Lotte World Tower duty free aims for world No.1 store

Lotte Duty Free CEO Lee Hong-gyun speaks in a recent press briefing on his vision to make Lotte World Tower Duty Free into an international tourist attraction, at the tower in Jamsil, Seoul, Wednesday. / Courtesy of Lotte Duty Free

By Park Jin-hai

The race for the new licenses for three duty free stores in downtown Seoul is coming down to the wire, with the Korea Customs Service’s decision on the winners due Saturday.

Four companies -- Shinsegae, Doosan Group, SK Group and Lotte Group -- are in the battle for the licenses.

Among them, Lotte is leading the pack, with its Chairman at the helm presenting a plan to make World Tower Duty Free the world’s top duty free shop in sales within 10 years.

“Lotte duty free stores’ global ranking has been raised to third place, because we have been promoting the local tourism industry and duty free business for the past 35 years,” said Shin Dong-bin, Lotte Group Chairman, outlining the company’s “Vision 2020” last month. “We will make all efforts to elevate it to the world’s top by 2020, becoming the Samsung Electronics of the retail industry.”

Under the vision, Lotte Group will inject 1.2 trillion won over five years, turning its World Tower store into the largest duty free shop in Korea and a major tourist attraction in southern Seoul, where tourist spots are scarcer than northern Seoul.

The World Tower store will be expanded to 36,000 square meters, the largest single store in Korea, from the 20,000 square meters, by the latter half of next year, in time for the completion of the 123-story Lotte World Tower.

It will become a one-stop tourism and shopping complex where visitors can enjoy performances, cultural experiences and shopping.

With the changes, Lotte has estimated that by 2020 it will have 5 trillion won of foreign currency revenue, an added value of 4.8 trillion won and direct and indirect employment of 27,000 people. The number of foreign visitors during the period is expected to be 28 million.

Lotte Duty Free, with an investment of over one trillion won, plans to make its Lotte World Tower store into a top duty free store in ten years as well as a landmark in Northeast Asia. / Courtesy of Lotte Duty Free

“The World Tower Duty Free has been designed as a major tourist attraction from the very beginning,” said Lotte Duty Free CEO Lee Hong-gyun. “Becoming an international landmark, we will make it the store whose sales will surpass those of the company’s most lucrative duty free shop in Sogongdong. We will save no effort so that the store can contribute to a critical role in promoting the local tourism industry.”

Lotte will create a “Gangnam Tourism Belt” to reach its goals.

To add more tourist attractions, Lotte will build a musical fountain, the nation’s tallest at 123 meters, emulating those of the Marina Bay Sands hotel in Singapore, or the Burj Khalifa in Dubai.

With the highest observatory on the top floor of the World Tower building, a vineyard classic hall, an aquarium, a multiplex and Lotte World Adventure, along with the nation’s largest duty free shop, Lotte is hoping to make World Tower the largest tourism hub south of the Han river.

Lotte Duty Free has been taking steps to achieve the vision. It has signed agreements with municipal authorities in Songpa-gu, Gangnam-gu and Seocho-gu to cooperate in revitalizing tourism in Gangnam.

It is also honoring its pledge to invest 1.8 billion won by 2017 to develop Songpa-gu’s regional economy. The fund will be used to develop the traditional market, organize festivals, develop local products and add English translations to signs and menus. Lately, it delivered another 200 million won in corporate social responsibility funds to the Gangnam-gu Office, aiming to provide more cultural events.

Lotte's duty free stores here attracted 1.55 million foreign tourists last year, 11 percent of visitors to Korea.

Lotte Duty Free in Sogondong, central Seoul, is No.1 in sales as a single store in Korean retail. Its annual sales in 2014 were 1.98 trillion won, up 33 percent from 1.5 trillion won a year earlier. Despite the Middle East Respiratory Syndrome outbreak, it recorded 1.76 trillion won in the first 10 months of this year, thanks largely to Chinese tourists.

Lotte World Tower Duty Free houses some 600 brand stores including the largest selection of luxury brands, boutiques and flagship stores in southeastern Seoul. It has shown 21 percent compound annual growth between 2010 and 2014. In particular, it had 44 percent growth last year.

The company expects its 2020 sales will top 1.5 trillion won and 4.5 trillion won in 2025.

The company raked in a whopping 2.5 trillion won ($2.2 billion) in sales from the two outlets last year.