JAPAN REPORT: LOTTE DUTY FREE TOKYO GINZA DOWNTOWN
Lotte DF expects sales to double at Tokyo Ginza for third straight year
Lotte Duty Free (Japan) tells David Hayes that it is expecting to double sales at its downtown store in Tokyo’s Ginza district, for a third consecutive year, as the number of group tour customers continues to rise.
L
otte Duty Free attributes revenue growth to a sharp increase in Chinese and
Taiwanese customers this year, while it anticipates greater success in the lead up to the 2020 Tokyo Olympic Games. During this time, the number of foreign tourists is expected to swell. Improved diplomatic relations
with China and South Korea during the past 12 months has allowed for the return of Chinese group tour travellers to visit Lotte Duty Free’s overseas shops [This follows a challenging trading period for the company during the THAAD missile crisis, which involved Beijing banning Chinese group tours from visiting Lotte and other South Korean operators’ duty free stores]. Lotte Duty Free’s Ginza downtown
store sales doubled to JPY10bn ($93.5m) in 2018 as a result; up from JPY5bn ($46.8m) the previous year. Duty free goods accounted for
70% of customer purchases last year, while tax free goods made up the remaining 30% share. “Our total sales were JPY10bn in
financial year ending 31 December, 2018 (FY2018) and we have already achieved JPY10bn sales from January to June this year,” insists Lee Sung Chul, Sales Department Director in Lotte Duty Free Japan’s Sales and Marketing Division, in an exclusive interview with TRBusiness. “We are very happy; it’s very rare
to be able to double sales every year so soon after opening a store, as we have since March 2016. “There are several reasons for this.
From September 2018 our business recovered from the THAAD issue. Currently 50 to 70 tour groups visit our Ginza store every day; that’s about 1,500 to 1,700 people, who are mostly Chinese. “In fact, Chinese and Taiwanese visitors make up 90% of the total.
OCTOBER 2019
Japanese customers represent 5% and South Korean visitors 2%.” Like many operators in Japan,
perfume & cosmetics is Lotte Duty Free Ginza’s most profitable category, accounting for 60% of duty free sales in 2018. Shiseido and SK-II are the two
top-selling beauty brands, while Shiseido, Clé de Peau Beauté, Fancl, Dr Ci:Labo and Tom Ford are also performing well. Lee also points out that Jo Malone fragrances are proving popular with Taiwanese customers. Tobacco represented 20% of Lotte
Ginza’s downtown duty free sales in 2018, with Iqos being the leading cigarette brand [This has been reiterated among Japanese retailers interviewed for this report-Ed]. “Watches make up around 15%
of sales; Omega and Longines are popular brands,” reveals Lee. “Both ladies’ and men’s watches
priced between JPY300,000 and JPY500,000 are popular, especially Omega as I already mentioned.” In fact, Lee reveals that Lotte Duty
Free Ginza is one of Japan’s top- selling stores for Omega products. It moved into the No 1 position during
May and June this year and was in third between January and June 2019 after reaching seventh among all stores in Japan in 2018. In addition to Omega and
Longines, other popular watch brands for Lotte’s Ginza store inlcude Casio, Blancpain and Jaeger- LeCoultre. “Customers buying watches are
normally in their 20s and 30s,” says Lee. “Usually customers buy one or two watches; we sell five to 10 watches every day. “As mentioned tour group
customers have been on the rise and now account for around 40% of our total sales.”
“Our total sales were JPY10bn in financial year ending 31 December, 2018 (FY2018) and we have already achieved JPY10bn sales from January to June this year.”
Lee Sung Chul,
Sales Department Director, Sales and Marketing Division, Lotte Duty Free Japan
TRBUSINESS 151
Above: Lotte has increased its tax free area with the addition of a new drugstore.
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