Changi Airport hands Lotte Duty Free 6-year contract for liquor and tobacco

Changi Airport Group (CAG) has awarded its core-category Liquor and Tobacco concession tender to Lotte Duty Free (Lotte) for six years beginning 9 June 2020, making it the first time a new operator would be taking the helm of this key concession since 2013. The tenancy contract covers all 18 liquor & tobacco stores across Changi’s four terminals. CAG said Lotte's proposal stood out with its strong omni-channel and marketing ideas which will propel CAG’s travel retail strategy forward.

This comes after DFS Group announced in August that it is ending its 40-year liquor and tobacco partnership with CAG, with its duty-free stores to close in June 2020.

CAG said Lotte possesses extensive experience in the travel retail industry including in the liquor & tobacco segment. With concession experience in markets like Australia, Japan, New Zealand, South Korea and Vietnam, it has a proven track record of operating at a scale similar to that at Changi Airport and possesses deep consumer understanding. The CAG-Lotte partnership will leverage the strengths of both parties to grow the concession at Changi Airport, the press statement added.

Beginning operations in June 2020, Lotte will offer "the widest range of" liquor products and brands housed within the 18 liquor and tobacco stores, all of which will be rejuvenated with fresh designs to appeal to both the connoisseur and new consumer segments, in particular the Millennials.

The iconic Terminal 3 Liquor and Tobacco duplex store will see a complete revamp of its store façade to maximise visual impact and visibility into both levels of the store. In addition, all stores will be infused with lifestyle elements and packed with experiential activations, such as product personalisation in the form of customised whiskey-blending. They will also sport new and exciting liquor boutique concepts and specially curated zones featuring the latest and trendiest products in the market. According to CAG, all these, together with a host of annual large-scale consumer events, will raise the shopping experience at Changi Airport "to new levels".

The transition towards the start of the new concession will be planned carefully with both the incoming and outgoing tenants. Renovation works in the stores will be conducted in phases to ensure that customers continue to enjoy a high standard of service.

The award of the Liquor and Tobacco concession concludes a detailed evaluation process undertaken for the tender, which closed on 26 August 2019. CAG said in the press statement that the tender attracted interest from top travel retailers with international operations and experience. The proposals received were evaluated based on a holistic set of criteria covering both qualitative and quantitative factors.

Lim Peck Hoon, CAG’s executive vice president, commercial, said the Liquor and Tobacco concession is one of the largest at Changi Airport and it presents unique opportunities for marketing innovation and customer engagement.

She added that Lotte put forth the strongest and most compelling proposal overall. It is aligned with CAG’s vision to offer passengers a seamless omni-channel retail experience and new retail-tainment initiatives leveraging smart technologies. Lotte also demonstrated a keen understanding of the market environment with a sound business plan supported by a competitive financial bid and backed up by solid business fundamentals, Lim explained.

"We were deeply impressed with the high quality of the tender proposals received and it was not an easy decision to make. We thank all the parties for their participation," she said.

Kap Lee, CEO of Lotte Duty Free said: “Winning the Changi Airport’s Liquor & Tobacco duty free concession is of great significance in terms of establishing a bridgehead to achieve our vision of 'Global No.1 Travel Retail'. Lotte Duty Free will put its continuous efforts to grow as a global brand with Changi Airport.”

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