SOUTH KOREA REPORT: SHINSEGAE DUTY FREE
Online sales now account for one third of total sales in the flagship (Myeong-dong) store and are expected to grow further this year.
TRBusiness
TAGHeuer. We will relocate these two brands.” T2 is used by Korean Air and other
members of the Sky Team alliance, namely KLM Royal Dutch Airlines, Delta and Air France. Korean Air transferred its flights to T2 from the east wing of T1, which it used previously before T2 opened. The terminal’s passenger-friendly
layout has created a more relaxed shopping environment, which is helping Shinsegae’s boutique sales in the new terminal. “In T2 all duty free shops are in the
central area,” says Hong. They are easy to find and more accessible; it’s easier to shop than in T1. “T2 has more of a shopping feel;
it’s more like a mall. Brand boutiques are in the centre, while on both sides are liquor and tobacco and perfume and cosmetics stores. Fashion multi-brand shops are near the flight gates.” The terminal’s recent opening and
the transfer of Korean Air and other Sky Team member airlines from T1 to T2 has left a number of empty flight gate slots in T1 that Incheon International Airport Corporation (IIAC) has started to fill. The largest change announced involves Asiana Airways gradually transferring its
flights from T1 west wing to T1 east wing to use flight gates previously occupied by Korean Air before its move to T2. This change will allow flight gates currently used by Asiana in T1 west wing to be used by foreign airlines moving into the T1 main terminal from T1 concourse. Shinsegae will modify its T1 duty
free shops after Asiana completes the transfer of its T1 east wing flights to T1 west wing. The shop display alterations are planned to serve the new passenger nationality mix that will use the T1 main terminal shops, as airlines now using the T1 concourse switch to the T1 main terminal flight gates. “Asiana is moving slowly from T1
west wing to T1 east wing and will complete the move in June,” Hong confirms to TRBusiness. “After completion of the
move I think there will be some shop renovations to target new passenger nationalities, but not a big investment as two-and-a-half-years have passed already of our current five-year concession. “There will be a few changes.
In our multi-brand shops we will put in brands more targeted at Chinese customers.”
Delayed downtown opening Shinsegae Duty Free recorded total sales worth $1.6bn in 2017 at Incheon International Airport and at its two downtown stores in Seoul and Busan. Although overall revenue grew sharply due to a strong performance in the company’s
Fashion remains a key draw for Shinsegae Duty Free customers.
Seoul Myeong-dong store, sales at Incheon T1 and at its Busan Centum downtown store were well below their original targets. This was tied to the fall in Chinese visitor numbers following China’s ban on group travel tours to South Korea in retaliation to the THAAD missile system crisis. In 2018, Shinsegae Duty Free is
aiming to increase total revenue by around 44% through boosting sales in its existing airport and downtown shops and opening a second downtown store in Seoul this summer. “Our target for 2018 is $2.3bn,”
confirms Hong. “I think we will achieve it. So far we are on target. “In January and February we were
on track. We are targeting Chinese customers for 60% of total sales. We expect perfume and cosmetics to be 55% of our total revenue.” Originally planned to open in
December 2017, Shinsegae’s second Seoul downtown duty free store is now scheduled to open in July in the capital’s fashionable Gangnam district, which lies south of the Han River. The opening date was put back
after the South Korean government ordered Shinsegae’s Gangnam shop and two other planned downtown duty free stores in Seoul to delay their openings due to the sharp fall in Chinese group tour visitor numbers following the start of the aforementioned THAAD missile dispute with Beijing. Offering 13,600 sq m of retail space,
Fashion, watches and jewellery accounts for 30% of sales at the Myeong-dong store. 108 TRBUSINESS
the new duty free store will occupy four lower floor levels in Shinsegae’s Gangnam Department Store, plus some additional retail space in the large adjacent commercial complex. Perfumes and cosmetics, watches and jewellery will be on at least two
MAY 2018
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