Doota Duty Free enjoys steep footfall and sales lift; ‘Break-even’ barrier to be broken by June or July

SOUTH KOREA. Travel retail industry newcomer Doota Duty Free has posted what it termed a “notable upward trajectory” in sales with average daily revenue in February up by +63% over January.

As reported, Doota Duty Free – owned by the Doosan Group conglomerate – was a shock winner in the late 2015 contest for downtown duty free licences in Seoul – ahead of Lotte Duty Free World Tower.

The store opened on 20 May 2016 in Seoul’s Dongdaemun area, in the process becoming Korea’s first late-night duty free store (remaining open until 2am). Dongdaemun is a popular tourist destination – especially among Chinese visitors, who comprise about half of the 7 million foreigners who visit the area each year.

Faced by intense competition, especially from industry giants, the business got off to a difficult start. From opening day until year-end Doota Duty Dree posted sales of KW0.111 trillion (US$95 million), having generated total sales of just US$43 million to the end of September – well below original projections. But things began improving steadily in September, with that month’s sales climbing to US$13.7 million. And since then the improvement has been emphatic.

The company told The Moodie Davitt Report today that daily sales revenue, “which started ratcheting up at the end of last year”, has averaged more than KW1 billion (US$874,000) since February, with a record high of KW1.4 billion (US$1.22 million).

Daily foot traffic has also increased by +33% on average compared to the previous month, “energising the entire outlet”, the retailer noted.

A Doota Duty Free official said: “Doota Duty Free has overcome its structural disadvantage in the retail sector and gone all out on multiple fronts to successfully run its duty free business since its launch nine months ago. Now our efforts are finally paying off.”

In an effort to overcome “trial and error” as a new market player and to keep the business on track, Doota Duty Free said it has concentrated on several key initiatives:

– Emphasising the strategic differentiation that its late-night store operation offers;
– Working to maximise close cooperation with domestic and foreign travel agencies;
– Stepping up marketing efforts aimed at free independent travellers (FITs) at various customer touchpoints, including China;
– Creating close synergies with Doota Mall, the multi-complex shopping-to-leisure facility in which Doota Duty Free is housed.

The company said: “As Korea’s one and only late-night duty free store, Doota Duty Free has attracted inbound and domestic tourists who are travelling both individually and with tour groups, by offering a differentiated experience and convenience. The share of daily revenue generated on average after 9p.m. hit 38% [of daily sales] in January, and it has remained in the mid- to high-30% range since then.”

Sales have also been boosted by the retailer’s formidable Korean and international cosmetics offer, numbering some 260 brands. Daily cosmetics sales in February rose by over +70% compared to January.

Doota Duty Free said it plans to introduce at least 20 new fashion, jewellery and cosmetics brands this year to accelerate the growth momentum.

“We may have had a slow start in terms of attracting brands, operating the store and drawing shoppers compared to the other duty free stores that opened around the same time, but it is picking up fast and gaining momentum,” said Doota Duty Free Executive Vice President and General Manager Yongman Cho. “At this growth rate, we expect to reach a desirable revenue target and exceed the break-even point by June or July, as we mark the one-year anniversary of the opening of Doota Duty Free.”