SOUTH KOREA: LOTTE DUTY FREE
Lotte Duty Free celebrates 40th anniversary in challenging times
Record online duty free sales in 2019 was good news for Lotte Duty Free, as the company moves ahead with plans to further expand the world’s largest online duty free sales operation. David Hayes reports.
A
better-than-expected online performance contributed to Lotte Duty Free’s (Lotte)
strong double-digit domestic revenue growth last year. Total downtown and airport
sales rose by about 30%, akin to the estimated growth trend for South Korean duty free. Sales from Lotte Duty Free’s online
store reached KRW 3.2 trillion/$2.65 billion (+10.2%), which comfortably beat the company’s initial 2019 sales target of KRW2.9tn/$2.4bn. Online sales grew among
all customer age groups and contributed to another year of record domestic sales. “Our primary goal for 2019 was
to maintain our leading position in the global online duty free market,” explains a Lotte Duty Free spokesperson. “To achieve this goal we targeted
young generations particularly. We also aimed to improve profitability. “Our strategy to target young
generations has been successful as sales to consumers in their teens and 20s boomed by 158% and 60%, respectively, year-on-year, while sales to other generations climbed by 58% year-on-year.” News of Lotte’s record online
sales performance comes as the company looks to maintain contact with its large customer base through its online store and related social media apps during the current Covid-19 crisis. Launched initially to serve
Lotte’s techno-savvy South Korean customers, the Lotte Duty Free Online Store (LDF Online Store) has expanded its coverage to serve growing numbers of foreign customers. It is doing this through Chinese, Japanese and English language
MAY 2020
services, which enable the company to offer a far wider range of goods and other features than instore. To sustain sales growth in South
Korea’s increasingly competitive online duty free market, which TRBusiness estimates accounts for at least 30% of most large operators’ total domestic revenue, LDF Online Store has assembled a wide range of products that extend far beyond traditional core duty free merchandise.
Brand range of 1,100 “The online store offers nearly every product a consumer could want,” continues the spokesperson. “It houses about 87,000 products from more than 1,100 brands. “It ranges from typical duty
free categories to unconventional merchandise such as gold bars, pet supplies, kitchen and dining gadgets, home décor, luxury detergents, and so on. “Throughout 2019, LDF Online
Store housed 93 new South Korean duty free industry exclusive brands including Korea Gold Exchange, Barbour, Crocs, Dr. Martens and others.” In addition, Lotte’s ties with industry-leading partners
in
other non-travel sectors have succeeded in creating high levels of consumer interest towards the LDF Online Store. For example, South Korean
customers have responded enthusiastically
to Lotte’s
partnership with Kakao, the operator of South Korea’s leading mobile messaging application, Kakao Talk. “In September 2019, we signed
an MOU with Kakao as an industry first,” says the spokesperson. “Now Kakao Talk users can easily sign up for Lotte Duty Free
Lotte Duty Free sales began to fall sharply from late January after the Chinese government banned group tour travel in the wake of the coronavirus outbreak.
TRBUSINESS 59
“Our strategy to target young generations has been successful as sales to consumers in their teens and 20s boomed by 158% and 60%, respectively, [in 2019] year-on-year.”
Spokesperson, Lotte Duty Free
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