INTRODUCTION.
Duty free, it’s like a dream. Oh my darling. Beautiful, you’re so wonderful. Oh my darling.
Beauty, beauty you’re so beautiful. Duty, duty Lotte Duty Free. Beauty, beauty you’re so beautiful. Duty, duty Lotte Duty Free”:
– You’re so beautiful (Lotte Duty Free song)
Lotte Duty Free Marketing Director Bo Joon Kim is a revered figure within the company, described by colleagues as “a legend”.
He is certainly one of travel retail’s most brilliant creative spirits. Those are quite some claims but his influence within the Korean travel retailer runs deep – and his insight in terms of understanding, segmenting, communicating with and providing for the Chinese traveller is impressive indeed.
The wall map of China behind Kim at Lotte Duty Free’s marketing division offices in central Seoul is very different to any you’re ever likely to see. The vast country has been colour-coded with 66 multi-hued stickers, each representing a different Chinese city. The colours denote five tiers of city, from first to fifth; while the numbers on each sticker reflect the sales volumes generated by Lotte Duty Free from customers coming from those places. “Previously the first tier was mostly located on the East Coast,” Kim notes, “but these days it is moving towards the centre of China.”
Some observations are vital. With the Chinese spend so critical to Lotte Duty Free’s fortunes, Kim and his colleagues have to be on top of each and every macro and micro trend. Forget all the clichés about targeting the Chinese consumer’. Lotte is evaluating at least 66 different patterns of Chinese consumer behaviour – and no doubt drilling down way beyond that.
Kim gives some examples of city by city variations in spending power and patterns, citing two locations in the centre of China and noting the very high sales their citizens generate at Lotte Duty Free. Then he points to a southern location very near Korea, a fourth-tier city yet one responsible for extremely good spends. Generalisations are strictly a no-no here; instead Lotte Duty Free is turning its detailed consumer knowledge into a retail science, tailoring its offer to Chinese tourists by their departure city and the retailer’s awareness of their buying habits.
Mapping the future: Lotte Duty Free Marketing Director Bo Joon Kim offers Martin Moodie a glimpse into the retailer’s detailed China marketing strategy |
And it’s not just about the Chinese. “We also have very, very good analysis of the Korean customers,” says Kim. In fact, he adds, Lotte’s knowledge of its own travelling nationals runs even deeper, as the segmentation extends to understanding consumer behaviour of travellers from smaller cities and towns right across Korea.
Buying patterns for, say, travellers from Busan differ sharply from those from Seoul, he explains. But even within Seoul, there are variances of consumer behaviour by area. Lotte Duty Free also has some 3.8 million VIPs (including 400,000 foreigners), each with a member’s card. That database allows a detailed study of key consumers’ buying habits and careful cross-referencing with mainstream buying patterns.
“We find the differences in the trends and we develop our marketing accordingly,” Kim says, pointing to a chunky-looking report which is produced each month and supplied to Lotte Duty Free’s merchandising and planning divisions. No stone is left unturned.
In the basement of Lotte World Tower, Tanki comes to life |
Star attraction: The Korean duty free business has benefited from (but also helped drive) the Korean Wave. Lotte Duty Free’s latest initiative is expected to entrance millions of overseas consumers as well as helping the disadvantaged in Korean society. |
RIDING THE KOREAN WAVE
But the real success and arguably the real genius of Lotte Duty Free’s marketing since 2004 has been the way it has embraced (and to a great extent driven) Hallyu – the famed Korean Wave.
Hallyu is a 21st century phenomenon that has seen South Korea become the entertainment epicentre of Asia, producing a vast outpouring of television dramas, movies and popular music (‘K-Pop’) that has won the hearts of millions of adoring fans all across the region – and nowhere more so than in China. Some commentators even refer to the trend as ‘hallyu-wood’.
Aided by its acute knowledge of consumer trends, Lotte Duty Free identified the power of the Korean Wave early on and since 2004 it has formed an intrinsic part of the retailer’s marketing efforts. If it could somehow integrate Hallyu with its duty free offer, it reasoned back then, the potential would be enormous.
Cue the creation of Star Avenue, a special zone at Lotte World Duty Free (with a smaller version at the main Sogong-dong store), an entertainment zone allowing visitors to experience the essence of the Korean Wave through interactive multi-media designed with life-size figures of Korean Wave stars, such as (today) Kim Soo-hyun, Lee Min-ho, Jang Keun-suk and many others.
Exporting excellence: Lotte Duty Free has played a critical role in driving the extraordinary popularity of Korean cosmetics at home and abroad |
The concept has been incredibly successful. Lotte Duty Free has since extended its association to its acclaimed social media and television campaigns, featuring many of K-Pop’s hottest names. Each day at Star Avenue hundreds of young Chinese and Japanese take photos and selfies against the backdrop of their idols.
The Korean Wave began with the exporting of Korean drama (K-Drama) in 2002-2003. K-Pop, the second step, followed soon after. Then came the first overt link with duty free, the surge in popularity of Korean beauty products, quickly of course dubbed K-Beauty.
