LEADING ASPAC OPERATORS: LOTTE DUTY FREE


New openings loom in Vietnam and Singapore as Lotte accelerates overseas expansion


While Lotte has faced extraordinary challenges, particularly in its native South Korea, due to the Covid-19 pandemic, the company presses on with the completion of two projects in Singapore and Vietnam, further strengthening its overseas footprint. Andrew Pentol reports.


L


ike many travel retailers worldwide, South Korean powerhouse Lotte Duty Free,


which celebrates its 40th anniversary this year, has suffered greatly as a result of the coronavirus (Covid-19) pandemic. However, as the situation


continues to improve in Korea, the retailer is determined to press on with its ambitious overseas expansion, which includes the completion of projects in Vietnam and Singapore. Lotte, which grew domestic sales


to KRW9.3tn/$7.6bn in 2019, from KRW7.5tn the previous year (source: Lotte Duty Free) is expecting to open its downtown Da Nang duty free store in Vietnam as planned, by the end of H1 2020. The store will be the retailer’s


fourth in the country and follow previous openings at Da Nang Airport in May 2017, Nha Trang Cam Ranh Airport in June 2018 and Hanoi Airport in July 2019. It will also be Lotte’s first downtown duty free shop on the central coast of Vietnam.


Singapore opening Lotte will begin another important overseas contract in the summer of this year, when it takes over the liquor and tobacco concession at Singapore Changi Airport , following the expiry of DFS Group’s contract on 8 June. The retailer overcame stiff


competition from Korean rival The Shilla Duty Free, which runs the four- terminal beauty concession. It also prevailed over Gebr. Heinemann, which has its main Asia Pacific office in Singapore and a strong DF&TR footprint in the region. DFS had held the concession since


1980 and forged a strong partnership with Changi Airport Group (CAG). Its decision not to proceed with a two-year contract extension agreed


MAY 2020 Last year Lotte opened a new store at Hanoi Airport in Vietnam


in 2018 — and that was due to start this year — was a shock to many industry observers. The extended agreement,


covering 8,000sq m of retail space across all four terminals was expected to run from 9 April 2020 to 8 April 2022. But in a surprising turn of events,


DFS Group decided not to proceed with the new contract and instead extended its existing agreement by two months until 8 June 2020. Already boasting several overseas


businesses in countries such as Australia, New Zealand, Japan, Thailand and Vietnam, Lotte’s new Singapore contract could be a catalyst for further Asian expansion. Regarding other potential projects


at home and abroad, a Lotte Duty Free spokesperson tells TRBusiness: “Everything else we had planned, including our customer events, have been put on hold.” Closer to home, much has been


made of the long and tedious concession negotiations involving Incheon International Airport Corporation (IIAC) and the three major Korean retailers (Lotte Duty Free, Shilla Duty Free and Shinsegae Duty


Free) to help mitigate against the impact of the Covid-19 crisis. Negotiations have been anything


but straightforward. Early last month, Lotte, Shilla and Shinsegae asked IIAC to postpone the initial 8 April 2020 deadline for 20% minimum annual guarantee discount applications at Incheon Airport until 24 April.


IIAC contract negotiations TRBusiness can confirm the request to extend the deadline until 24 April was rejected by IIAC, which proposed a new deadline of 13 April. One retailer source suggests Lotte,


Shilla and Shinsegae ultimately submitted their discount applications on 13 April, five days after the original deadline. In lodging their applications, the


source indicates the retailers did not agree to a clause imposed by


“In Brisbane, for example, the rental fee used to depend on passenger numbers. Now it depends on sales volume.”


Spokesperson, Lotte Duty Free


TRBUSINESS 29


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