SOUTH KOREA REPORT: SM DUTY FREE
Shopping outlet in T2. Most sales in the shop are to foreign visitors. “In Incheon T2 both of our new
shops’ sales totalled $80,000 on opening day. On 1 March the combined total was $120,000, so there was a 50% increase,” says Lee. “T2 sales are better than expected.
The T2 sales level is increasing day after day to [average] $120,000. We are happy. Our T2 sales target is over $30 million a year.” SM Duty Free’s marketing strategy
in Incheon Airport is to attract outbound travellers that have booked with parent company Hana Tour to travel overseas. “What we are trying to do in our
Incheon T2 shops is to use Hana Tour’s brand equity,” describes Lee. “Last year Hana Tour sent 6.5 million South Koreans outbound. “We are strengthening our
marketing ability with our mother company’s travellers. They are offered discount vouchers and smartphone reminder messages. “The discounts depend on the
amount spent and the products purchased as there are some restrictions on big brand discounts.” Elsewhere in Incheon Airport’s
T1, SM Duty Free operates SME concession DF9 in the terminal’s east wing. The concession totals 1,121 sq m in area and comprises 859 sq m of retail space and a 262 sq m bonded warehouse area. The space consists of three retail
units divided into four shops. These are located close to flight gate 17 in the east wing ‘antler’ that was previously used by Korean Air in Incheon Airport’s main departure terminal. It is currently being taken over by Asiana Airways. Two of the retail units are situated
adjacent to each other and are divided into three shops. One sells perfume and cosmetics, another specialist unit selling liquor and tobacco and a third shop sub-divided into a further three boutiques. This displays Victoria’s Secret,
the South Korean fashion brand Beanpole and IM Fashion. The last option offers a range of smaller South Korean fashion brands. SM Duty Free’s other T1 retail unit
is divided into a general merchandise shop selling food, confectionery
MAY 2018 Brands such as Bally (pictured) have moved to the first floor of the downtown shop.
and fashion accessories, which is located on the opposite side of the passenger concourse. “The T1 shops are metallic design
and have a bright sign board over the shop’s front,” describes Lee. “Our Incheon Airport T2 shops’
design is a little different to our Incheon T1 shops. The T2 shops have a vertical stripe, natural wood colour surround. “We were asked to use a shop
sign and decorate the interior to match the outside wood design atmosphere. We chose a natural colour sign. The interior includes a light colour marble tile floor with white shelving and fixtures.”
Tough 2017 Meanwhile, SM Duty Free is looking to sharpen its competitive edge, as South Korea’s duty free market prepares to expand this year with the opening of more downtown duty free stores in Seoul. The company is looking for
a partner in China, Lee reveals, to develop future business opportunities as diplomatic relations between Seoul and Beijing begin to improve again [this was very much the mood observed by TRBusiness at the time of writing, although it is important to note that the situation is constantly changing]. “[The year] 2017 was very tough –
the worst, as visitor traffic dropped from China,” admits Lee. “This year will not be easy as there will be more downtown operators
Perfumes and cosmetics account for more than 80% of SM Duty Free’s downtown shop sales.
TRBUSINESS 121
Liquor and tobacco is the major category in SM Duty Free’s new Incheon T2 mixed category shop, accounting for 45% of total sales with perfume and cosmetics at 35% [of total sales].
TRBusiness
like Shinsegae and Hyundai Duty Free in Gangnam district. “SM Duty Free is trying to find
a solution. “We are in the middle of finding
an overseas partner to create new opportunities in Seoul at Incheon International Airport and overseas tourist destinations. “We are looking for a partner
in China – an international player to influence brand launches… a partner to work in China to give us access to the mainland. We want to grab the opportunity of [the] cross- border business. It’s huge between China and South Korea.” «
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