Lotte Duty Free sales hit all-time high of US$6.7 billion in 2018
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South Korea’s top travel retailer Lotte Duty Free reported best-ever sales of 7.5 trillion won (US$6.7 billion) last year on a surge in online sales and mass purchases by Chinese merchants seeking trade in shuttling goods to China. Lotte Duty Free said its annual sales last year hit a record high of 7.5 trillion won, up 25 percent from a year-ago period. In particular, sales from the online business soared 50 percent on year to 2 trillion won, contributing 25 percent to its total domestic sales thanks to successful upgrades of its online and mobile platforms and various promotional perks like online-only products and discount options.
Lotte Duty Free’s main store in the bustling shopping district of Myeongdong in downtown Seoul remained the world’s single-largest revenue earner for three years in a row last year with annual sales up 35 percent at 4 trillion won and daily revenue at about 11 billion won as of Dec. 14.
The Myeongdong store that opened in 1980 has kept on growth with sales reaching over 1 trillion won in 2011, 2 trillion won in 2015 and 3 trillion won in 2016 on increasing demand from individual merchants from the mainland who buy popular Korean duty-free goods in bulk to profit from reselling them in China.
Lotte Duty Free has expanded its investment in domestic stores to draw more consumers. Its Myeongdong store was expanded in August 2016, and spent 10 billion won to add the Star Lounge for VIP customers in April 2018. The World-Tower store in the affluent Gangnam area of southern Seoul also posted 1 trillion won in sales last year, becoming the largest earner to reach the threshold in the district.
Meanwhile, Lotte Duty Free World Tower also posted sales of more than 1 trillion won (US$895.4 million), joining what the retailer dubbed the “One Trillion Club” on 23 December.
“As a leader in the industry, we will endeavour constantly to improve our performance.”
That represents an 80 percent increase year-on-year for the Jamsil, Seoul store, which reopened on 5 January 2017, 193 days after it was forced to close on 26 June 2016 due to the loss of its licence in an open tender.
“Even in the midst of rapid market changes, Lotte Duty Free has been able to achieve a record-breaking year, reflecting 38 years of operational expertise,” said newly appointed Lotte Duty Free CEO Lee Kap. “As a leader in the industry, we will endeavour constantly to improve our performance.”
Lotte Duty Free said that the World Tower store’s excellent tourist services and differentiated luxury brand offer had generated “remarkable achievements” in 2018. This was despite the proliferation of new duty free stores in the Gangnam area [notably the new Shinsegae Duty Free store opened on 18 July], the retailer commented.
Despite industry difficulties posed by the THAAD dispute between South Korea and China, sales of small and medium enterprise SME Korean brands at the World Tower store increased by 300 percent year-on-year. This contributed to a “win-win relationship” with SMEs, Lotte said.
Increased demand by daigou shoppers “greatly influenced” sales said Lotte. The retailer noted that such travellers had compensated for the “stagnation” of conventional Chinese tourism since the THAAD dispute erupted in March 2017. However, Korean travel retail executives and observers are closely monitoring the impact of China’s new e-commerce law, introduced on 1 January 2019, which is expected to hit the daigou business hard
Questions & Answers
Q.What specifically contributed to the 50 percent increase in online sales for Lotte Duty Free?
What specifically contributed to the 50 percent increase in online sales for Lotte Duty Free?
The significant rise in online sales was due to successful upgrades of its online and mobile platforms. The company also offered various promotional perks, including online-only products and discount options, to attract customers.
Q.Which Lotte Duty Free store maintained its position as the world's highest-earning single store, and for how long?
Which Lotte Duty Free store maintained its position as the world's highest-earning single store, and for how long?
The Lotte Duty Free main store in Myeongdong remained the world's single-largest revenue earner. It held this position for three consecutive years up to and including last year, with annual sales reaching 4 trillion won.
Q.How did Lotte Duty Free's World Tower store perform in comparison to other stores in its district?
How did Lotte Duty Free's World Tower store perform in comparison to other stores in its district?
The World Tower store achieved 1 trillion won in sales last year, becoming the largest earner to reach this threshold in the Gangnam district. This represented an 80 percent year-on-year increase for the store.
Q.What factor compensated for the decline in traditional Chinese tourism after the THAAD dispute?
What factor compensated for the decline in traditional Chinese tourism after the THAAD dispute?
Increased demand from daigou shoppers significantly influenced sales and compensated for the stagnation of conventional Chinese tourism. These individual merchants bought goods in bulk to resell them in China.
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