Guam – The fight between DFS and Lotte Duty Free over the Guam Airport concession has spilled over onto the Moodie Report website.
The Moodie Report tracks the travel retail, and duty free business. Last week, it printed stories about the rival firms who are competing for the Guam Airport duty free concession.
A February 19th posting about Lotte is titled “Lotte claims soaring success at Soekarno-Hatta Airport.”
The posting refers to Lotte’s claims that “it generated sales of over US$8.7 million in its 11 months of trading at the Indonesian gateway … equating to 40% of total retail revenues at the airport.”
Lotte maintains that those numbers make it the overall market leader in Jakarta, putting it ahead of “established competitors, including DFS and Plaza Bali,” according to the Moodie report.
The report goes on to say that the South Korean Chaebol has “ambitions to further develop its overseas airport duty free business, citing the current airport retail tender in Guam.”
And, referring to Lotte’s Guam bid, Lotte says its Guam bid proposes a “strict localization strategy, involving remodelling the airport interior and offering spaces for local brands.”
It also makes reference to the Lotte Group’s recent $9 million dollar decision to renovate the Aurora Resort & Spa, which it leases. And Lotte’s prediction that “target marketing could be successfully supported by co-events or co-promotions between the resort and the duty free shop” at the Guam Airport, if Lotte wins the bid, note the Moodie editors.
Moodie asked for reaction from DFS Group’s Chief Operating Officer Michael Schriver who responded the next day by tells Moodie’s that “the Korean retailer was not comparing like for like” in its claim to be the market leader in Jakarta.
Schriver told Moodie’s that “to compare our operations with Lotte’s in Jakarta in terms of productivity is about as relevant as comparing DFS’s business at Changi Airport, where we have operated the core duty free liquor & tobacco concession for over 30 years along with 19 separate concessions in fashion, watches, wine & cigars to the two general merchandise concessions Lotte acquired last year.”
Schriver also points out that “Lotte operates a 9,400sq ft duty free concession compared to DFS’s duty free concession at just over 5,000sq ft,” and, he argues, “based on DFS’s actual duty free sales and the Lotte information … DFS duty free store productivity is over +30% higher than Lotte at US$1,320 per square foot”
The Moodie editors point out that “based on both company’s figures and statements, Moodie Research estimates DFS’s duty free sales at Soekarno-Hatta International to be around US$6.7 million, with duty paid and destination merchandise sales on top.”
And with reference to its bid for renewal of the Guam duty free concession, Schriver told Moodie’s that the DFS Group is intensely committed to the local Guam market and they have “proposed a substantial commitment of space to locally made products in a unique locally inspired environment,” in their Guam bid.
DFS he said, has also “proposed a local [Guam] architectural design concept for all the common areas surrounding our stores to leave the traveller with a strong taste of the Guam culture on departure.”