VIETNAM. South Korean travel retail giant (and world number two in the latest Moodie Davitt Report Top 25 Travel Retailers ranking*) Lotte Duty Free opened a new operation at Nội Bài International Airport in Hanoi on 26 July.
The Hanoi store is Lotte Duty Free’s third in Vietnam following earlier openings at Da Nang International Airport in May 2017 and at Cam Ranh International Airport in June 2018. The retailer revealed that it is to open a fourth business – in downtown Da Nang – within the year.
Lotte Duty Free said that it plans to become Vietnam’s largest duty free retailer through the opening of new stores along with the development of existing operations.
Lotte is operating 506sq m of space in Hanoi on a ten-year contract until 2028. The travel retailer is projecting sales of more than KW200 billion (US$169 million) over the concession term.
Growing global footprint – Lotte Duty Free’s offshore businesses 1. Jakarta downtown, Indonesia. Opened June 2013. 2,090sq m. Source: Lotte Duty Free; Moodie Davitt Business Intelligence Unit. Australian and New Zealand businesses run by JR/Duty Free, acquired by Lotte Duty Free at the end of 2018. |
The Hanoi business offers about 90 brands, including Korean skincare favourites such as The History of Whoo, Su:m37° and Innisfree, plus popular international beauty names including Yves St Laurent, Tom Ford and Bobbi Brown.
A dual Grand Opening held on Friday at the airport and at Lotte Hotel Hanoi was attended by Eunhyuk, a member of popular Korean boy band Super Junior, and actor Ji Chang-wook – both Lotte Duty Free representatives.
Lotte Duty Free CEO Kap Lee led the opening ceremony, commenting:“We will jointly develop Vietnam’s tourism industry and Lotte Duty Free through our various investments.”
Hanoi, the Vietnamese capital, is expected to attract over 7 million foreign visitors this year, up sharply from 5.74 million in 2018. Chinese passenger traffic, critical to the airport’s shopping potential, rocketed by 20% last year, while Korean passenger numbers rose 12%.
Lotte Duty Free said that it plans to build a business model tailored to the airport’s characteristics by analysing the nationalities and age groups of departing passengers.
Hanoi was named one of Time Magazine’s ‘Top 8 Destinations’ last year. According to the Hanoi Tourism Development Bureau, direct and indirect revenues from tourism represent about 15% of Hanoi’s total GDP. Heavy investment is being poured into tourism infrastructure to grow the sector.
Global development continues apace – world number one by 2020?
Having opened its first overseas store in 2012, Lotte Duty Free said that it is on target to hit KW1 trillion (US$845 million) in offshore sales by the end of 2020. This will make it the world number one duty free retailer, Lotte claimed*.
Lotte Duty Free, keen to balance its strong leadership position in (but reliance on) South Korean travel retail, now has 21 stores in eight countries.
The company said that its other Vietnamese businesses each turned surpluses in their first year of operation. Sales at the Tokyo Ginza store in Japan have grown an average of +120% each year since opening, the retailer said.
Offshore sales so far this year have already exceeded those for the whole of 2018, Lotte Duty Free noted.
*NOTE: The Moodie Davitt Report will publish its much-anticipated Top 25 Travel Retailers ranking in early August. A preview of the report, published last month, puts Lotte Duty Free as the sector number two, behind Dufry Group.
