Lotte Duty Free signs strategic partnership MOU with KakaoPay

SOUTH KOREA. Lotte Duty Free yesterday signed an MOU with Korean mobile payment and digital wallet service KakaoPay for a pioneering agreement that offers a diverse range of customer benefits.

A key part of the deal is the introduction of KakaoPay’s direct payment service for Lotte Internet Duty Free mobile users. The Korean number one travel retailer and world number two described this as a first for the country’s duty free sector. Several other shopper incentives are being introduced in line with the agreement.

Lotte Duty Free CEO Lee Kap (left) and KakaoPay CEO Shin Won-geun attended the MOU signing ceremony at Lotte Duty Free headquarters in Jung-gu, Seoul yesterday

Lotte Duty Free said that the deal was struck amid an improving business climate with signs of recovery in overseas travel demand.

In a big boost for the beleaguered travel industry, previously stringent quarantine requirements were scrapped for vaccinated arriving visitors from 1 April. The travel retail sector has also been encouraged by the lifting of the US$5,000 purchasing limit  for outbound nationals in South Korea’s duty free stores on 18 March.

Mobile users account for about 80% of Lotte Internet Duty Free customers, where 37% of sales on the Korean site are through the KakaoPay platform.

Lotte Duty Free and KakaoPay have agreed to carry out a wide array of activities in line with their agreement to enhance customer value. These include a focus on differentiated service and joint promotions to increase mutual sales; a seasonal promotional campaign; and a wider cooperative relationship between Lotte Group and the Kakao Community.

In addition, overseas customers in locations such as Southeast Asia and Hong Kong who use Alipay Plus can access Lotte Duty Free through the KakaoPay network without installing additional applications.

Introduced in 2014 amid concerted resistance from credit card companies, KakaoPay has become an integral component of Korean consumer shopping behaviour

Lotte Duty Free Lee Kap said, “With this agreement, we hope that the two companies can grow together based on their respective experience and capabilities. Together we will provide a range of services and benefits.”

In related news, Lotte Duty Free has been strengthening large-scale gift events and membership benefits for Korean customers since. The retailer’s downtown stores now offer up to KRW2 million (US$1,650) in LDF PAY incentives depending on the purchase amount. LVIP membership upgrades are provided to customers who achieve US$10,000 in total online and offline purchases.

The company has also struck an agreement with Lotte Department Store whereby LVVIP and LVIP customers (Lotte Duty Free’s top members) can enjoy the same benefits as Lotte Department Store VIP level members.

Customers who apply for the affiliate service will be provided with ten drinks per month at the Lotte Department Store VIP bar until December; a 5% discount benefit when paying with a Lotte card or cash; a 20% discount at the Lotte Department Store Cultural Center; and free parking for 3 hours.

Shoppers with the highest levels of Lotte Department Store membership can also receive VIP benefits including discounts of up to 20% at Lotte Duty Free stores.

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