Lotte Duty Free rekindles global ambitions with Sydney opening
South Korea’s largest travel retailer, Lotte Duty Free, is set to resume its global growth plans, starting in Sydney, Australia, where the company will open its first store in the city on Thursday.
Covering over 32,000 square feet and showcasing hundreds of premium brands, the three-level store on the corner of Pitt Street and Market Street in the heart of Sydney’s shopping district was designed to be a destination all its own whole for travellers.
Lotte said the opening of the city center marks the “restart of our global business” as well as a “full-fledged entry into the Oceania duty-free market”. Lotte Duty Free CEO Lee Gap said: “The opening of the Sydney store reflects our desire to accelerate expansion again.
It is the retailer’s first store in about two years, following the launch of the large 90,000 square foot tobacco and liquor franchise in Singapore Changi Airport in June 2020. It was first launched as an e-commerce business as there were no passengers due to Covid-19.
A goal of nearly $800 million
Lotte means business in Australia. It has set a sales target of just over $790 million (1 trillion Korean won) over 10 years for the new store. The main categories will be beauty, watches and jewelry, and wine and spirits. In a statement, Lotte Duty Free said it planned to become Australia’s largest duty-free operator by using its downtown Sydney store as a “stepping stone” to growth.
According to the South Korean retailer, Australia’s duty-free market was worth around $800 million a year before Covid. Sales are currently well below that and other competitors in the market such as Dufry, LVMH-owned DFS and Heinemann will all be scrambling for business as traveler numbers start to return. .
Lotte will fully capitalize on the international reopening of the Australian market. At Sydney Airport, where Heinemann has the main retail concession and where luxury brands have held firm in difficult times— International traffic in March reached 342,000, a 992% year-on-year increase. The rise, while significant, only reflects how much the market had fallen during the pandemic. For comparison, in March 2019 (before Covid), international traffic reached 1.3 million passengers.
A Sydney Airport competitor
The interiors of the new store in downtown Lotte have been designed by Australian company Bates Smart to be contemporary and inviting. Stephen Timms, CEO of Lotte Duty Free Oceania, said: “It’s a destination in its own right and we want people to incorporate it into their international travels.
Since travelers will be able to browse at their leisure, instead of rushing to the airport, the new downtown store will threaten airport sales if travel shoppers prefer to shop downtown with Lotte , where the selection can also be bigger and better.
The South Korean retailer will showcase some brands that are new to the Australian travel retail market, such as Japanese beauty brands Pola and Decorté. The average price of cosmetics will be set at 15% less than the local retail price in Australia to incentivize buyers.
Meanwhile, the focus for alcoholic beverages will be on Australians and New Zealanders who tend to buy this category as duty-free import limits are higher than in many other countries. A resident sommelier will be on hand for wine requests or tastings, and there will be a whiskey bar showcasing 100 different bottles.
In the watch department, brands such as Omega, Montblanc, Longines and Mido will be present. When the duty-free market recovers sufficiently, Lotte says it will add “leading” fashion and jewelry brands to their own stores.
Elsewhere in Asia, Lotte Duty Free – which had at one point closed all of its 19 overseas stores due to Covid-19 – has resumed operations everywhere except its Cam Ranh airport store in Nha Trang, Vietnam. Also in Vietnam, the company plans to open a new store in Da Nang this year and expects total overseas (non-Korean) sales in 2022 to reach nearly $200 million.
With the new Sydney store, Lotte will operate 20 duty-free shops in seven markets: Australia (4), Guam (1), Japan (2), South Korea (8), New Zealand (1), Singapore (1) and Vietnam (3).