TOP 10 OPERATORS 2: LOTTE DUTY FREE
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Lotte’s domestic sales return to pre-THAAD levels in 2018
Despite a lack of Chinese group tourists in the wake of THAAD, Lotte Duty Free excelled domestically in 2018. Its overseas business also thrived, recording year-on-year growth of 168%, as Andrew Pentol reports.
ollowing successful online and offline marketing strategies and timely crises management,
Lotte Duty Free’s domestic sales returned to pre-THAAD levels in 2018, rising +24% year-on-year to KRW7.5tn ($6.35bn). All domestic outlets, except the
Seoul Incheon Airport Terminal 1 branch posted positive sales growth. This was a remarkable achievement considering the turbulent domestic situation as a result of the THAAD missile crisis. Online
sales increased
significantly, reaching KRW2tn, an increase of +49% on 2017. Accounting for around 8% of total business in 2013, online sales have more than tripled to comprise 25% of Lotte’s overall business. TRBusiness can also confirm total
DF&TR sales in 2018 amounted to KRW7.8tn ($6.7bn), putting the retailer second in our Top 10 list. Revenue at Lotte’s flagship
Myeongdong and World Tower outlets reached approximately KRW4.3tn and KRW1tn, respectively. The former grew sales by 35%. Considering Lotte exited all non-
liquor and tobacco Seoul Incheon Terminal 1 concessions in July 2018
OCTOBER 2019
(perfumes and cosmetics, fashion and leathergoods and all items), the fact that this was its only domestic location not to achieve positive sales growth is hardly surprising. Following the Incheon Terminal 1
withdrawal, Lotte said it expected to save KRW1.4tn in rent to 2020, so its decision to exit the three Incheon T1 loss-making concessions will surely be vindicated. With the much-anticipated
Seoul Incheon Terminal 1 tender on the horizon, Lotte, which begun operating the Terminal 2 liquor and tobacco concession last year, is expected to join a strong line-up of potential bidders. These include The Shilla Duty Free,
Dufry, Lagardère Travel Retail, Gebr. Heinemann, DFS Group, Lotte Duty Free, WHSmith, Duty Free Americas, Ever Rich Duty Free, Shinsegae Duty Free, Dubai Duty Free and CDFG/Sunrise.
Incheon T1 tender In a shift away from the previous five-year terms, the airport is poised to go to market with a 10-year opportunity (including a possible semi- automatic five-year extension period) at the end of October or beginning of
November. The new tender covers eight concessions and 48 outlets spread over 8,749sq m. The contract, which includes lots
currently held by The Shilla Duty Free and Lotte Duty Free, won in 2015 [excluding the latter’s surrendered non-L&T lots recently re-tendered and won by Shinsegae Duty Free], began on 1 September 2020 and will run until 31 August 2031. Speaking at the time of the
Above: The Seoul Incheon Airport Terminal 2 liquor and tobacco contract was secured by Lotte Duty Free in 2017.
“Thanks to the withdrawal from Incheon Airport Terminal 1, [we] no longer need to pay sky-high concession fees and [with a] stabilised performance in foreign stores, operating profit for the full-year of 2018 will likely be way higher than the last year.”
Spokesperson, Lotte Duty Free
Three out of four concessions were surrendered by Lotte at Incheon Airport T1 in 2018.
TOP 10 OPERATORS 17
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