"Lotte Duty Free to Fully Relaunch Global Business, Opening Sydney City Store in Australia"

Opening a 3,000㎡ Store in Sydney CBD... "Full-Scale Entry into the Oceania Duty-Free Market"
New Stores to Open in Da Nang and Hanoi, Vietnam... "Strengthening the Asia-Pacific LDF Belt"

Exterior view of Lotte Duty Free Sydney City Store in Australia.

[Asia Economy Reporter Kim Yuri] Lotte Duty Free is resuming the opening of new overseas stores, accelerating the expansion of its global business.

Lotte Duty Free announced on the 3rd that it will open a new downtown duty-free store in Sydney, Australia, on the 5th. This is the first new store opening in 683 days since the opening of the Singapore Changi Airport store in June 2020.

◆Sydney Downtown Store in Australia Aims for 1 Trillion KRW Sales in 10 Years

The Sydney downtown store, located in the central business district of Sydney, spans three floors with a total area of approximately 3,000㎡ (907 pyeong) and houses about 150 brands across categories such as cosmetics, perfumes, liquor, watches, and jewelry.

After acquiring five duty-free stores in Australia and New Zealand from JR Duty Free in August 2018, Lotte Duty Free entered the Oceania market for the first time in the domestic duty-free industry in January 2019. The Sydney downtown store, opening this time, is Lotte Duty Free’s first new store in the Oceania region, and it is expected to generate sales of 1 trillion KRW over the next 10 years.

The Australian duty-free market size was about 1 trillion KRW annually before COVID-19, with fierce competition among global duty-free operators such as Lotte Duty Free, Dufry, DFS, and Heinemann. Lotte Duty Free plans to leverage the Sydney downtown store as a stepping stone to become the largest duty-free operator in Australia.

◆Category-Specific Operations to Boost Sales

Australia fully reopened its borders in February this year, leading to a significant expansion of international flights. According to the Australian Bureau of Statistics, the number of passengers entering and leaving Australia in the past month increased about tenfold compared to the same period last year. At Sydney Airport, the average daily number of international arrivals increased from 10 flights in September last year to 40 flights currently. The Australian government also decided in March to provide an additional AUD 600,000 to support the recovery of the tourism industry, marking a turning point for the Australian tourism market.

Lotte Duty Free will introduce differentiated operational strategies by product category in line with the recovery of the Australian tourism market. For cosmetics, it will emphasize price competitiveness, offering products about 15% cheaper on average than local retail prices. The store will provide a differentiated shopping experience through the largest cosmetics store in the region, featuring over 60 well-known domestic and international beauty brands such as Est?e Lauder, SK-II, La Prairie, and Sulwhasoo.

In the liquor and watch categories, marketing will target local Australians and New Zealanders. For liquor, considering the higher duty-free import limits compared to other countries (Australia allows one bottle under 2.25 liters, New Zealand allows three bottles under 1.125 liters each), the store will feature specialized sections for local wines and spirits preferred by locals, and operate a tasting space with a traditional winery concept to attract local customers. Watches are duty-free items in Australia, with only GST applied, allowing retail sales at lower prices. Lotte Duty Free plans to conduct marketing targeting not only international travelers but also local Australians, featuring about 10 famous watch brands such as Omega, Breitling, and Longines.

After the Australian duty-free market recovers to a certain level, the store plans to introduce top-tier fashion and jewelry brands in boutique store formats to target high-spending customer groups.

Lee Gap, CEO of Lotte Duty Free, said, "The opening of the Sydney downtown store reflects Lotte Duty Free’s determination to accelerate external expansion again. We plan to quickly secure key overseas tourist destinations and proactively respond to the surge in tourism demand."

Meanwhile, Lotte Duty Free, which temporarily closed all overseas stores due to COVID-19, has resumed operations at all stores except the Vietnam Nha Trang Cam Ranh Airport store, which is temporarily closed due to airport shutdowns. Overseas sales of Lotte Duty Free from January to April this year increased nearly 140% compared to the same period last year, showing a sharp recovery in overseas store performance. Lotte Duty Free aims to achieve 250 billion KRW in overseas sales this year through strengthening existing overseas stores and opening new stores such as the Danang downtown store in Vietnam. Next year, it plans to complete the opening of a new downtown store in Hanoi, Vietnam, and the grand opening of the Singapore Changi Airport store, further strengthening the 'LDF Belt (Lotte Duty Free Belt)' covering the Asia-Pacific region.

Lotte Duty Free currently operates a total of 19 stores in the Asia-Pacific region, including Korea.