AUSTRALIA. Lotte Duty Free CEO Kim Ju Nam says that capturing a new ten-year concession at Brisbane Airport, allied to opening recently at Melbourne Airport, will help the Korean travel retailer build “trust and influence” in the regional market.
In this Q&A, he tells The Moodie Davitt Report about the importance of the ten-year agreement at Queensland’s major gateway, ambitions for the new concession and how Lotte Duty Free plans to deliver on its pledges to Brisbane Airport and to its consumer base.
The Moodie Davitt Report: Tell us please about the significance of this new contract for Lotte Duty Free in Brisbane.
Lotte Duty Free CEO Kim Ju Nam: The Oceania market, where competition among global players is intense, has been our strategic priority. We have proven again our global competence by successfully reacquiring the Brisbane Airport duty free concession in this competitive landscape. Furthermore, we achieved a significant milestone in establishing a position as the leading operator in the region. This contract will enable Lotte to strengthen its trust and influence within the region.
Brisbane Airport said that Lotte Duty Free was aligned to its values of ‘Communication, Care, Courage and Collaboration’, and its sustainability focus. How will these elements come to life at the new expanded store?
Lotte Duty Free is already operating in 13 airports worldwide. However, a particular consideration for us this time was how Brisbane Airport could transcend its function as an airport and become a symbolic travel destination unique to Brisbane.
It was inevitable that we should focus on Brisbane Airport’s core values and sustainability while conceptualising this business proposal, and it was naturally reflected in the final outcome. The stores we envision not only aim to provide customers with diverse shopping experiences and high-level services but also commit to sustaining partnerships with the local community as an integral part of the Brisbane region.
How do you ensure the duty free space is ‘Uniquely Brisbane’?
We consider an airport to be the face of the region, and Brisbane Airport especially will be the gateway to the 2032 Olympics. With the goal of creating a space that serves as the last memory of Brisbane and part of the travel experience for Brisbane visitors, we have endeavoured to observe Brisbane through the eyes of travellers.
Our main theme revolves around the pleasant vibe unique to Brisbane, where urban and natural elements harmonise. Additionally, we plan to introduce stores with VR experience zones, tasting spaces, and more, providing customers with enjoyable and immersive spaces to linger. Through our stores, we hope to offer a fresh discovery of Brisbane’s charm to those even familiar with Brisbane.
How do you plan to leverage your knowledge of the customer there (and more recently in Melbourne) to take the offer to new heights?
Lotte Duty Free has always been at the forefront of industry innovation. Last year, we successfully implemented a highly personalised Marketing Automation System based on AI and big data.
Through this system, we analyse various segmented indicators such as individual customer purchase history, buying patterns, preferred products and event responses. This enables us to predict both current and future needs of our customers.
We have established ourselves as the leading operator in the Oceania region with airport shops including Brisbane and Melbourne, plus two downtown shops. Leveraging our understanding of the region and its customers, we plan to implement marketing activities and promotions at Brisbane Airport that reflect the diverse preferences of each individual customer, and deliver at the optimal moments.
Moreover, we will go beyond just shopping by designing experiences and events that captivate customer interest, encouraging participation to provide each individual with a unique and special experience.
What are your business and sales targets at this new location compared to under the previous contract?
Since the start of our operation in Brisbane in 2019, Covid prevented us from fully leveraging Lotte’s operational expertise. With the market recovering, we plan to embark on innovative initiatives, shifting our focus from sales to the individual experiences of each customer.
In response to the needs of key customers in Brisbane and changing trends, we aim to expand our product line-up and introduce experiential elements. Specifically, we intend to demonstrate new approaches by enhancing our product offerings in Australian-produced liquor and cosmetics and featuring various tasting bars including the Gin Distillery.
Having established a strong position now at Australian airports, what are your further ambitions in this region?
We plan to maximise the strengths of our multi-store portfolio and further expand our business. As we increase the number of our locations in Australia, we continue to deepen our understanding of the market and of the people visiting Australia.
Building on this heightened customer understanding, we will continuously evolve our products and services, and implement inter-store marketing strategies. Looking ahead, our goal is to extend our reach beyond duty free shops and into various areas within the travel retail industry.
Tell us also please about Lotte Duty Free’s wider ambitions today at home and overseas.
Our goal extends beyond being merely a ‘duty-free operator’ to [becoming] a comprehensive ‘travel retail company’. To achieve this, we plan to secure an overwhelming position within the regions of strategic importance, which includes home and some overseas regions, and diversify our business model.
Particularly, in alignment with changes in shopping trends, we aim to enhance customer convenience by carrying out digital transformation and strengthening the online business.
Additionally, we are dedicated to discovering new brands and products and actively exploring new areas such as duty paid business. Ultimately, we aspire to provide a more diverse and innovative travel retail experience to a broader customer base.
Are you continuing to try to diversify the base of customers? What are the main levers?
We are currently diversifying our business portfolio through the opening of new stores within the regions of strategic importance and expanding our duty paid business. Additionally, we are undertaking personalised marketing activities as part of our ongoing efforts to diversify our customer mix and not rely on a single customer segment, nationality or age group.
What investments are you prioritising for 2024?
Our priority is to proceed with expansion and renovation works at the reacquired Brisbane Airport and newly acquired Melbourne Airport stores. We plan not only to introduce a new design concept but also to incorporate cutting-edge IT technologies into the stores, creating innovative retail spaces. Stay tuned for exciting developments. ✈
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