That trend began with alphabetised skincare treatments (BB and then CC creams) and quickly became a broad-based tagline for the growing Korean influence on female skincare (based on Korean women’s famed ten-step cleansing routines).
Great quality at accessible prices quickly saw Korean skincare brands such as Sulwhasoo, Laneige and Whoo surge in popularity, drawing huge crowds in the country’s duty free shops (and proving highly attractive in other travel retail markets too). When The Moodie Report took a tour of the Lotte Duty Free flagship store in late August guided by General Manager Steve Park, business was still recovering from the MERS downturn. But while the luxury boutiques were near empty, the Korean cosmetics counters were crammed with young female shoppers craving bargains and beautiful skin in equal measure.
Mock-ups of how the first Tanki’s Family store will look at Under Stand Avenue |
Now the focus is on the fourth and fifth steps of the Korean Wave, Kim tells me. I’m intrigued, especially when he says with a laugh, “You’re going to have the fourth step for lunch!”
He’s talking about K-Food, which like its entertainment and beauty siblings, has seen an explosion of interest in Korean cuisine at home and abroad. Korean staples such as bap (cooked rice), juk (porridge) and guksu (noodle); side dishes including guk (soup), jjigae (stews), jeongol (hot pots) and bokkeum (stir-fried dishes); and desserts such as tteok (rice cake), and gwaja (cookies) have surged in popularity, buoyed by a reputation for health benefits. There are countless K-Food newspaper and magazine columns, television cooking programmes, a government-backed K-Food Festival, numerous YouTube features and even a K-Food Addict website.
Lotte Duty Free has tapped into the trend, for example via a seemingly unlikely combination with Bulgarian celebrity chef Mihal Spasov Ashminov, who operates out of two famed Seoul restaurants called Zelen. The retailer is using Ashminov for a lucky draw promotion, offering trips to Bulgaria accompanied by the chef for the winners.
Now though comes the big reveal. Whereas Lotte Duty Free tapped into and worked with the first four components of the Korean Wave, now it is creating a whole new one – K-Animation.
It’s time to meet Tanki’s Family, a group of characters conceived, designed and animated entirely by the Lotte Duty Free team. Tanki’s Family is a breakthrough Corporate Social Responsibility (CSR) project for Lotte Duty Free. Each family member represents different countries in which the retailer is or soon will be trading – China, Guam, Indonesia, Japan, Singapore and Thailand – with more to come as the retailer extends its global footprint.
Lotte Duty Free plans to use the characters to make a major contribution to Korean society through its new, multi-million dollar CSR project, Under Stand Avenue (see article on p.140). The company will allow small & medium enterprises (SMEs) to use the characters and produce products featuring the various family members. A Tanki’s Family store will be opened on Under Stand Avenue in late October, selling products created by the SMEs.
Lotte will also build a children’s playground on Under Stand decorated with the characters. Kim and his team are developing an array of emotional icons to accompany the launch of Tanki’s Family. These can be adapted to numerous purposes including phone messenger services and as gifts for Lotte customers, so that they can share the sense of social responsibility. There will be Tanki’s Family cell phone games, gift cards, flash videos, even perhaps web toons and extended movies.
Meet Tanki’s Family (from top): Cooni (Thailand); Kung (China); Singa (Singapore); Kiki (Indonesia); Fin (Guam) and Niko (Japan) |
What drove the latest creation? “We know that Korean celebrities and stars are very good for us to be associated with,” Kim replies, “but we think that there might be some limitations globally with that approach. So we have chosen to create these characters as part of our efforts to broaden our industry to the world. More importantly, we wanted to contribute to society.”
The project is brand new (The Moodie Report is the first outside party to see it) and Lotte Duty Free plans to develop it on a ‘multi-use’ basis. “That way they will reap the revenues from the products and we will contribute to the community,” says Kim.
It’s a key point. Lotte Duty Free and the Lotte Group are stepping up their CSR programme, linked to what the company has dubbed ‘Creating Shared Value’ (CSV). “It’s not just about giving money but about creating shared value between the community and the corporate entity,” Kim explains.
The storyline comes back to the roots of Lotte Duty Free and the Lotte Group. Tanki, the original character, is born in the basement parking lot of Lotte World Tower. An alien finds him and turns Tanki into a lovable human being who then sets off on a journey around the world where he meets his various family friends.
“We’re not just going to develop the products but also we are planning to create an animation with the characters – all the time using it for Corporate Social Responsibility purposes,” says Kim.
It’s a fascinating initiative. Faced by open political hostility about its economic power in Korean society, Lotte Duty Free is stepping up its long-time social agenda, underlining the benefits it brings to the disadvantaged and to the nation’s myriad small businesses.
Notes Team Leader Global Business Development Kim Tae Won: “We play a major role not just in the Korean duty free sector but also the Korean tourism industry. But it’s not just about earning money from the customer; we are also thinking constantly about creating shared value and contributing to the Korean economic development. That’s our role and that’s our value I believe.”
