TOP 5 ASIA OPERATORS: SHILLA DUTY FREE
Shilla Duty Free’s flagship downtown store in central Seoul currently accounts for the largest share of its domestic business, with sales of $1.5bn in 2016
TRBusiness
free store, South Korea’s largest, is operated by a joint venture between HDC Group and Hotel Shilla. Speaking to TRBusiness in May last
year, a Shilla source disclosed that the retailer was eyeing sales of $3bn by year-end. The forecast at the time struck
YEARS 1997-2017
Company Limited have also promised to execute omni- channel and digital initiatives to support customer engagement, via interactive zones with virtual reality (VR) services, interactive devices and iBeacon technology. Hotel Shilla Travel Retail
Fighting talk from TFWA President
President Roberto Graziani said at the time: “This highly competitive win is attributed to our teams’ innovative category insights, our deep understanding of customer needs, as well as our long-standing operational excellence.
Vote of confidence for Shilla “We are grateful to AA for this vote of confidence and look forward to warranting our customers and all stakeholders, offers, services, and operational performances, which will stay abreast of trends and changes in consumers’ preferences, always maintaining a strong competitive edge throughout the length of the concession.” Shilla operates two downtown
Also inside
duty free outlets in Seoul, its flagship Jung-Gu branch and Shilla I’Park store in Yongsan district. The Shilla I’Park downtown duty
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a more cautionary tone, which reflected the struggles in regional areas such as China, where tightened domestic policy has curbed spending. A mere two months later and
Hong Seok Ho
analyst Mirae Asset Daewoo Research forecast Shilla to break the $3.5bn mark in consolidated revenue – a marked improvement on the initial prediction – with its Seoul downtown, Incheon Airport and Singapore Changi Airport beauty businesses contributing the lion’s share of the revenue. The sales surge was also expected
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
to come from its HDC Shilla I’Park shop, which it operates in a joint venture with global construction firm HDC Group. At the time of writing, TRBusiness
understands that 2016 ended well for the duty free business, with domestic sales increasing by 10% year-on-year to total $2.6bn (this is excluding the firm’s HDC Shilla I’Park Duty Free joint venture in Seoul). TRBusiness understands that
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Shilla’s flagship downtown store in central Seoul currently accounts for the largest share of its domestic business, with sales of $1.5bn in 2016.
May 2017 20
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However, a new flagship
downtown store located on an adjacent site to the existing store is understood to be in the offing, with a planned opening in around two years. Despite the key developments
in regional markets, uncertainty still lingers over duty free domestic sales this year. The Chinese government’s
objection to the citing of the US’s Terminal High Altitude Area Defense (THAAD) missile system on South Korean soil to deter against any potential attack from neighbouring North Korea has been an on-going issue.
THAAD: Mitigating impact Suspicions from the Chinese military that the THAAD system employs surveillance technology that could be used to monitor China’s military activities is coupled with the government’s aggravation at competitor Lotte Group selling land to the South Korean government to facilitate the THAAD technology. As TRBusiness has reported, the
effects of THAAD on wider duty free retail sales are already being felt. Quite what impact – short-term and long-term – the situation will have on Chinese visitor numbers to South Korea [a key component of Shilla’s duty free sales] is at this stage, unclear. However, a Shilla spokesperson
has acknowledged to TRBusiness that the situation will have some effect. It’s Incheon International Airport
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shops and Jeju Island downtown store remains some of its largest domestic operations. It currently runs shops and
boutiques in Incheon’s main Terminal 1 under a five-year contract it secured in September 2015, with three concessions covering P&C, L&T and general merchandise, including luxury boutiques. In March, Shilla hosted an
exclusive Guerlain outpost to mark the launch of new fragrance Mon Guerlain, located next to the departure transit hall. The activation, which ran
The Shilla Duty Free’s downtown Seoul store continues to perform well. 60 TRAVEL RETAIL BUSINESS
until early April, drew on an olfactive brand journey allowing travellers to experience the DNA of Mon Guerlain. «
MAY 2017
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