Lotte Duty Free talks up omnichannel ability and international liquor & tobacco expertise in bid for key Changi contract

SINGAPORE/SOUTH KOREA. Lotte Duty Free, the Korean number one travel retailer by sales and world number two (Source: The Moodie Davitt Report Top 25 Travel Retailers) has underlined both its omnichannel abilities and its long-proven liquor & tobacco retailing expertise as it seeks to win the Singapore Changi Airport liquor & tobacco concession. [Look out for extensive analysis of the bid in coming days in The Moodie Davitt eZine].

As revealed by The Moodie Davitt Report in a worldwide exclusive, Lotte Duty Free was one of three bidders for the contract when the tender closed yesterday. The others are fellow Korean travel retailer The Shilla Duty Free (Korean number two, world number three and incumbent Changi airport perfumes & cosmetics retailer), and Gebr Heinemann of Germany.

In a shock development, DFS Group, which has operated the business since 1980, did not bid. Nor did other travel retail powerhouses Dufry, Lagardère Travel Retail or China Duty Free Group, all of whom had expressed interest earlier.

The field might be much smaller than expected but it is high-quality (Gebr Heinemann is the world’s number six travel retailer by sales and the longest established).

Confirming its bid, Lotte Duty Free told The Moodie Davitt Report, “One of our strengths is extensive operating experience in the airport business. We have 12 airport stores all over the world. We run liquor & tobacco shops at Incheon International Airport, one of the largest airports in the world.

Liquor & tobacco are key categories for JR/Duty Free in Australasia, acquired by Lotte Duty Free at the end of 2019. Pictured is the rebranded Brisbane Airport store.
Lotte Duty Free points to its Incheon International Airport liquor & tobacco operation to affirm its ability to run the Changi Airport concession successfully

“Another strength is our online business,” the company said. “Since Changi Airport is said to be interested in omni-channel, we hope that our reputation as the world’s leading operator in the online duty free market will help bring a positive result.”

Pulling power of digital: A promotion for the Lotte Duty Free online store this summer

As first reported by The Moodie Davitt Report, Lotte Duty Free’s online business posted around KRW2.0 trillion (US$1.69 billion) in 2018 sales, up +46.3% over the previous year. If it reaches its goal of KRW2.9 trillion in 2019, this will represent a year-on-year surge of about 43.6%. The online shop is estimated to have welcomed 5.4 million Monthly Active Users on average in the first half of 2019.

In his only international travel retail media interview since he assumed the post in January this year (see below), Lotte Duty Free CEO Kap Lee told The Moodie Davitt Report that ecommerce represented 25 percent of sales in 2018, roughly double the share of five years ago. That represents the highest online percentage relative to total sales in the travel retail sector, according to The Moodie Davitt Business Intelligence Unit.

“It’s a more complex business than people think because it has developed so quickly,” he said. “We have to react with agility to those changes. Since we began our ecommerce business, it has grown really fast and we want to keep that growth on track. Within five years, if we double again, it will represent a 50 percent share of total sales.”

As reported, Lotte Duty Free’s online sales growth for the last three years was 32% on average, far higher than its offline sales growth of 15%.

The retailer said that its ecommerce success is related to its “continuous effort to provide industry-best services”.

Since September 2018, the online store has supported the use of traditional Chinese characters. Customers using these characters, including those from Taiwan, Singapore and Hong Kong, have benefited from this update, noted Lotte Duty Free. Online sales in the past six months (to June 2019) from those countries’ customers surged by 291% compared to the previous year. Lotte Duty Free claims that it is the only retailer in the industry to support four different languages for its online store – Korean, English, Japanese, Chinese (both simplified and traditional characters).

Click the image to read the 26 March issue of The Moodie Davitt eZine featuring a world first interview with CEO Kap Lee.

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