TOP 10 OPERATORS 2018 2: LOTTE DUTY FREE
stores to record profit.” On the home front, it is a familiar
story. “The main store in Myeong- dong will likely post KRW4tn this year, while the World Tower will do KRW1tn,” continues Bo-joon. As reported in May, it will also look
to accrue roughly KRW260bn from its COEX stores as it targets growth of approximately +12% to $6bn. “Our company will surely revive
this year and continue on its way to achieve the title of world’s best travel retailer,” says Bo-joon. “We keep our eyes on all the
upcoming concession bids all over the world. Further international expansion is absolutely essential, especially to Southeast Asia. However, we will not strain. It is time to focus more on stabilising those new foreign branches.” Indeed, South Korean duty free
itself remains in rude financial health year-on-year, despite the challenges. After hitting approximately
$12.8bn last year, the sector is targeting close to a 20% jump in revenue this year, a major contributor being the loosening of sanctions on Chinese tour groups, together with the rise in Chinese FITs [free independent travellers].
S.Korea arrivals stores? According to data from the Korea Customs Service, South Korea Duty Free sales lifted by 38% to KRW9.1tn in the first half of this year. Based on conservative estimates
– and assuming foreign visitor numbers climb as expected – this could add approximately $2.5bn to 2017’s figure, which totalled
Lotte Duty Free store at Da Nang International Airport in Vietnam.
KRW14.5tn ($12.8bn) That’s not to forget the granting
of new downtown duty free store licences to Shinsegae Gangnam Duty Free, Hyundai COEX Duty Free and City Plus Sinchon. Furthermore, there is debate
over the future opening of duty free arrivals as speculated by Korean media in response to reported comments made by South Korean Premier Moon-Jae. These comments appeared to
draw mixed responses from the country’s duty free industry at the time media reports surfaced in August. The move is designed to conveniently boost domestic spending by foreign and Korean travellers. “There are a lot of things to go
“Sales growth for H1 at home is heavily driven by Chinese shuttle traders or daigou. Foreign customers from Southeast Asia such as Taiwan, Hong Kong, Vietnam, Indonesia and Malaysia were crucial as well.”
Kim Bo-joon, Marketing Director, Lotte Duty Free
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through to open arrival duty free stores, so we will keep our eyes on how [the] situation develops,” Bo- joon states.
Nha Trang stores to generate $625m
Underlining its ambition to become Vietnam’s no 1 duty free brand, Lotte Duty Free CEO Jang Sun-wook opened the company’s large departure store and smaller arrivals store at Cam Ranh International Airport in Nha Trang in June, while revealing that Lotte expects to generate KRW700bn ($625.2m) from the space in the next 10 years. As the sole duty free shop operator
at the airport, Lotte will run the combined 1,680sq m retail space
OCTOBER 2018
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The new International Terminal at Nha Trang Airport has a footprint of 50,000sq m.
(1,507sq m in departures and 173sq m in arrivals) for 10 years until 2028, carrying cosmetics, perfume, watches, fashion, liquor, and tobacco products. As reported, Lotte opened a store at
Da Nang Airport last year and it also due to open a downtown store in the same region this year. The new international terminal at
Nha Trang Airport has a footprint of 50,000sq m and a growing passenger capacity, expected to reach 8m outbound travellers by 2030.
TOP 10 OPERATORS 21
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Elsewhere, there is still no word following the Korean travel retailer’s cancellation of its $4.5bn IPO before THAAD impacted in earnest last year. At the time of the Top 5 Asian
Operators report in May, a Lotte spokesperson stated that although the firm had a ‘strong will’ to go public, the ‘practical conditions are not getting better’. As this issue went to press, Lotte declined to comment on the issue. «
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