SOUTH KOREA REPORT: LOTTE DUTY FREE
a high-end Japanese brand in our Sogong-dong store and it has sold well,” notes Kim. “We will expand Albion to our other shops; we are discussing another downtown location now. “Japanese companies are very
careful about expanding distribution as they want to protect their product image.” Lotte will expand its Japanese
cosmetics collection further with the planned spring season launch of Polar. “Polar is a medium-price Japanese
A confectionery and liquor aisle at Lotte Incheon T2.
“Almost 25% of Lotte Duty Free’s total business is online; we had $1.4 billion online sales in 2017.”
Kim Joon Soo, Lotte Duty Free
“Also, for the Narita and Haneda airport pickup services we have modified it a little.”
‘Bright start’ at Incheon T2 Meanwhile, Lotte Duty Free is reporting a bright start at Incheon Airport T2, where the company holds a liquor, tobacco and food licence. “We have 130 liquor and tobacco
brands there,” comments Kim. “Ginseng is a big part of our liquor, tobacco and food shop sales in Incheon T2, along seaweed products and health food. “One special feature is a smoking
room for e-cigarette smokers. Electronic cigarettes are doing very well. KT&G’s Lil and Philip Morris’ IQOS are exclusive to Lotte Duty Free in T2.” Lotte’s T2 liquor and tobacco
store features a tasting area for liquor and tobacco products. Six brands are featured: Johnnie Walker, Ballantine’s, Royal Salute, Hennessey, KT&G and Philip Morris. “This is the first time we have
individual boutique-style stores for liquor and tobacco,” says Kim. “Each is 60 sq m. It’s very successful. “The back-walls are full of nice
media – wide TV screens, so we can show video footage of scenery, sightseeing, brand promotions and other things.” Meanwhile, Kim explains that
perfume and cosmetics remain Lotte Duty Free’s largest category, representing more than 50% of total annual sales. Although overall beauty sales remained flat during 2017, the company’s product sales ratio is changing. “The perfume and cosmetics share
of sales is growing,” confirms Kim. “South Korean brands are slowing
and international brand sales are up. “These days, there is the same
trend with South Korean compared to Japanese brands as Chinese customers want to buy Japanese beauty products.” Lotte Duty Free is expanding its
The main downtown store, which accounts for more than 50% of company revenue, hit sales of $2.8bn in 2017.
98 TRBUSINESS
Japanese beauty collection to meet customers’ demands. “Last year, we introduced Albion,
cosmetics brand. We will start selling Polar in our Sogong store and then spread it out to our other shops,” explains Kim. Other initiatives to expand
perfume and cosmetics sales this year include moving the Lotte Duty Free second-floor lobby-shop in Hotel Lotte. This is situated next to the Lotte
Department Store in the main store where the duty free shop occupies floors nine to 12. The aim is to move it to the hotel’s first-floor street-level lobby in July. There, the shop will have better visibility and be expected to attract more customers. “We will expand our Sogong
cosmetics zone this year,” continues Kim. “Make-up and skincare are the highest efficiency products for retailing, so we need to expand our zone. “We want to introduce more South
Korean and international cosmetics brands. We want to use the lobby as a test-bed for new brands. Elsewhere, plans are under
preparation to expand the cosmetics zone retail display areas in several other Lotte Duty Free downtown stores.
Downtown expansion plans In Busan, for example, Lotte Duty Free will add another 1,300 sq m of retail space to its downtown store. This will increase the floor area by
about 20% to 7,700 sq m compared with the 6,400 sq m at present. “In Busan we will expand our
perfume and cosmetics zone,” says Kim. “We will introduce Armani, Tom Ford and Japanese cosmetics Decorté and Shiseido Clé de Peau Beauté. These are coming in July.
MAY 2018
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