The biggest travel retailer in the South Korean market, Lotte Duty Free, is stepping up its promotional campaigns as it seeks to lift sales from its home market South Koreans who are traveling abroad.
During the final weekend of August, the company’s CEO Kim Joo-nam launched an online shopping festival called ‘Daily Duty Free’ in advance of the Chuseok (추석) Golden Week vacation. This is South Korea’s equivalent of Thanksgiving, also known as Hangawi, and this year the holiday takes place from September 16-18. It will see millions of Koreans on the move, traveling both domestically and abroad, to see friends and family.
The Daily Duty Free promotion targets those planning to go overseas in a month-long, large-scale event. Lotte Duty Free’s online arm will showcase roughly 400 brands and 10,000 products on its platforms with discounts of up to 70%. For the Fall/Winter season, the categories will include whiskies, jewelry, eyewear, beauty, and others.
Promotions and deep discounts have become a major tactical weapon used by duty-free retailers like Lotte, Shilla, and Shinsegae Duty Free, whose parent conglomerate of the same name is now chaired by billionaire Chung Yong-jin.
The simple aim is to lure domestic shoppers to spend more. The downtown duty-free market in Korea—which had been so reliant on Chinese shoppers pre-pandemic—has had to shift focus to local outbound Koreans to revive falling sales over recent years.
In 2023, duty-free revenue in South Korea fell back to 13.76 trillion South Korean won ($10.3 billion) according to data from Statista, reversing a slight recovery the year prior. However, the market is well down on its 2019 peak of $18.6 billion as reported by the Yonhap News Agency last year.
Chinese numbers are rebounding, less so their spending as Japan has become a big attraction due to a favorable exchange rate. Therefore, Korea’s duty-free operators have to try harder to tempt local shoppers into their stores.
During the month-long Daily Duty Free promotion, products will include premium cosmetics and perfumes from international brands such as Estée Lauder, Jo Malone London, SK-II, and Tom Ford Beauty. More local and regional labels like Dotsay, Orthomol, and Pulior will also be taking part.
Weekly headline offers
Lotte has also introduced a ‘Weekly Hot Deal’ to ensure that domestic shoppers do not suffer from promotional fatigue. The weekly event will introduce 30 new products at “reasonable prices” as well as the ‘MD’s Pick’, a selection of extra special items chosen by Lotte Duty Free’s buyers.
One positive upward trend is rising demand for wine and spirits from domestic customers according to Lotte Duty Free’s head of merchandising, Hyungil Im. He said that the ability of Korean duty-free retailers to sell alcohol through online channels since last July has had a positive impact. As a result, Lotte Duty Free now has a specialized liquor section on its domestic e-commerce platform.
The Daily Duty Free promotion will also be using both on- and offline channels to give customers the chance to take part in prize events such as a roulette promotion with a 100% chance of winning random giveaways. In addition, during the event period, among shoppers who purchase more than $200 with KakaoPay (Korea’s equivalent of PayPal), one will be selected from a raffle to win a Fred necklace worth more than $5,000.
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