SOUTH KOREA REPORT: SM DUTY FREE
decreased the watches and jewellery area as sales have decreased. “It’s because of a change in
cultural behaviour; people use their smartphones to tell the time and do not need watches now. Also, Chinese visitors started to decrease in number last summer.” However, as watch and jewellery
sales have declined, perfume and cosmetics continue to prop up revenue for the company and now account for 50% of SM Duty Free’s sales at Incheon Airport. International cosmetics brands
and South Korean brands generate an equal amount of the total revenue made at the airport, in contrast to the company’s Seoul downtown store where South Korean cosmetics brands dominate overall beauty product sales. SM Duty Free’s top two South Korean
cosmetics
brands are Sulwhasoo and The History of Whoo. Liquor and tobacco products
account for a further 25% of sales at Incheon Airport while fashion items, food and confectionery represent the remaining share of sales.
Top selling tobacco Korean National Tobacco Group products are the top selling tobacco brands, according to Lee, while Scotch whisky is the airport shop’s main liquor category, led by Ballantine’s and Johnnie Walker. “Chinese passengers represent
digit sales growth at the airport in 2017, despite the anticipated fall in Chinese visitor numbers, following a decision to target the rising number of outbound South Korean travellers. “We are happy with the Incheon
sales figure and the fact that we did not lose money at the airport,” said Lee. “Our 2017 target is to grow sales by 20% at Incheon. “Most of this increase will be
local customers as South Korean outbound travellers are expected to increase from four to five million. We think SM Duty Free needs to strengthen marketing to local Korean travellers.” Meanwhile, the opening of
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Incheon Airport’s new Terminal 2 will soon impact SM Duty Free’s airport business, as leading local airlines and foreign carriers relocate their flight operations to different areas of the airport. SM Duty Free expects that revenue
China committed to domestic tourism drive
in its T1 east wing shops will drop noticeably after Korean Air relocates its flight services to T2 and Asiana Airlines moves operations from T1 west wing to T1 east wing. “Asiana Airlines moving from T1
Also inside
“We are happy with the Incheon sales figure and the fact that we did not lose money at the airport. Our 2017 target is to grow sales by 20% at Incheon.”
Lee Sun Young, SM Duty Free
May 2017 20
YEARS 1997-2017
Asiana passengers is expected to be lower than those flying with Korean Air (after the airlines move their flight operations), Lee says he expects that that the same range of products and brands will remain popular. “T2 will be a little different – Korean
TRBusiness Annual South Korea Report
Air passengers will use the SME mixed category shop DF4 in T2 east wing and foreign airline passengers will use the mixed category shop DF5 in the T2 SME west wing area.”
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60% of our sales at Incheon Airport and South Korean travellers about 40%,” said Lee. “South Korean customers buy
sunglasses, foods like kimchee, fashion items, liquor and tobacco. They buy small bags, leather accessories and shirts at Incheon Airport. Beanpole shirts and pants are popular as well as Louis Quattorze leather bags. “Chinese customers buy South
Korean cosmetics at Incheon Airport and they also buy Chinese tobacco products, liquor and fashion accessories.” SM Duty Free recorded sales worth
US$90m at Incheon Airport in 2016, exceeding original expectations [as mentioned earlier]. The company is looking for double-
MAY 2017
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west wing to our east wing is better for us than having foreign airlines move there from the concourse, but we expect our sales will be down 20% in our east wing shops after Korean Air moves to T2,” Lee revealed. “Korean Air ticket prices are a little
higher than Asiana’s, so Korean Air passengers have more disposable income. Also Korean Air has more business passengers.” Although the duty free spend by
are occupied by temporary shops with fashion accessories, perfume & cosmetics and some foodstuffs,” explained Lee. “Our perfume & cosmetics sales
are 50:50 international and South Korean brands at Incheon Airport but downtown South Korean cosmetics brands represent about
plus 12 monthly print editions and the critically acclaimed TRBusiness Top 10 International Operators Report, please visit
www.trbusiness.com/subscriptions Shinsegae shoots for $1bn sales target in 2017... p115
Adding brands downtown Meanwhile, SM Duty Free is continuing to add new brands at its downtown duty free store. The company is a subsidiary of
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
Hana Tour Group, South Korea’s largest outbound tour operator which also serves a large number of inbound foreign visitors through business alliances with tour operators in other countries. “There are still some areas that
Many customers buy red ginseng products online now. TRBUSINESS 133
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