TOP 5 ASIAN OPERATORS: LOTTE DUTY FREE “Lotte Duty Free is considering
opening more overseas branches, both airport and downtown stores, especially in Vietnam,” says Park. “Ho Chi Minh and Hanoi are on the list.” “The Da Nang Airport Store
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hotel and commercial complex in the Samsong District, COEX has traditionally been a favourite for Chinese shoppers. With a strong focus on beauty
had an unexpected outstanding success even though it was its first operating year. “Bangkok Downtown has been
strengthening its ‘localisation strategy’ in [the] Thailand duty free market since its soft-opening. It is scheduled to grand open this year.” “Global travel retail will become
more competitive this year. However, Lotte Duty Free will continue to expand its overseas business in order to become the world’s best duty free operator.”
COEX eyes KRW260bn Despite the hit on profit, Lotte says it expects fortunes to improve in 2018. “Lotte Duty-free shop is expected
to improve profitability by stabilising its business,” the results statement adds. “Based on improved profitability
structure through the withdrawal of Incheon Airport, the company intends to strengthen its competitiveness in duty free shops in the city and to expand online duty- free shop marketing.” One timely boost is Lotte’s
renewal of its important Convention Exhibition Centre (COEX) Seoul downtown store licence in December for a further five years. Situated in a large shopping,
IPO ‘waiting game’
Aside the impact of THAAD, Lotte’s business has been challenged by various internal scandals, which came to a head in February when Group Chairman Shin Dong-bin was sentenced to two-and-a- half-years in prison for bribery by Seoul’s District Court. The court heard that Dong-Bin offered
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for corruption, influence peddling and abuse of power. In April last year, shortly after THAAD
impacted in earnest, Lotte moved to cancel its $4.5bn IPO. At that time, TRBusiness speculated
KRW7bn ($6.5bn) to Choi Soon-sil, the friend and advisor to former South Korean President Park Geun-Hye, in exchange for ‘special favours’ including a licence to open a duty free shop. He is understood to have appealed the verdict. Choi herself was sentenced to 20 years
MAY 2018
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that the planned IPO was now clearly on the backburner – a view that was further vindicated when the retailer reported its first retail loss in 14 years [$26.1m between April to June 2017 – Ed]. As such, the resurrection of that IPO
plan appears inconclusive at this stage. Park relays to TRBusiness that despite Lotte having the ‘strong will’ to go public,
Sangsub Park, PR Manager, Lotte Duty Free. TRBUSINESS 43
‘practical conditions are not getting better’. “Hence, we are watching how the situation develops,” he says.
products, which have historically accounted for around 50% of sales, COEX was strategically important as a service point for Chinese tour groups when Lotte temporarily lost its World Tower Licence. Today, the business is not immune
from the pressures exercised by THAAD, but plans to upgrade the facility represent a ‘new leap forward’ for trading, Lotte tells TRBusiness. “[A] Remodeling of the entire store
is scheduled,” Park confirms. “Special stores only for cosmetic
brands and brands from mid-sized companies will be opened. The construction will be completed by 2020.” “COEX is also working on bringing
more customers through striking partnerships with Seven Luck Casino and Bongeunsa Temple. VIP customers from Seven Luck Casino are eligible for Lotte Duty Free VIP membership. “The COEX Store seeks to achieve
a KRW260bn sales figure this year.” Likewise, Lotte’s World Tower has
been steadily recouping trade since its revival last year. The flagship World Tower
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store reopened in January 2017 after Lotte clinched one of the 10-year downtown licences in December 2016. It initially shut in June 2016 following Lotte’s shock loss of its
about Lotte Duty Free’s trading performance, including detail on its Incheon T1 and T2 contracts, turn to page 95.]
Lotte Duty Free successfully renewed its COEX store licence for a further five years in December.
“Group tours are still banned, meaning group tour packages are not being sold and flights are not being chartered to prepare for them.”
Spokesperson, Lotte Duty Free
operating licence in November 2015. “Although World Tower Store is
still suffering since the fall in Chinese tourism, the business is bullish about the future,” concludes Park. “It began to revive since its grand
open and the larger numbers of FIT [free independent traveller] customers. World Tower Store seeks to achieve a KRW1tn sales figures this year.” «
[To read further insight and analysis
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