s flagship main downtown
store achieved sales worth $2.8bn in 2017, up 2.4% compared with the previous year and accounted for slightly more than 50% of the company’s total revenue. Lotte World Tower store in Seoul’s
fashionable Gangnam district south of the Han River was the company’s second highest revenue earner with sales of $510m in 2017, up 73% compared with 2016 when the shop was operational for part of the year. Online and Internet shopping is an
important part of Lotte Duty Free’s overall business. The company expects online
sales to pick up this year after decreasing by about 5% in 2017 due to fewer Chinese customers visiting South Korea – and using the service. Currently accounting for 25%
of the main store’s total revenue, online and Internet sales occupy a similarly important share of sales at Lotte World Tower, Seoul COEX and the Busan downtown outlet, which also provide the
MAY 2018
online shopping service. “Almost 25% of Lotte Duty Free’s
total business is online; we had $1.4 billion online sales in 2017,” says Kim. “Our online sales target this year is
$2 billion. It’s a big target. $1.8 billion is more realistic.”
Online strength Perfume and cosmetics accounted for around 90% of total online sales in 2017, according to Kim, who notes the international brand share of beauty is now larger than online and offline for South Korean brands. The recent development reverses
a previous trend evident over the past five years. This resulted in South Korean perfume and cosmetics brands overtaking international brands’ share of beauty product sales. “Larger colour make-up sales one factor. Also,
is the Chinese
customer trend is changing to international brands,” comments Kim to TRBusiness. “Chinese Daigou trader customers also prefer international brands. “South Korean cosmetics
companies AmorePacific and LG want to protect their brand identity so put a limit on the orders we place. They deliver about 60% of our orders. It’s happening for AmorePacific, LG and some international beauty brands as well. “In future, Daigou customers
will not disappear; the Daigou share will decrease dramatically, but the customers will survive so this, therefore, is one more channel
“Almost 25% of Lotte Duty Free’s total business is online; we had $1.4 billion online sales in 2017.”
Kim Joon Soo,
Senior Vice President and Head of Merchandising HQ at Lotte Duty Free
where we can sell products.” In order to develop its online
business platform and meet customers’ developing shopping expectations, Lotte Duty Free last year integrated its four separate online shopping service language platforms into a single platform to provide enhanced customer services. “We have to focus on our online
business,” states Kim. “We have introduced a global, next-generation, integrated system which has raised our mobile shop experience to another level. “We integrated four separate
language platforms for Korean, Chinese, Japanese and English in September 2017,” Kim explains. “Through this we can maximise
user convenience and offer a personalised service. The user’s experience is enhanced.” Lotte Duty Free also plans to offer
its new personalised online shopping service to customers in Japan and Guam. “Our Lotte Ginza online system
and processes are the same as here in South Korea, but we have adapted it to Japanese customers,” says Kim.
Perfumes and cosmetics accounted for approximately 90% of online sales in 2017. TRBUSINESS 97
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164
