Lotte Duty Free outlines ambitions to grow Melbourne Airport business to US$243.3 million in sales

SOUTH KOREA. Lotte Duty Free says its successful bid for the Melbourne Airport duty free contract – revealed in a global exclusive by The Moodie Davitt Report last Friday – is a milestone for its regional and international ambitions.

Lotte Duty Free CEO Kim Ju-Nam said, “The Melbourne Airport store, which will open in the first half of this year {1 June -Ed}, will be a key base for Lotte Duty Free to expand its global business and market recovery. We plan to leap forward as a duty free retailer.”

The Korean number one travel retailer and world number two* estimated the combined Australia and New Zealand duty free market at KRW1.3 billion {US$1.1 million} before the COVID-19 pandemic. In a media statement, the company noted strong inter-regional competition from players such as Lotte Duty Free, Dufry, Gebr. Heinemann and DFS {also Lagardère Travel Retail and Aer Riana International -Ed}.

It said it had triumphed in the Melbourne tender against “fierce” competition from five other global players {the final consideration came down to a choice between long-time incumbent Dufry, Lotte Duty Free and Aer Rianta International -Ed}.

Sign of the times: Lotte Duty Free sees the Melbourne Airport business as the foundation to becoming the biggest travel retailer in Oceania

Describing Melbourne Airport as the second-largest duty free operation in Oceania {Note: in fact Sydney Airport and Auckland Airport were both bigger in 2019 -Ed}, Lotte Duty Free said it had been selected as the preferred bidder at the end of December, before final contract details were completed.

As reported, the contract runs for ten years from 1 June until the end of May 2033.

The Melbourne Airport Duty Free business embraces 3,592sq m, including the departure and arrival duty free shops. This will become the second-largest retail footprint among Lotte Duty Free’s global airport operations, trailing only behind Singapore Changi Airport.

Lotte Duty Free plans to expand the Melbourne Airport store to 5,800sq m and transform it into a store with annual sales of KRW300 billion (US$243.3 million). The Melbourne Airport store offers all traditional categories including cosmetics, perfumes, wines & spirits, tobacco, fashion and miscellaneous goods.

Lotte Duty Free said it has emphasised its know-how, online platform capabilities, and competitiveness in merchandise sourcing in its bid. The retailer also highlighted its know-how in operating duty free businesses at major international airports in the Asia Pacific region, including Incheon, Singapore, Guam and Vietnam.

Lotte Duty Free also emphasised its strategy of continuously investing in duty free retail infrastructure within Oceania. For example, it opened a flagship downtown store in Sydney in May 2022.

Lotte Duty Free’s success is big news in South Korea where the sector enjoys a very high profile. Click on the image to read the full report from The Korea Herald.

The company said it has started to rebuild its offshore business step by step following the easing of the pandemic, opening new downtown stores in Sydney and Da Nang, Vietnam (November 2022). It currently operates 13 stores in six countries overseas.

In 2022, Lotte Duty Free’s overseas business sales increased by about +340% compared to the previous COVID-devastated year, underlining the effect of global re-opening, the retailer said.

The success builds on Lotte Duty Free’s exisiting presence in the Victoria capital at the long-established Swanston Street store in the heart of Melbourne’s Central Business District. The store was formerly run by JR/Duty Free, acquired by Lotte Duty Free in late 2018.

Lotte Duty Free is preparing for the delayed Grand Opening of its Singapore Changi Airport business in the first half of this year and an inauguration of its Melbourne Airport store in June. It will also open a downtown duty free store in Hanoi, Vietnam in the second half of the year.

The three-level Lotte Duty Free store in Sydney opened last May enjoys prime retail space on the corner of Pitt and Market streets in the heart of the Central Business District

The Melbourne award boosts Lotte Duty Free’s presence in Australia, the company having entered the market when it acquired JR/Duty Free at the end of 2018. As a result of that acquisition, Lotte Duty Free also runs the Brisbane Airport duty free concession, currently the subject of a Request for Proposals. Other duty free operations include Darwin International Airport and downtown stores in Melbourne and (recently opened) Sydney. ✈

Note: The Moodie Davitt Report is the industry’s most popular channel for launching commercial proposals and for publishing the results. If you wish to promote an Expression of Interest, Request for Proposals or full tender process for any sector of airport or other travel-related infrastructure revenues, simply e-mail Martin Moodie at Martin@MoodieDavittReport.com. We have a variety of options that will ensure you reach the widest, most high-quality concessionaire/retailer/operator base in the industry – globally and immediately.

The Moodie Davitt Report is the only international business media to cover all airport or other travel-related consumer services, revenue-generating and otherwise. Our reporting includes duty free and other retail, food & beverage, property, passenger lounges, art and culture, hotels, car parking, medical facilities, the Internet, advertising and related revenue streams. Please send relevant material, including images, to Martin Moodie at Martin@MoodieDavittReport.com for instant, quality global coverage.


Food & Beverage The Magazine eZine