Retail in Asia

Lotte Duty Free plans to grow Melbourne Airport sales to USD 243.3m

Lotte Duty Free said its successful bid for the Melbourne Airport duty free contract is a milestone for its regional and international ambitions, after revealing on January 20 it had won the retail contract for the Australian city’s airport, opening June 1.

SEE ALSO: Lotte Duty Free teases ‘Virtual Lotte Duty Free Tower’

“The Melbourne Airport store, which will open in the first half of this year will be a key base for Lotte Duty Free to expand its global business and market recovery. We plan to leap forward as a duty free retailer,” said Lotte Duty Free CEO, Kim Ju-Nam.

The Korean number-one travel retailer and world number two estimated the combined Australia and New Zealand duty free market at KRW 1.3 billion (USD 1.1 million) before the Covid-19 pandemic. In a media statement, the company noted strong inter-regional competition from players such as Lotte Duty Free, Dufry, Gebr. Heinemann and DFS (also Lagardère Travel Retail and Aer Riana International).

It said it had triumphed in the Melbourne tender against “fierce” competition from five other global players (the final consideration came down to a choice between long-time incumbent Dufry, Lotte Duty Free and Aer Rianta International).

Describing Melbourne Airport as the second-largest duty free operation in Oceania (in fact, Sydney Airport and Auckland Airport were both bigger in 2019), Lotte Duty Free said it had been selected as the preferred bidder at the end of December, before final contract details were completed.

As reported, the contract runs for ten years from 1 June until the end of May 2033.

The Melbourne Airport Duty Free business embraces 3,592 square metres, including the departure and arrival duty free shops. This will become the second-largest retail footprint among Lotte Duty Free’s global airport operations, trailing only behind Singapore Changi Airport.

Lotte Duty Free plans to expand the Melbourne Airport store to 5,800 square metres and transform it into a store with annual sales of KRW 300 billion (USD 243.3 million). The Melbourne Airport store offers all traditional categories including cosmetics, perfumes, wines and spirits, tobacco, fashion and miscellaneous goods.

Lotte Duty Free said it has emphasised its know-how, online platform capabilities, and competitiveness in merchandise sourcing in its bid. The retailer also highlighted its know-how in operating duty free businesses at major international airports in the Asia Pacific region, including Incheon, Singapore, Guam and Vietnam.

The company said it has started to rebuild its offshore business step by step following the easing of the pandemic, opening new downtown stores in Sydney and Da Nang, Vietnam in November 2022. It currently operates 13 stores in six countries overseas.

In 2022, Lotte Duty Free’s overseas business sales increased by about 340 percent compared to the previous Covid-devastated year, underlining the effect of global re-opening, the retailer said.

Lotte Duty Free is preparing for the delayed Grand Opening of its Singapore Changi Airport business in the first half of this year and an inauguration of its Melbourne Airport store in June. It will also open a downtown duty free store in Hanoi, Vietnam in the second half of the year.

The Melbourne award boosts Lotte Duty Free’s presence in Australia, the company having entered the market when it acquired JR/Duty Free at the end of 2018. As a result of that acquisition, Lotte Duty Free also runs the Brisbane Airport duty free concession, currently the subject of a Request for Proposals.

Other duty free operations include Darwin International Airport and downtown stores in Melbourne and recently opened, in Sydney.

Source: The Moodie Davitt Report