JAPAN REPORT: LOTTE DUTY FREE TOKYO GINZA DOWNTOWN
Lotte has opened up the duty free shopping experience to travellers departing Japan by allowing them to pick up the purchases they make at the downtown store, at the airport. Lotte now has pick-up counters at both Haneda and Narita International Airports. Lotte also has applied to open up
counters at Kansai International Airport in Osaka and Chubu Centrair International Airport in Nagoya, but has so far failed to reach any agreement. Without official Lotte Duty
Free pick-up counters, travellers departing Japan through Kansai and Chubu airports cannot buy duty free goods from Lotte’s Ginza store. However, these travellers are
able to buy tax free goods. Lee tells TRBusiness that Lotte has signed an agreement with Japan’s Customs Department to operate an online duty free shopping service, but has been unable to arrange the necessary pick-up counter facilities with any airport. “We want to open more duty free
pick-up counters but it’s difficult, so we are thinking of broadening our Lotte Duty Free Ginza store tax free zone,” says Lee. Despite the challenges to its omni-
channel ambitions, the physical store itself continues to benefit from its location in Tokyo’s upmarket Ginza shopping and entertainment district. Aptly designed in the style of a
high class department store – with polished granite floors and other luxurious touches – Lotte boasts a 4,200 sq m footprint over Tokyu Plaza’s entire eighth and ninth floors. Luxury fashion, watches and
jewellery brands are displayed in boutiques and on counters on the eighth floor, explains Lee. “Among our luxury fashion
brands, Gucci sales are continually increasing along with Coach, MCM and Tory Burch. “Among our accessories brands,
Qeelin, the Hong Kong brand, has recently been performing well.” Perfume, cosmetics,
liquor,
tobacco, eyewear and Lotte Ginza’s tax free zone are all located on the ninth floor. “Now about 25% of our ninth-floor retail area is used for tax free goods,”
OCTOBER 2019 Cosmetics account for about 60% of Lotte Ginza’s total tax free sales.
adds Lee. “We are thinking about increasing the tax free zone to 40%, but we must talk with the customs department first.” Lotte expanded its tax free offer
in March this year by opening a Satsudora drug store outlet, which stocks low-priced Japanese cosmetics, over the counter medicines and various general goods including shampoos. “Our Satsudora drug store is a very
popular shop; average sales reach up to US$20,000 per day; we are happy,” says Lee. “From January to June this year,
tax free shopping has increased from 30% to 40% of our total sales,” reveals Lee. “People buy a lot of Japanese
medicines that are popular among Chinese visitors.” Cosmetics account for about
60% of Lotte Ginza’s total tax free sales, with Dr Ci:Labo and Canmake being popular in the
“Our downtown store sales target for 2019 is JPY20 bn… We expect perfume and cosmetics to reach 50% of total duty free and tax free sales this year.”
Lee Sung Chul, Lotte Duty Free Japan
lower-price brackets. “Our downtown store sales target
for 2019 is JPY20 bn,” according to Lee. “We expect perfume and cosmetics to reach 50% of total duty free and tax free sales this year. “Our tax free Satsudora drug store
is performing well, so the perfume and cosmetics share is lower than it was last year. “We expect tobacco to make up
10% of total revenue. Iqos is doing very well; tobacco sales in general are higher this year. Our watches target share is 20% of sales, up 5% from last year.” «
Sales at Lotte Duty Free’s Ginza downtown store doubled to JPY10bn ($93.5m) in 2018. TRBUSINESS 153
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