AUSTRALIA. Lotte Duty Free is promising “a duty free shopper experience like no other” at its new 3,000sq m downtown store in Sydney which opens on Thursday (5 May).
Lotte Duty Free, South Korea’s number one travel retailer and world number two (Source: The Moodie Davitt Report Top 25 Travel Retailers), will open the three-level boutique on the corner of Pitt Street and Market Street, the heart of Sydney’s retail precinct within the Central Business District.
Lotte Duty Free is targeting sales of KRW1 trillion (US$790.3 million) over the first ten years of operation. The company said that the pre-COVID Australian duty free market was also worth KRW1 trillion, noting that competition among global retailers including itself, Dufry, DFS Group and Heinemann is “fierce”.
Lotte Duty Free described the downtown Sydney store as a “stepping-stone” to becoming Australia’s largest duty free retailer. In a media release, it dubbed the opening “a restarting of our global business and a full-scale entry into the Oceania duty free market”
The inauguration marks the first Lotte Duty Free shop opening in 683 days since its Singapore Changi Airport business launched in June 2020. The intervening months have coincided with the raging COVID-19 pandemic which has hit the company hard at home and abroad.
The travel retailer said that the store will house many brands never seen before in Australian travel retail. Popular brands making their debut include Pola and Cosme Decorté, which will be offered alongside a wide range of international names including Estée Lauder, Lancôme, Shiseido, SK-II and Gucci Beauty in a 100-plus beauty brand line-up.
Australian brands include Beauty Chef and Vita Glow, while the fast-growing niche fragrance sector is represented by a variety of labels including Le Labo, Frederic Malle and Kilian Paris. The store will offer more than 150 brands across the cosmetics, perfumes, wines & spirits, watches (including Omega, Montblanc, Longines and Mido) and jewellery categories.
Shoppers will be greeted by a concierge and discover a differentiated experience on each floor. The upstairs wines and spirits zone will feature a cellar-door experience where wine connoisseurs can connect with Lotte Duty Free’s resident Sommelier and enjoy local wines or sample premium whiskies from a 100-bottle Whisky Bar.
The store interiors were designed by leading Australian design company Bates Smart. The firm’s architectural styling has created what Lotte Duty Free called a “fresh and contemporary” environment that integrates the latest technology to ensure an informed and pleasurable customer shopping experience.
Lotte Duty Free CEO Lee Kap said: “Lotte is home to some of the most luxurious brands in the world. We are proud to offer shoppers everything they are wanting in a space that elevates this part of their travel journey. Our retailer partners are testimony to Lotte’s reputation worldwide and we are excited to bring this retail experience to one of our favourite cities, Sydney.”
Lotte Duty Free Oceania CEO Stephen Timms said, “The duty free experience is as important as all other aspects of the travel journey. From the hotel to the location, travellers want something special and memorable.
“Design innovation and client experience were the guiding principles in the creation of this iconic store. Lotte Duty Free is a travel destination in its own right and something we want people to build into their plans and be excited to experience as part of the international travel journey.”
Back with a bang in Vietnam
In related news, Lotte Duty Free, which had once closed its entire overseas store network due to COVID-19, has resumed all operations except for the Cam Ranh Airport store in Nha Trang, Vietnam, which is temporarily closed due to the airport shutdown.
Lotte Duty Free’s overseas sales from January to April increased by nearly +140% year-on-year. The retailer currently operates 19 stores across the Asia Pacific region, including those in South Korea.
The company plans to generate offshore sales of KRW250 billion (US$197.4 million) in 2022 by strengthening existing overseas stores and opening in new locations such as Da Nang, Vietnam.
Next year, it plans to further strengthen the ‘LDF Belt’ (Lotte Duty Free Belt) encompassing the Asia Pacific region by completing the inauguration of a new branch in Hanoi, Vietnam and the grand opening of a branch at Changi Airport, Singapore.
Lotte Duty Free entered the Oceania travel retail market after acquiring five duty free shops in Australia and New Zealand from JR/Duty Free in August 2018 and relaunching the following January. The downtown Sydney store is the company’s first new store in Oceania.
Tourism market recovering
Lotte Duty Free said that it has strategies to stimulate sales by product category in the wake of a recovering tourism sector.
Australia, which had imposed strict entry restrictions for the past two years, fully reopened its borders in February and started to expand international flights in earnest.
According to the Australian Bureau of Statistics, the number of passengers entering and leaving Australia in the past month has increased tenfold year-on-year. In the case of Sydney Airport, the number of daily international flight arrivals has risen to 40, compared to an average of just ten in September 2021.
The Australian tourism market is at “a turning point” in a rebound, Lotte Duty Free said. That new dynamism has been boosted by the Australian government providing an additional A$60 million (US$42.6 million) in March to help the inbound tourism industry recover, the company noted.
Lotte Duty Free pledged to present differentiated operating strategies for each product category in line with the recovery of the tourism sector.
For cosmetics, where the average retail price will be -15% lower than the Australian local price, the company plans a differentiated shopping experience through the largest cosmetics store in the region. This will feature over 60 renowned domestic and foreign beauty brands, including Estée Lauder, SK-II, La Prairie and (from South Korea) Sulwhasoo.
In the wines and spirits and watch categories, marketing is aimed at Australians and New Zealanders. The offer will reflect the high regional duty free allowances (up to one bottle of 2.25 litres in Australia and up to three bottles of 1.125 litres in New Zealand).
Lotte Duty Free will introduce a local wine and spirits specialty zone and a tasting space featuring a traditional cellar door winery concept. Watches are classed as a duty free item in Australia (they can be sold duty free to domestic consumers, but with GST included). The retailer plans a related marketing campaign targeting not only foreign visitors but also Australians, with some ten famous brands including Omega, Breitling, and Longines.
After the Australian duty free market recovers to a certain level, top-tier fashion and jewellery boutiques will be introduced to target customers with high purchasing power.
Lee Kap concluded, “The opening of the downtown Sydney store is a move that reflects Lotte Duty Free’s will to speed up its expansion once again.”
Destination Gold Coast
Duty free retail and other commercial revenue streams will be the focus of a pioneering event to be held on Australia’s beautiful Gold Coast this July.
As reported, the Australian Airports Association – in partnership with The Moodie Davitt Report and Ivo Favotto’s The Mercurius Group – will host Australasia’s first-ever conference dedicated to airport retail and commercial issues on 21-22 July.
Registration is now open at Airport Retail and Commercial Forum 2022 (eventsair.com). Delegate numbers are limited to 200 and will be allocated on a first-come, first-served basis.