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[Newsmaker] Lotte reopens duty free at World Tower

Jan. 5, 2017 - 15:20 By Won Ho-jung
On Thursday morning, the duty-free floors of Lotte World Mall were bustling with Chinese tourists dragging travel luggage as they stood in long lines in the cosmetics section. Shoppers handed store attendants cell phones with pictures of specific products they wanted to buy. Periodically, announcements in Mandarin rang out from the store speakers. 

Lotte’s duty-free operator reopened its World Tower outlet Thursday after receiving a final operating license from the Korean customs regulator. The store had been closed for 193 days since last June.

The company said it expected to have 8,000 visitors on opening day, including 5,000 Chinese tourists brought in through travel agencies.

Lotte Duty Free had to close the outlet when it failed to renew its duty-free license in November 2015.

Last month, it was one of three large companies awarded additional licenses to operate duty-free stores in Seoul after a drawn-out and brutal competition.

(Lotte Duty Free)

Lotte’s license was considered hard-won because of allegations the company had lobbied the government to rig the duty-free licensing process. The Korea Customs Service awarded the license to Lotte, but said it would revoke it if the ongoing investigation revealed Lotte had bribed officials in the past.

Lotte Duty Free had kept its stores intact and put the outlet’s 1,300 employees on temporary leave, allowing it to reopen as soon as it received approval.

For now, the branch has reopened stores for 350 brands, with additional stores set to open in the coming months. Lotte Duty Free said the outlet will eventually have up to 700 brands in stores in the actual Lotte World Tower, which is waiting on a city permit to open to the public. 

The branch hopes to reach 1.2 trillion won ($1 billion) in sales this year. Last year, sales had reached 380 billion won before the outlet closed its doors in June. 

However, circumstances have changed for the World Tower branch since last year. Hyundai Department Store and Shinsegae DF, the other two companies that won duty-free licenses in December, are planning to open their own outlets in southern Seoul this year.

Lotte hopes to stay competitive by “connecting the World Tower store with other culture and tourism resources around the Lotte World Tower,” Lotte Duty Free CEO Jang Sun-wook said in a statement.

Shoppers stand in line in the cosmetics section of Lotte Duty Free‘s World Tower branch in southern Seoul, Thursday morning. (Won Ho-jung/The Korea Herald)

One advantage of the outlet is that it houses the coveted luxury trifecta of Louis Vuitton, Chanel and Hermes, although only the Hermes store was in operation Thursday. Louis Vuitton and Chanel plan to reopen their stores in the coming months after completing construction and restocking inventory.

“The brands could have decided to take their business elsewhere, like to newly opened duty-free stores, but they waited out the six months for us,” the spokesman said.

The outlet came close to pushing back its reopening. Representatives from KCS had visited the stores Tuesday for a final on-site inspection before issuing the license at last.

“We expected the license to come yesterday, so that we could open today,” a Lotte Duty Free spokesman told The Korea Herald. “But the process took longer than we thought. The World Tower branch manager personally went to Seoul Main Customs to collect the license this morning so that we could open on time.” 

By Won Ho-jung (hjwon@heraldcorp.com)