Lotte Duty Free to Close COEX Branch... "Focus and Prioritize in the Endemic Era"

Decision Not to Apply for Patent Renewal at COEX Branch... Scheduled to Expire This December
Plan to Maximize Operational Efficiency Focusing on Myeongdong Main Branch and World Tower Branch

[Asia Economy Reporter Yuri Kim] Lotte Duty Free will cease operations at its COEX branch in Samseong-dong, Seoul, in the second half of this year. The company plans to focus and prioritize in the endemic (periodic infectious disease outbreak) era.

On the 8th, Lotte Duty Free announced that it will not apply for the renewal of the COEX branch's license. This decision was approved at the Hotel Lotte board meeting held that afternoon at Lotte Hotel Seoul. The license period for Lotte Duty Free COEX branch lasts until December 31, 2022, and operations are expected to end within the second half of this year.

Lotte Duty Free COEX branch began operations in 2010 when Lotte acquired AK Duty Free from the Aekyung Group. The current license, which is about to expire, was approved in December 2017 for a five-year operation by Hotel Lotte.

Lotte Duty Free plans to consolidate its previously dispersed duty-free operations in the Gangnam area into the Jamsil World Tower branch. The World Tower branch has become one of Seoul's representative duty-free stores alongside the Myeongdong main branch, boasting the largest area among domestic downtown duty-free shops and the highest number of brands in the Gangnam area. Following its focus and prioritization strategy, Lotte Duty Free aims to strengthen solid management centered on the Myeongdong main branch in the Gangbuk area and the World Tower branch in the Gangnam area, while enhancing competitiveness through expanding product and brand entries and intensifying marketing activities.

A Lotte Duty Free official stated, "This decision is an extraordinary measure to make a fresh leap forward ahead of the endemic. We plan to increase investment so that customers of the COEX branch can be absorbed by the Lotte World Tower branch and create synergy by utilizing surrounding tourism infrastructure such as Lotte World Tower and Lotte World."

Meanwhile, the domestic duty-free market remains challenging due to intensified competition from new entrants and the impact of COVID-19. No duty-free companies applied for the new license bid for downtown Seoul duty-free stores, which closed on the 30th of last month, targeting large corporations. According to the Korea Duty Free Association, the number of domestic duty-free shops has decreased from 57 at the end of 2019, before COVID-19, to 48 currently.