Lotte fights to keep duty-free shops

The licenses for Lotte’s lucrative duty-free stores in downtown Seoul will expire at the end of the year, and in a move to make sure those licenses are reissued, Lotte Duty Free unveiled plans for how it would continue to contribute to local tourism.

The operator pledged its future efforts would bring an additional 12 million tourists by 2020.

Lotte Duty Free is desperate to keep the government-backed licenses for its outlets in Sogong-dong and Jamsil, as Shinsegae and Doosan Group are also interested.

Conglomerates have been drawn to the duty-free industry in recent years because of its double-digit sales growth, thanks to the increasing number of tourists visiting Korea.

Korea Customs Service will receive submissions by Friday and announce the winners sometime around October. Shinsegae and Doosan have said they will submit, but have not specified which licenses they want.

Along with Lotte’s branches, the licenses for WalkerHill Duty Free by SK Network and Shinsegae Duty Free in Busan will also be up for grabs.

Since the customs agency will likely take into account public interest in the reviewing process, Lotte is promoting a plan that focuses on boosting tourism and promoting cooperation with local merchants.

Lotte Duty Free will spearhead different tourism programs such as cruise ship tours and K-Pop concerts, the company said.

Lotte Duty Free has been on the defensive to regain the licenses since parent company Lotte Group’s corporate practices came under scrutiny last month following a feud in the founding family over control of the group.

Some lawmakers raised concerns about Lotte Duty Free’s dominance in the industry during a national audit last month.

Sales at Lotte Duty Free, the top operator, accounted for 50 percent, with 2.29 trillion won ($1.9 billion) in sales, while Shilla had 30 percent, with 1.35 trillion won according to a Korea Customs Service report released on the request of Rep. Shim Jae-chul of the ruling Saenuri Party.

The lawmaker called for limiting the operator’s hold on the market.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]