LEADING ASIA PACIFIC OPERATORS: LOTTE DUTY FREE
KRW200m full-year prediction. Lee says the US$1bn overseas
sales target by 2020 remains in its sights, and he emphasises the current strength of the business this year to support this prediction [achieving that would have to be considered a remarkable feat given the $252m overseas sales return last year – Ed]. Currently, Lotte Duty Free operates
12 stores in seven overseas locations (Tokyo Kansai International Airport, Tokyo Ginza downtown, Guam Antonio B. Won Pat International Airport, Jakarta downtown, Bangkok downtown and in Vietnam at Da Nang Airport and Nha Trang Cam Ranh Airport) and has made no secret of its burning desire to expand further with openings planned at Hanoi’s Noi Bai International Airport and Da Nang downtown in the second half of this year. In March, it held a grand opening
ceremony at Brisbane Airport following the acquisition of JR/Duty Free’s business in Australia and New Zealand in August – a move predicted by TRBusiness shortly before the contract was signed. The deal does not include JR/
Duty Free’s interests in its duty free businesses in Israel and Tahiti and covers stores in the following Australian airports: Brisbane, Melbourne, Darwin, Canberra plus one store in Swanston Street in downtown Melbourne and an on- airport store at Wellington Airport.
Daigou business ‘shifting’ Unlock the full potential...
Lotte has a plan to hit $200m in sales in the region in the first year – capitalising on Australia’s plus-10% growth in Chinese tourism in the past few years – and views Oceania as fertile territory for further growth. Visiting Australia in March, Lee
boldly proclaimed the milestone contract as ‘the next step in Lotte Duty Free becoming the world’s number one travel retailer and the most influential in the region’. That includes a sizeable plan to
scale up the travel retailer’s online shopping presence in Australia. “The goal of this year in the Oceania
market – business stabilisation – is looking pretty successful so far,” he explains. “We will particularly focus on
developing the e-commerce business henceforth. Lotte Duty Free has acquired JR/Duty Free’s online store too, so technically we are running two online stores now. “E-commerce retail in Australia
is booming – on the other hand, e-commerce travel retail in this country is not so developed yet,” he continues, asserting that whoever makes the first move in the market will be able to dominate it. “Many people still think that
duty free shops are only available in airports. We will break away from that stereotype in Australia and look for ways to develop our online duty free shop further.”
Kap Lee, CEO, Lotte Duty Free.
“E-commerce retail in Australia is booming – on the other hand, e-commerce travel retail in this country is not so developed yet.”
Kap Lee, Lotte Duty Free
Lotte says it remains focused not only on Australian/New Zealand airport bids, but tenders all over the world and tells TRBusiness that merger and acquisition activity is a ‘great option’ for future expansion. «
In January, China introduced a new e-commerce law that regulates online merchandising to provide consumers with increased protections. Originally passed in August, it
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introduces new import VAT and consumption tax rules on cross-border purchases that will invariably curb daigou agents’ influence in purchasing goods overseas to re-sell through networks in China [in a way that circumvents high Chinese import taxes- Ed]. Shortly after its introduction, multiple
sources in South Korea told TRBusiness that the ‘clampdown’ on daigou sales had yet to materialise and this appears to be the case for Lotte Duty Free at the time of writing. “Sales are actually increasing,” reveals
MAY 2019
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Lee. “Our three downtown stores in Seoul (Main Store, World Tower Store, COEX Store) have posted a 30% rise in sales from Chinese this year so far compared to the same period in the previous year. “We believe that China’s new e-commerce law will have some
www.trbusiness.com/subscriptions ‘Sales are actually increasing’, says Lotte.
positive influence on our industry from the long-term perspective. The whole daigou market is changing; daigous are registering as legal e-retailers and are being re-organised, mainly for large companies who are capable of paying taxes. Such changes can encourage interactions between retailers and end- purchasers. “All the players, including Lotte,
have braced themselves against the disadvantage since 2017 and have succeeded in augmenting volumes. The market is apparently growing, even after the new law came into effect. China still has a high demand on Korean duty free goods. As long as the demand remains high, the daigou business will not shrink easily.”
TRBUSINESS 39
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