ON THE RISE IN SOUTH KOREA: SAMICK
Samick’s revenue reaches $61m in first year of trading
Much like City Plus, Samick Duty Free is also hoping that a recent pick up in Japanese visitors and South Korean outbound travellers will help to offset the expected fall in spending by Chinese passengers this year, as David Hayes reports.
“Before the THAAD missile crisis began our sales growth rate in January and February this year was almost +27% for cosmetics and about +36% for perfume,” revealed Kong You Seon, Managing Director and CFO of Samick Duty Free in an exclusive interview with TRBusiness. “The total combined growth rate
Above: Samick Duty Free's revenue reached $61m in its first year.
A
s has been well documented by TRBusiness, Beijing’s ban on group tour visits to South
Korea is affecting sales at airport and downtown duty free shops across the country. In many outlets revenue is reported to be down about 30% compared with last year when the ban was first introduced. Sales at Samick’s Incheon Airport
perfume and cosmetics store had previously been growing in double digits every month since the shop opened on 7 December, 2015. Impressively, revenue reached
US$61m in 2016 during the company’s first year of operations, but since the Chinese government imposed its group tour travel ban to South Korea in mid-March this year, mainland visitor numbers have fallen sharply, causing Chinese customer purchases to drop.
“Chinese passengers usually buy online through downtown stores before they come to the airport, but we cannot offer online shopping as we do not operate a downtown store.”
Kong You Seon, Managing Director and CFO of Samick Duty Free
22 TRBUSINESS
was +27%, but our sales growth rate in the second half of 2016 was 14% compared to the first half last year. When we launched this business
our store logistics were not perfect but now our arrangements have improved. “Also, the second half growth rate
of outbound passengers last year was +9%, so for those reasons our second half revenue growth was +9%.”
Better margins on P&C Samick Duty Free is part of the diversified Samick Speco Group that includes Speco, an asphalt plant company, musical instruments manufacturing, and caster wheel production activities. Samick operates a single 234sq m
perfume and cosmetics shop under concession DF11 in Incheon Airport’s central main terminal area facing the Louis Vuitton boutique. In fact, Samick has chosen to sell
only fragrances and cosmetics at this store even though DF11 also permits the sale of ‘miscellaneous goods’. “We operate only perfume and
cosmetics in our shop as there is a bigger margin on these than for other items,” Kong explained. “We are located at the entrance to
the concourse shuttle train. At our location South Korean passengers [represent] 44% of our customers and foreign visitors make up 56%. “Last October the government’s Tax Refund counter moved to a new
location in front of our store. Usually when visitors get a tax refund they spend the money [they get back].” Samick displays 43 perfume and
cosmetic brands that include 10 popular South Korean cosmetics brands, mostly selling face mask products “We have 10 K-Beauty brands,
mostly they are face masks and the retail price is cheap,” Kong said. Sulwhasoo, from South Korean
beauty giant AmorePacific is Samick’s top selling brand followed by Estée Lauder, Christian Dior and LG’s The History of Whoo (also a South Korean company). “Customers can see our shop
from the central concourse. We have designed the shop’s visual image but each brand designs and constructs its own cosmetics display stand,” Kong explained. “Visibility is most important for
our suppliers. The major customers are Chinese, so we have put South Korean brands at the front and back of our store.” Samick Duty Free’s shop
interior and brand selection both cater to customers doing last minute shopping before taking the shuttle train to the T1 concourse terminal. “Chinese passengers usually buy
online through downtown stores before they come to the airport, but we cannot offer online shopping as we do not operate a downtown store,” Kong remarked. “Usually Chinese customers buy a
little more than Korean passengers at Incheon Airport. “Chinese customers focus on
South Korean branded products while our South Korean customers focus on foreign brands.” «
JULY 2017
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