Indonesia Expat
Business Profile

Tax-Free Paradise: Lotte Duty Free Indonesia

Lotte Co., Ltd. is a multinational food, chemicals and shopping corporation, which is South Korea’s eighth largest business conglomerate. Their duty free division entered Indonesia in 2012, headed up by Yoon Hyun Cheol, who has worked for Lotte for 20 years in various departments, including merchandise, human resources, logistics, and strategy projects. For the last three years, Mr. Yoon has been running Lotte Duty Free Indonesia in Jakarta. Turning over €3.535 billion in 2014, Lotte Duty Free is a major contender on the global travel retail market.  

Why has Lotte found Indonesia such an interesting market to enter?

Indonesia has strong potential and resources, a large population with such beautiful cultural diversity, and a land rich with natural resources. The Indonesia market is very strong, particularly Jakarta, because it has a big population with a strong purchasing power and it is the centre of business activities. Indonesians are always keeping up with global trends in fashion, beauty, and food. Indonesia has a lot of interest in Korean culture, and is excited to know more about Korea’s products and services.

How would you describe the Korea-Indonesia business relationship?

I think we have three correlations. First is the government, which has built a great diplomatic cooperation and communication. Second is industry relations; both Korea and Indonesia have always had good cooperation in industry which has helped Indonesia’s growth. And the third is personal relations – we have cooperated in raising the quality of human resources through conducting exchanges between Korean and Indonesian students and workers. The proof is that Korean people want to come to Indonesia to see the culture and to study, and many Indonesians go to Korea to experience Korean culture and to study, too.

How many stores do you have in Indonesia today?

Lotte Duty Free first entered Indonesia in January 2012 with a 880-square metre store at Soekarno-Hatta International Airport’s Terminal 2, followed by the opening of its first duty-free shop in downtown Jakarta, at Lotte Shopping Avenue, which spans 5,500 square metres.

What does your domestic duty-free store offer shoppers?

We started in 1980 with the first Lotte Duty Free shop in Korea, and we have since opened stores in Russia, Singapore, Japan, Guam, and Indonesia. For Indonesian people, domestic duty free is the right place to find nice treats to bring to their family or friends abroad, while also experiencing a new concept of duty-free shopping in a downtown mall without time restrictions or having to worry about missing flights.

What is the history behind the founding of Lotte Duty Free?

The first duty free store operated in 1946 in a harbour in Iceland, while the modern concept of a duty-free airport started in 1959 in France to engage more export-import activity, as well as give more value to foreign money through the tourism industry.

In Korea itself, shops that sell imported goods first opened in 1964. It started with only government companies, then in the 1980s private companies such as Lotte made a breakthrough in this business to give more value to foreign money while giving consistent contributions to the tourism industry.

At first, it was quite a struggle to open a duty-free shop since it is hard to obtain a license from the government, who have strict examinations and will only give a license to the best company. Today, duty-free is a popular business with a competitive market.

How is the shopping mechanism at Lotte Duty Free at Lotte Shopping Avenue?

Make sure to bring your passport and flight ticket before visiting the store. Choose your items, enjoy promotions, and save up to 20 percent. The customer will receive a Bill of Exchange afterwards; please keep it and show it to pick up the purchased goods at Soekarno-Hatta Airport Lotte Duty Free in Terminal 2 before departing.

What is your company’s mission?

Wherever you travel, we’ll be there. That is our goal: becoming the best luxury shopping destination for worldwide travellers. We value unstoppable services to satisfy Lotte customers around the world.

As the President Director, what makes up the majority of your workload?

The most important thing in management is communication with co-workers. Whenever I have the chance, I like to share with my employees so they will know easily what we have to do together and which direction we will go in. Also I encourage them with operational management and ways to achieve its goals, building synergy in all departments, as well as making Lotte Duty Free the best place to work.

What challenges do you face in your industry?

Other duty-free and tax and refund shops. Also other stores that offer competing prices and discounts, and the preference of local Indonesians to shop in duty-free stores abroad.

Are you noticing a shift in the way people shop?

Now people are looking for the easiest and fastest ways to shop. That’s why online businesses are growing very fast. In Indonesia we can’t compete that, but we have our strong advantage by giving a different kind of shopping experience. We will also build a strong relationship with customers to feel comfortable and satisfied to shop.

What is the main item that shoppers purchase at your store?

We provide the best selection of liquor and tobacco, also premium wines from Europe, Africa, America, and Australia. But since we have a customer allowance for alcohol, the bestselling items are cosmetics and perfumes. Some of the products we sell are not available in regular retail stores, for instance we are the only store to carry Chanel duty-free cosmetic products in Indonesia.

How are your two stores managed?

We have the same management for both our airport and downtown shops. The difference is only that our downtown shop is located in a ‘Bounded Area’ of duty-free goods, which allows customers to take their purchased goods home before departure to the airport.

Can you tell us more about Lotte Duty Free’s accomplishments?

In July 2015, The Moodie Report, the famous worldwide travel retail news, ranked Lotte Duty Free as a Global Top 3 Duty-Free Shop with a total turnover of €3.535 billion in 2014.

The record consists of sales from Korea, Jakarta, Singapore, Guam, and Japan stores, and online sales. This year we will expand more, opening stores in Japan and Bangkok.

Do you have any special promotions on at the moment?

At the end of March we’re planning to have another Night Sale Promotion that offers up to 80 percent discount.

Have you any special events planned?

We have our regular exhibition in our store named Gallery at Lotte Duty Free as an appreciation of local art and photography talents. Also we have annual gatherings for our VIP members.

What are you most proud of achieving in your career in retail so far?

When our downtown Jakarta store first opened, our Cosmetics Zone won the ‘Best New Store 2013’ prize from Duty Free News International. Lotte Duty Free achieved twice the market share from only 20 percent of the retail space at Jakarta Airport.

We contribute to society through a social book donation programme in celebration of World Book Day on April 23, inviting everyone to donate their book and drop it by our stores. The books are distributed to children in various regions of Indonesia. We strive to have an active social responsibility programme in the future.

Even though there will always be competitors, in 5-10 years Lotte Duty Free will be one of the world’s most important travel retail stores. I have tried to conduct new regulations to develop Lotte Duty Free as a best business and working place for employees. I believe I will able to contribute in supporting growth and increase Indonesia’s economic sector.

Thank you, Mr. Yoon. For more information, please visit the Lotte Duty Free website.

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