'The "Recession Swamp" Duty-Free Industry... Lotte Duty Free's "Winning Move" with K-Fashion Platform'

Opening a Platform Gathering Domestic Designer Brands Within the Year
Planning to Serve as a 'Bridgehead' for Overseas Expansion with a B2B Concept
Growing Interest in New Business Ventures Amid Duty-Free Industry Slump

Lotte Duty Free is launching a K-fashion platform overseas. The plan is to create a foothold for domestic designer brands to enter foreign markets and lead the K-fashion craze. As the duty-free industry faces a prolonged downturn, Lotte Duty Free aims to secure the K-fashion platform as a new growth engine.

According to a comprehensive report by Asia Economy on the 27th, Lotte Duty Free will open a K-fashion platform gathering domestic designer brands within this year. It is the overseas version of platforms like 'Musinsa' and 'W Concept,' which collect domestic designer brands in one place and provide sales channels. Lotte Duty Free expects that as global interest in K-culture is subdividing into K-food, K-beauty, K-pop, and K-content, K-fashion will also attract attention in the global market.

Prolonged Downturn... Lotte Duty Free to Launch K-Fashion Platform Within the Year

The platform that Lotte Duty Free is introducing will approach the market with a B2B model connecting overseas fashion companies and buyers, rather than a B2C model that only sells to consumers in foreign markets. The target companies are domestic designer brands seeking overseas expansion but struggling with global marketing due to lack of funds and manpower, such as 'Mardi,' 'Matin Kim,' and 'Marithe Francois Girbaud,' which are considered successful examples of domestic designer brands.

A Lotte Duty Free official said, “We believe that by utilizing our solid overseas network, we can help domestic designer brands enter foreign markets more easily. Although nothing has been concretized yet, the focus is not just on bringing products to sell but on pioneering overseas sales channels for K-fashion.”

Lotte Duty Free has chosen the K-fashion platform, a non-duty-free business, as a new growth engine amid the prolonged downturn in the duty-free industry. According to the Korea Duty Free Association, last year, the domestic duty-free industry’s sales dropped sharply by 22.7% to 13.7586 trillion won from 17.8164 trillion won the previous year. This was partly due to lowering the commission fees for daigou (Chinese personal shoppers), which had surged during the COVID-19 period, but mainly because of the decline in Chinese group tourists visiting Korea.

In Lotte Duty Free’s case, withdrawing from the Incheon Airport duty-free store also affected poor performance. Recently, major duty-free stores have been strengthening marketing to domestic customers and devising strategies to improve profitability, but the outlook for the duty-free business remains bleak.

Lotte Duty Free has also achieved early results in its new business. Recently, it participated in 'Coterie New York,' where overseas fashion buyers gather, and secured export contracts for K-fashion brands. Operating a joint booth with the Seoul Metropolitan Government, it supported domestic designer brands such as Ma & Me, Tina Blossom, and Preno, achieving about 50 deals worth $200,000. In August last year, it opened a 'Seoul Fashion Week exclusive zone' at the Jamsil World Tower store, and in September, opened another exclusive zone at the Busan store. The Seoul Metropolitan Government is responsible for selecting, managing, and promoting the brands, while Lotte Duty Free assists with store operations and brand sales performance management, building connections with domestic designer brands.

'Musinsa' and 'Balan' Also Expanding Overseas Sales Channels for K-Designer Brands

Domestic fashion platforms are also expanding their overseas presence by promoting domestic designer brands. 'Musinsa' is putting the most effort into expanding overseas sales channels for domestic designer brands. In the second half of last year, it opened the 'Musinsa Global Store.' It currently sells products from over 1,000 domestic designer brands in 13 countries, including Japan, the United States, Singapore, Canada, Hong Kong, and Taiwan.

Musinsa is also opening offline stores in overseas markets. Two years ago, Musinsa opened 'Musinsa' DF stores at Shilla Duty Free and Hyundai Department Store Duty Free, and this year in the first half, it plans to open its first offline store at Lotte Duty Free Tokyo Ginza in Japan.

The luxury platform Balan’s business goal this year is the overseas expansion of domestic designer brands. As consumption of luxury goods declines, it has found new growth potential in K-fashion. After nurturing domestic designer brands, Balan plans to launch them on its application (app) and enter Southeast Asia, Japan, and other markets within the year.

Experts say that the most important factor in the fashion industry is 'inventory management,' so creating sufficient demand is essential groundwork. Although global interest in K-fashion is growing, it may be limited to certain fandoms. Especially since global fashion trends are created in Europe and enter Korea with a 2-3 year lag, domestic designer brands leading K-fashion cannot guarantee success in overseas markets like K-food or Hallyu culture, which are loved globally.

Professor Cho Chun-han of the Fashion Design Department at Gyeonggi Science and Technology University said, “Large domestic fashion companies do not have large production capacities, so even if they go overseas, they do not have the capability to lead global trends. To attract interest in K-fashion, it is necessary to approach with a strategy of influencer marketing featuring specific figures such as idols or soccer players to capture fandoms or niche markets.”

This content was produced with the assistance of AI translation services.