SOUTH KOREA. Lotte Duty Free has unveiled a wide-ranging crisis management programme amid deeply challenging Korean travel retail market conditions and escalating losses.
The initiative, unveiled yesterday (25 June), underlines a profound structural shift in the Korean market plus the difficulty of making money from both offshore airport and downtown business.
With topline growth so challenging, Lotte Duty Free CEO Kim Ju Nam revealed the ‘2024 Lotte Duty Free Emergency Management Declaration’ on the company’s in-house bulletin board in a post the company shared with The Moodie Davitt Report.
“We have entered into an emergency management system to overcome the immediate crisis and lay the foundation for a new leap forward,” Kim wrote.
He announced a raft of measures, including structural improvement of high-intensity business divisions, workforce restructuring, organisational slimming and a -20% reduction in executive salaries.
Even post the COVID-19 crisis, the Korean duty free is having difficulty recovering, Kim said. This is due to a decline in consumer sentiment, driven by the global economic downturn – including in China – and negative factors such as unfavourable exchange rates and high inflation.
Kim commented: “We have endured the difficult times after the coronavirus crisis with expectations of market recovery. But due to high inflation, high exchange rate and rapid changes in the external environment, growth has stopped and profitability has worsened. As the CEO leading the company, I fully feel responsibility.”
He concluded by saying, “I believe in Lotte Duty Free’s ability and potential to overcome crises as a market leader that it has built over the past 45 years.
“If we quickly innovate our management structure and prepare for the future in a changing market, our status as a 100-year company will increase.” ✈
