THAILAND/SOUTH KOREA. Lotte Duty Free has confirmed to The Moodie Davitt Report that it is reviewing an exit from its operations in Thailand. While no official decision has been finalised, Lotte affirmed that it is leaning towards quitting the country.
The revelation follows recent speculation in the Korean media that the country’s travel retail giant (and world number #2) was considering such a move. Any such step would signal a break from the company’s strategy to grow its fledgling Thai business as part of an ambitious foreign expansion plan.
The likelihood of an exit underlines the difficulties that Lotte Duty Free has faced in growing its Thai operations. The retailer’s downtown ‘duty free’ store in Bangkok, opened in 2017, is located in Show DC Complex, a leisure to entertainment emporium.
However it was never able to attain genuine duty free status as Lotte Duty Free lacked an airport collection platform thanks to the nature of King Power International’s across-the-board concession at Suvarnabhumi and Don Muang airports in the Thai capital.
Lotte Duty Free had planned for the 7,000 sqm store to become a ‘Hallyu (Korean Wave) Town’ offering the latest Korean products and luxury Western brand products to Thai nationals on their outbound trips and more importantly to Chinese nationals visiting Thailand. In the end it could only sell domestic produce. Lotte Duty Free does not have an airport pickup counter and failed in its previous bid to win an airport concession. The downtown store offers 120 local brands and the absence of both luxury western brands and the ‘Korean Wave’ meant minimal sales and accumulating losses.
Lotte’s likely decision reflects deep frustration as a foreign entity looking to expand in Thailand. Despite the Korean company’s strong bid in June 2019 in partnership with Bangkok Airways, Airports of Thailand awarded the main Suvarnabhumi concession to long-term incumbent King Power Duty Free Co. King Power was also subsequently awarded the rights to run the duty free pick-up counters at Suvarnabhumi.
In contrast, Lotte Duty Free’s business in Vietnam has thrived. The company now operates three airport stores in the country (Da Nang; Cam Ranh International Airport in Nha Trang; and Nội Bài International Airport in Hanoi) and will open one downtown duty free shop in Da Nang.
