SOUTH KOREA REPORT: SM DUTY FREE
May 2017 20
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SM Duty Free exceeded expectations at Incheon Airport in 2016 and reported a strong growth in sales to $90m. However, the performance of its Seoul downtown store was disappointing, in comparison says David Hayes.
Shinsegae shoots for $1bn sales target in 2017... p115 Also inside A
fter a full year of operating its three SME retail units at Incheon International
Airport, SM Duty Free can report strong sales growth, mainly driven by South Korean customers. As Chinese visitors to South
Korea fall due to Beijing’s ban on tour groups visiting the country – in reprisal over Seoul’s decision to install the United States THAAD missile system – SM Duty Free is fine tuning its airport retail operations. This is to meet the demand from
outbound South Korean passengers who are likely to account for a large share of sales this year. “Our Incheon Airport operation
is good,” confirms Lee Sun Young, Luxury Brand Team Manager for SM Duty Free Co Ltd’s Merchandising Division, to TRBusiness
an
exclusive interview. “If an operator’s sales exceed
free shop licenses on offer at the airport’s Terminal 2. “The total size of perfume &
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cosmetics and liquor & tobacco retail space is limited to 60% of the total shop area for SME concessions DF4 and DF5 mixed category shops. The rest of the shop area is for fashion and food,” said Lee. “Concession DF6 is 100sq m,
which is one boutique and one multi- brand shop. We will bid for DF4, DF5 and DF6.”
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Period of adjustment... SM Duty Free currently operates the 1,121sq m SME concession DF9 in the east wing of Incheon Airport, comprising 859sq m of retail space and a 262sq m bonded warehouse area. The retail space is divided into
expectations [at Incheon Airport] then the operator pays more concession fees; except for us no one paid additional fees at Incheon Airport last year.” Lee also revealed that SM Duty Free is bidding for all three SME duty
MAY 2017
numerous units and shops; two of the units are situated adjacent to each other and are divided into three shops. One of these sells perfume and
cosmetics, another specialist shop sells liquor and tobacco, and the third shop – sub-divided into three boutiques – displays Victoria’s
“If an operator’s sales exceed expectations [at Incheon Airport] then the operator pays more concession fees; except for us no one paid additional fees at Incheon Airport last year.”
Lee Sun Young, Luxury Brand Team Manager for SM Duty Free Co Ltd’s Merchandising Division
TRBUSINESS 131
through a period of adjustments in terms of its brand mix and space allocation for each product category. “We have had some partial
changes with brands,” said Lee. “Recently we adjusted our general merchandise store where we sell food, local fashion, watches and other items. “We enlarged the sunglasses area
divided into a general merchandise shop selling food, confectionery and fashion accessories, which is located on the opposite side of the passenger concourse. The company is currently going
Secret, the South Korean fashion brand Beanpole and IM Fashion which offers a range of smaller South Korean fashion brands. SM Duty Free’s other retail unit is
Above: SM Duty Free performed well at Incheon Airport.
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