Lotte units pair for duty-free shopAfter Shin Dong-bin, chairman of Korea’s Lotte Group and second son of founder Shin Kyuk-ho, was tapped to head Japan’s Lotte Holdings last week, the conglomerate announced the two units will collaborate on a duty-free shop in Thailand.
Korea’s Lotte Group will invest 80 percent for the project while Lotte Holdings, the holding company of Japan’s Lotte Group, will fund the rest, according to the Nihon Keizai Shimbun.
The joint bid represents a clear departure from the previous management practice at the retail group, where the two groups were managed separately under different chairmen and rarely partnered.
A change was signaled when Lotte announced last Thursday that the second son was appointed chairman of Lotte Holdings, previously held by his brother Shin Dong-joo.
Measuring approximately 7,000 square meters (75,000 square feet), the new shop will be in downtown Bangkok and open next year.
Lotte said the store will sell luxury designer brands, Korean and Japanese cosmetics and fashion accessories.
This will be the Japanese unit’s first foray into the duty-free industry, but Lotte said both groups bring important experiences to the table.
“Lotte Duty Free will draw on its experience running duty-free shops for 35 years while the Japanese unit has experience operating business in Thailand,” said a source at Lotte Group.
“Since the duty-free shop will be the first Lotte Duty Free Shop in Thailand, we are taking great care.”
Since the Thai government bans foreign companies from operating duty-free shops independently, Lotte will form a joint venture with a local company.
King Power International currently dominates Thailand’s duty-free industry, though the government declared it will boost competition by handing out more licenses for foreign retailers.
Lotte Duty Free has been boosting its presence around the world.
It opened a store in Japan’s Kansai International Airport last year as part of its drive to expand overseas.
Lotte also opened stores in Guam, Singapore and Indonesia, helping Lotte Duty Free achieve record sales last year of 4.45 trillion won ($3.84 billion).
The successful performance made Lotte Duty Free the worlds’ third-largest duty-free operator by sales, according to the Moodie Report, a London-based publication specializing in the travel retail industry.
The publication tracked the annual ranking of the world’s top 25 travel retailers based on sales last year.
Dufry, a Switzerland-based operator, took the top spot, followed by DFS Galleria, a Hong Kong retail group.
Lotte’s local rival, Shilla Duty Free, also made it to the list at seventh.
Lotte Group will likely further cooperate with the Japanese business in operating duty-free shops in Japan.
“While doing business in Asia, both groups will share staff and seek different partnerships,” a source at Lotte said. “As the Korean and Japanese markets have now matured, Lotte will actively seek mergers and acquisitions abroad as well.”
BY PARK EUN-JEE, LEE SO-AH [email@example.com]