Top Travel Retailers Report (continued)

Lotte Duty Free

2021 Sales (million)


2021 Rank


Lotte Duty Free delivered sales of just over KRW5.8 trillion (€4,046 million) in 2021, retaining its position as the number two travel retailer. Despite the sharp impact of the pandemic, as in 2020 the company benefited from a strong daigou (reseller) business, online sales and support measures from government that allowed it to deplete unsold inventory locally.

Innovations last year included the so-called ‘flights to nowhere’ with duty free service; the expansion of its Luxemall service; the opening of Sogong No.1, the world’s first online luxury store; and the launch of LDF Buy, an online mall for overseas direct shopping.

The company has also made some market gains at home and overseas in the past 12 months.

A signature development came in May this year, when Lotte Duty Free opened a three-level boutique in Sydney’s Central Business District. The retailer is targeting sales of KRW1 trillion (US$790 million) over the first ten years of operation.

In the same market, in late 2021 Lotte Duty Free agreed a two-year extension to its contract at Brisbane Airport’s International Terminal. Lotte Duty Free acquired the airport’s then incumbent retailer JR/Duty Free at the end of 2018, continuing JR’s operation of the concession which commenced in late 2014.

In Singapore, the company celebrated a major contract coup by winning the Changi Airport liquor & tobacco contract (worth around US$430 million a year pre-crisis), which it took over in June 2020. This turned out to be desperately unlucky timing as it coincided with the beginning of Singapore’s shutting down from the outside world due to the pandemic.

However, the business is swinging into action now following Singapore’s recent opening up and is set to build a vibrant spirits and wine business anchored by innovation and an acute focus on exclusivity – as demanded by airport operator Changi Airport Group. Among the big planned openings is a new T2 arrivals store, scheduled for September.

In further signals of recovery, Lotte Duty Free has reopened its Tokyo Ginza off-airport store in Japan and its Cam Ranh Airport store in Nha Trang, Vietnam.

At home, the market remains troubled despite some recent recovery in outbound and inbound travel. Lotte Duty Free made the decision to close its downtown COEX store in Gangnam, Seoul after 12 years of operation. It plans to concentrate its operational capabilities in the wider Gangnam area on the Jamsil-based World Tower branch.

Lotte Duty Free pointed out that the Korean duty business climate “is still not good” due to the intense competition posed by the number of players and the sustained impact of the pandemic. To underline that view, not a single company applied for a new downtown duty free licence in Seoul when bids closed on 30 May.

The Lotte Duty Free downtown flagship store in Myeong-dong, Seoul

The online channel is one way in which the retailer is seeking to offset the worst impacts of the crisis. In June Lotte Duty Free launched what it said is the first online platform to sell Korean domestic products on a duty free basis to consumers in overseas countries, without them having to visit the Republic.

Some big challenges remain for Lotte Duty Free and the wider Korean market once travel does return. Korean travel retail’s overwhelming dependence on a single foreign nationality and within it the daigou sector is certain to prevail for some time, a worrying vulnerability given the Chinese authorities’ ability to crackdown periodically (or longer) on the unofficial trade. But at 95.4% of the Korean duty free business last year, seasoned observers see little near-term structural change in the market.

Any normalisation of the Korean business will also be affected by the recent or impending exits of several luxury brands, including Louis Vuitton, Chanel and Rolex, from all or selected downtown duty free locations. These brands are focusing their efforts more today on key airport markets, including in China domestic.

One of the latest brand boutique additions, Fred, at Lotte Duty Free World Tower

Incheon International Airport has also failed repeatedly over the past two years to attract interest in its once highly desirable Terminal 1 contracts, against a backdrop of historically onerous rents, the long-running pandemic and related uncertainty over the return of Chinese travellers. It means the immediate future for a business that was the industry’s number-one airport for duty free sales — hitting an all-time high of US$2.43 billion in 2019 before plummeting through the pandemic to an estimated 5% of former levels — also looks problematic.

Lotte Duty Free’s future therefore is likely to involve a mix of aggressive international expansion in Asia Pacific, enhanced digital commerce and continued leadership in its home Korean market.

Overseas expansion remains high on the agenda for Lotte Duty Free; Changi Airport pictured

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The Moodie Davitt eZine Issue 313 | 28 July 2022

The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit and to subscribe, please e-mail

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