SOUTH KOREA. In a first for the travel retail sector, Lotte Duty Free today spelled out its plan to break into the fast-emerging Metaverse market.
Metaverse – a compound word of meta, which means ‘virtual’ and universe, which means ‘world’ – is a fast-growing network that allows real-life activities to be performed in a virtual world.
Early this month Lotte Duty Free participated in CES 2022 in Las Vegas, the world’s largest IT exhibition held – a first for the Korean duty free industry. In partnership with Caliverse, a subsidiary company of Lotte Data Communication, Lotte Duty Free introduced two ultra-realistic Metaverse contents at the exhibition – a virtual fitting room and virtual concert.
New Korean duty free regulations spur Metaverse opportunityThe company pointed to the Korean government’s announcement earlier this month that it would permit online sales of Korean domestic duty free products for overseas residents without them having to visit South Korea. That initiative is expected to be implemented within three months at the earliest. “With this new measure, it is now expected that Lotte Duty Free’s Metaverse duty free shop project will gather momentum,” the company said. “The Metaverse is characterised by the feeling of actually being with others in a virtual space, being able to communicate with one another, and providing virtual reality in the form of a mirror that replicates reality as it is. “Therefore, Metaverse duty free shops are expected to provide shopping services far beyond the digital shopping experience provided by existing internet duty free shops and the role of mere sales channels. “In addition, as the era has arrived when foreigners can order high-quality and reliable Korean duty free goods in the rooms of their houses without having to come to South Korea, Korean players with Metaverse duty free shopping functions can be seen as presenting a new business model to generate profits.” |
The virtual fitting room allows customers wearing HMD (Head Mounted Display) devices to experience products such as bags, accessories, shirts, and pants in a virtual showroom. Through this technology, customers can check the suitability of the items as if they were actually wearing them.
Lotte Duty Free said that it plans to develop technology that even allows customers to make a purchase in the virtual space. This channel will provide a new duty free shopping experience beyond the existing online and offline environments, the retailer commented.
Just like being there
Virtual concert allows participating customers to watch artists on virtual stages from various perspectives. It also enables free communication between users in real time who can talk to each other and share moves.
Lotte Duty Free plans to combine its new Metaverse technology with the retailer’s hugely popular Family Concert that has been hosted successfully for the past 16 years and use it to strengthen customer-participating content.
“Lotte Duty Free is actively utilising the Metaverse to advance digital duty free shops,” a Lotte Duty Free spokesperson commented. “We want to create content through a combination of retail, travel, and Metaverse.”
Duty free’s digital pioneer
The company said that it has been leading the global duty free industry in digital transformation since 2000 when it opened the world’s first internet duty free shop. In 2007, it introduced the pioneering ‘One-packing System*’ through IT innovation to complete an efficient logistics system.
Lotte Duty Free also opened the world’s first mobile duty free shop in 2012 and introduced Korea’s first Alipay facial recognition payment system to the Myeong-dong main store’s Sulwhasoo shop in 2019. As reported, the retailer opened the world’s first online duty free luxury store Sogong 1st Ave in 2020.
Having proven its digital transformation capabilities over more than two decades, Lotte Duty Free said that existing and next-generation initiatives in the field are and will be anchored by strong brand partnerships.
Smart Store, travel retail’s first contact-free digital store opened by Lotte Duty Free in 2020, boasts a full collection of the latest digital technologies from each featured cosmetics brand. SK-II, for example, introduced digital skin diagnosis service ‘Future X’, while Lancôme and Estée Lauder unveiled virtual makeup services ‘Dream Face’ and ‘You Can Makeup’, respectively.
In addition, many other beauty brands are using Smart Store as a space to introduce new digital technologies to customers.
Through a comprehensive renewal of its online platform in last July, Lotte Duty Free now features a virtual space for the Sulwhasoo flagship store on its mobile store using VR (virtual reality). In this virtual space – where one can see the interior of the beauty brand’s flagship store with a 360° perspective, the user can check detailed product information by clicking on the displayed products and make a purchase immediately.
In the virtual fitting room presented at CES 2022, Lotte Duty Free also showcased Korean street fashion brands including Acme De La Vie and Nerdy.
A Lotte Duty Free spokesperson said, “The partnership with the brands will be the core of all digital transformation projects that Lotte Duty Free will carry out in the future.
“Lotte Duty Free’s brand attraction, which stands out in the global travel retail market, and the strategic relationships that it has maintained with leading brands will be the foundation for the business.”
Lotte Duty Free pointed to its history of introducing brands to the Korean market – including Hermès and Chanel boutiques brought to the duty free channel for the first time in the early 1980s and more recently labels such as Valmont, Tatcha, Charlotte Tilbury, and Pomelato during the pandemic – as evidence of the company’s buying power and market dominance.
This track record also underlined the continued trust of brands in the Korean duty free market, the retailer claimed.
Lotte Duty Free said that it has been focused on securing potential customers without a reduction in customer marketing costs during the COVID period.
The company has attracted more than 1.6 million new online global members by converting its Family Concert – featuring global K-pop stars such as BTS – into an online event and has been communicating continuously with them through its social media channels and digital magazines.
Lotte Duty Free said it expects that the investment will serve as a strong foundation for its entry into the Metaverse retail market.
“Considering the digital innovation, strategic partnerships with brands, and customer management capabilities that Lotte Duty Free has shown in the market thus far, it seems certain that we will continue to lead the industry in the future,” the company concluded.
