SOUTH KOREA REPORT: SHINSEGAE DUTY FREE Perfume & cosmetics accounts
for about 70% of online sales, while fashion items are the second largest category purchased online, with sunglasses, small leather goods and shoes being the most popular products. Online purchases now account
for 50% of Shinsegae Myeongdong store’s total perfume & cosmetics sales and 25% of its fashion accessories’ revenue. “Even though we have to rely more
on online sales, as travel retailers we do not get regular customers – like department stores and other shops – so offline presents an important opportunity to show who we are and what we carry,” Hong points out. “Online sales are for convenience
and are cheaper, but offline is important for a statement of our spirit and retail image. Also, there are people who like offline shopping; not just to buy goods, but for the store experience.”
Sales forecast adjustments Meanwhile, Shinsegae’s previous strong revenue growth forecasts for 2017 have been thrown into doubt recently by China’s clampdown on mainland tourist visits to South Korea over the THAAD missile crisis. Sales in the Myeongdong store
reached US$90m in January and again in February this year, which is a 50% increase from around $60m in monthly sales for both November and December 2016. Shinsegae had expected sales
at the flagship store to hit $100m a month in 2017, but it must now wait for the THAAD missile crisis to be resolved, before it can adjust its forecasts. Meanwhile, Shinsegae is bidding
for all three large operator duty free licenses on offer for Incheon International Airport’s
soon
to open Terminal 2. Although the company is keen
to expand its presence in Incheon Airport, where it already sells fashion goods and confectionery in Terminal 1, the level of concession fees is a matter of concern. “For a big operator it’s important
Heinemann hits $4bn in group turnover in 2016
Fighting talk from TFWA President
to anchor the image and to pull customers into your retail zone, but the cost to anchor in that size and zone is questionable,” insists Hong. “It’s a matter of the minimum payment level.” Last year, Shinsegae reported
China committed to domestic tourism drive
strong sales growth across its 16 Incheon T1 shops in the western side of the main terminal, which is currently used by local carrier, Asiana Airlines. Shinsegae opened boutiques
Also inside
from Hermès, Fendi, Miu Miu, Balenciaga, Moncler and Celine in mid-2016 following a string of openings for Coach, Tod’s, Bally, Tory Burch, Montblanc and MCM. “Our Incheon Airport shops are
Busan sales total $291m in 2016
Sales at Shinsegae’s Centum downtown duty free store in Busan reached $22m per month and totalled $291m for the whole of 2016, Shinsegae Duty
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doing pretty good,” said Hong. “We grew 30% from 2015 to 2016 and opened every shop. The last boutique we opened was Hermès.” The opening of T2 will create
the west wing,” added Hong. “They carry mostly Chinese passengers, which are the fast growing segment. Mostly we have fashion boutiques from brands like Fendi, Celine and Hermès which are popular with the Chinese and Japanese customers. «
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Free Merchandising Division Senior Vice President, Hong Seok Ho, told TRBusiness recently. “It was a bit below target as the Busan
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market has not grown as much as we expected. We thought there would be more cruise ships from China. They increased but not as much as we expected.” Shinsegae moved duty free sales from
its Paradise Duty Free Shop to its Centum Duty Free Shop in March 2016, which boosted revenue growth. Shopping trends are different in Busan
Haedong Yonggung Temple in Busan. (Photo Credit: Seokjoon Choi.)
MAY 2017
compared to Seoul with perfume & cosmetics accounting for 70% of sales in
the Busan Centum store. South Koreans customers are the main
shoppers in the Busan Centum store with a 45% share of sales, followed by Chinese customers who account for 40% of sales. Japanese visitors make up the remaining purchases, said Hong. “South Korean customers in Busan
look for the same products as they do in our Myeongdong shop in Seoul,” he added. “Busan online sales are 50% of revenue as the Korean share of purchases is bigger. “Koreans prefer to buy perfume and
cosmetics online but for fashion goods they come to the store to see first.”
TRBUSINESS 119
“Online sales are for convenience and are cheaper, but offline is important for a statement of our spirit and retail image.”
Hong Seok Ho, Shinsegae Duty Free
May 2017 20
YEARS 1997-2017
TRBusiness Annual South Korea Report
Top Asia Pacific operators drive global growth
Exclusive: Coty details $12.5bn P&G acquisition
Hong Seok Ho
Shinsegae says its Incheon Airport shops registered strong growth in 2016.
Shinsegae shoots for $1bn sales target in 2017... p115
LAGARDÈRE IN ROME | ACI CONFERENCES’ REVIEW | LOTTE DUTY FREE | DFS GROUP SHILLA | SUNRISE | EVER RICH | CHANGI AIRPORT | SINGAPORE CRUISE CENTRE | CHINA DUTY FREE | INCHEON AIRPORT | HDC SHILLA | HANWHA GALLERIA | SM DUTY FREE WILLIAM GRANT & SONS | PERNOD RICARD | BROWN-FORMAN | BEAM SUNTORY | BACARDI BEAUTY IN ASIA REPORT | COTY’S PHILIPPE MARGUERITTE | PEOPLE NEWS | NOW & THEN
new opportunities for Shinsegae as a number of foreign airlines will transfer to the west wing of T1, where the company’s shops and boutiques are located, while Asiana moves to T1 east wing to replace Korean Air [which will move to T2]. “Foreign carriers are coming to
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