SOUTH KOREA REPORT: SHILLA DUTY FREE
Online sales have increased strongly during the past 18 months and continue to offer important revenue growth opportunities that complement the company’s offline duty free offer in its downtown stores.
TRBusiness
listed earlier this year. “Also, South Korea’s Gentle fashion sunglasses
Monster
brand has entered our flagship store basement floor, opening its first downtown duty free shop,” said the spokesman. In addition to introducing new
YEARS 1997-2017
Chinese visitors who in 2016 accounted for a major share of overseas customer sales. Foreign visitors account for
almost all sales in the Shilla Duty Free Jeju downtown store and for about 80% of purchases in the Seoul flagship store. Many of these visitors, particularly
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the Chinese, are now looking for smaller, more fashionable South Korean brands that they are already familiar with or aware of through media coverage in China.
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brands, Shilla Duty Free uses pop up shops and sales promotions to provide a continual stream of new attractions in its downtown and airport shops. The Seoul flagship store has
five pop up positions in the main entrance hall to create a constantly changing front entrance lobby. When TRBusiness visited the store
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Hunt for new brands “We are endeavouring to find new brands for online and offline sales,” emphasised the Hotel Shilla spokesman. “Our merchandising teams are eager to source new labels to list.” Shilla’s Seoul downtown store
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recently the three smaller pop up shop positions were occupied by cosmetics brands Shangpree and Papa Recipe together with beauty appliance brand Foreo, while Chanel and Kiehl’s occupied the two larger pop up positions. “Pop up shop positions are usually
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occupied from two weeks to two months [by one particular company],” added the spokesman. “Some new and emerging brands
has introduced several new brands recently including Age 20s, a South Korean cosmetics brand that was
[often have the opportunity to take up these positions]. We try them first, and then we see if we can consider a more permanent position for them in the store.” Meanwhile, Shilla Duty Free is
New Hotel Shilla downtown Seoul flagship
In early March of this year Shilla Duty Free began site clearance in preparation to build the company’s new flagship downtown store on an adjacent plot in the Hotel Shilla compound, to replace the existing overcrowded Seoul flagship store. Shilla received approval of its plans
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also looking to increase revenue at Incheon International Airport where the company operates shops and boutiques in Terminal 1 under the current five-year concession contract that started on 1 September, 2015. Shilla operates three Incheon
Airport concessions that cover perfume & cosmetics, liquor & tobacco, and general merchandise including luxury boutiques. Outbound South Korean
passengers make up the majority of Shilla’s total sales at the airport (55%).
Maison de Chronus “South Korean and Chinese passenger purchases are almost equal at Incheon Airport,” added the Hotel Shilla spokesman. “Cosmetics generate the most sales.” Recent new additions by Shilla
at Incheon Airport include Maison de Chronus, a mixed luxury watch brands boutique that opened in February and is positioned in front of departure gate 28 in Terminal 1’s east wing. The location was used previously as a watches area. “We have renovated the area as a
Maison de Chronos boutique,” said the spokesman. It’s the first time to open Maison de Chronos at Incheon Airport, but we already have this mixed brand watches boutique in
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from the Seoul Metropolitan government in 2016, which call for the larger flagship store to be built on the present ground level car park, which is situated at the base of the entrance driveway slope that serves the existing Shilla Duty Free Shop. Slated to open in about two years’
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The entire Hotel Shilla Duty Free new flagship store project will take around five years to complete and once the new downtown store is opened, the existing store will be demolished and replaced by a traditional three-storey Korean inn- style hotel built on the present shop site. The hotel is planned to complement
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the nearby historic Yeong Bin Gwan state guesthouse, which lies between Shilla Duty Free Shop and Hotel Shilla in what is one of Seoul’s important
historic locations. Shilla Duty Free also has shareholdings
time, the new shop is expected to be at least 10,000sq m in area compared with the current shop size of 7,000sq m. In addition to retail space, the new shop will include a large basement car park and other customer service facilities.
108 TRBUSINESS
in two other downtown duty free shops in Seoul. Jointly with global construction
company HDC Group, Shilla Duty Free owns the 60,000sq m Shilla I’Park Duty Free store which is South Korea’s largest downtown duty free shop in terms of
Jointly with global construction company HDC Group, Shilla Duty Free owns the 60,000sq m Shilla I’Park Duty Free store.
MAY 2017
retail space [see an interview with a representative from HDC Shilla on p111]. Shilla also holds a minority stake
in a Dongwha Duty Free store which is located in Seoul’s central City Hall district. The SME store, which is South Korea’s oldest established downtown duty free shop, registered sales of about $300m in 2016.
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