SOUTH KOREA: LOTTE DUTY FREE
late 2018. Chopard watches and Iqos cigarettes have now moved into the newly created space. Elsewhere, in Seoul, Lotte is
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renovating is flagship Sogong-dong store, located in Seoul’s City Hall cultural and tourist district. The world’s largest-selling downtown duty free outlet registered an impressive $3.8bn in 2018, up 36.5% compared to the previous year, due to a rapid increase in purchases from Chinese daigou traders. “We will renovate the majority
of the Sogong store; we have just renovated our Chanel, Dior and Hermès boutiques, all of which are duplex stores,” says Davis. “This works for us; our duplex
boutiques are a success. People like to go in and feel like they are shopping on the High Street.” Lotte continues to try new fashion
brands in its pop-up shop areas and counts South Korean bag brand, Find Kapoor, among its most recent success stories. The brand operated a pop-up shop in the Sogong-dong store during the first half of 2018 and then proceeded to open a full-size boutique on the ninth floor late last year, following strong sales among Chinese customers in particular. Most pop-up shops are open for four to five months. The brand is then considered for a permanent boutique dependent on sales. Lotte is currently trialling another
South Korean fashion brand on the tenth floor. Acme de la vie specialises in T-shirts and other ready-to-wear garments. Meanwhile, Davis reveals that Lotte
is planning to renovate and remodel its Sogong-dong store’s cosmetics zone later this year, for which preparations are now underway. “Two of our biggest international
brands will renovate their displays with exclusive new display designs; these are under negotiation,” according to Davis. “We will expand our beauty area.
We will shrink South Korean brands as they are moving slower now, but we will expand our international beauty area in November. “We will add new brands such
as Gucci, Burberry and Christian Louboutin; Rituals and Sabon are also coming in.” Davis hopes that the renovation of
the beauty section, which includes redesigning the layout of cosmetics brands, will make it easier for shoppers to navigate. “Today beauty brands are all
over the place; in future the beauty area layout will reflect the way that people shop,” remarks Davis. “There will be Japanese,
international and South Korean beauty brand zones. It will save shoppers’ time. “People go to the cosmetics
counters for the experience. Other customers come in to see what’s new and then buy online.”
This content is for subscribers only. Japanese brands still on the rise
Online cosmetics boom Online sales now account for about 40% of downtown revenue and continue to grow, particularly in cosmetics, which are popular with South Korean and Chinese customers. However, Davis believes
three days. We and the beauty brands fly people in including Key Opinion Leaders (KOLs).” VIP lounge showcase events are
International and South Korean cosmetics brands both account for
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about half each of Lotte Duty Free’s total perfume and cosmetics sales, although the share continues to fluctuate. “In 2018 it was 60% international and
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40% Korean brands as Chinese travellers were not allowed to bring back South Korean brands [because of the THAAD crisis ban]” explains Davis. “Also, last year people started buying Japanese cosmetics brands. “High-tier skincare is doing well. LG’s
Japanese brands appear to be growing faster than South Korean brands currently.
MAY 2019
The History of Whoo and Amorepacific’s Sulwhasoo are still doing well along with Japanese and international brands.”
“News from Shiseido is that Clé de
Peau Beauté is doing well; customers have moved from South Korean to Japanese brands. “Skincare represents around 72%
of our beauty business and it’s still growing,” continues Davis. “It was slowing and now it’s coming
back and definitely Japanese brands are popular. “Ipsa is a hot Japanese brand; it’s
super hip with the millennials; it’s trendy and very cool – the shop, the staff, everything.”
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Fashion goods account for roughly 18% of total sales in most of Lotte Duty Free’s downtown shops.
“We are competing with China’s domestic duty free industry for customers. The China domestic duty free risk for us is their Hainan Island domestic duty free shops and arrival shopping here.”
Jeffrey Davis, Lotte Duty Free
that bricks and mortar stores still have an important role to play in the sale of beauty products. “Offline is very important; it’s
educational,” he says. “In every downtown store location we plan to build a VIP lounge where we will stage showcase events.” “These events last from one to
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