LEADING ASIA PACIFIC OPERATORS: SHILLA DUTY FREE
Airlines) moving from Terminal 1 to Terminal 2. It was also agreed that the rate [should be] adjusted every six months to reflect the actual decrease in passenger numbers. “Although the agreed reduction was
not what we proposed, the decision to accept was appropriate and based on a long-term view that Shilla and Incheon International Airport could grow together in the future.” One way for the airport and
retailer to accelerate growth, especially during peak traffic periods such as Chinese New Year, is through marketing campaigns and in-store promotions which (when effective) can have a dramatic impact on sales. Of course, accommodating the
needs of high-spending Chinese consumers all year round should ensure a win-win situation for both parties. Shilla’s decision to adopt direct WeChat Pay capabilities within its official WeChat account in March 2019, for example, was a shrewd move. “The number of free independent
travellers increases during seasonal holidays such as Chinese New Year and Chinese National day,” says the Shilla spokesperson. “This customer segment is
very important as their average consumption is high.” These customers often prefer to
make purchases online, which has encouraged Shilla to make the sales platform a top priority in recent years. Last May, Taeho Kim, Executive Vice President, Korea Division, Shilla Duty Free told TRBusiness he expected online sales to continue increasing in double-digits. He also predicted the segment to eventually account for 50% of total business. The spokesman says: “Switching
from offline to online business is not an option but a requirement. “The importance of online has
increased since our main targets are highly familiar with online purchases, especially mobile transactions.” Shilla’s online sales have increased
nearly +60% over the past five years, “and we expect the online proportion of total sales to grow consistently.” Meanwhile, its online tipping blog
service (Shilla Tipping), designed to capture a greater slice of retail sales among millennials, is proving popular
MAY 2019
among South Korean customers. Launched in September 2018,
Shilla Tipping allows millennials to share their retail experiences and product reviews with others via the Korean travel retailer’s online mobile application (see more on p85). In an additional fillip, customers
are incentivised to create attractive and convincing reviews to earn ‘profit rewards’ of up to 3% of the sales value of purchases made as a result of the reviews.
Millennials are ‘main target’ Authors can then convert rewards into online shopping mileage points or a pre-paid gift card. Rewards totalling over KRW100,000 ($88) are eligible for a cash exchange. The spokesperson explains: “Shilla
Tipping is a platform that reflects the tastes of the millennial generation, which is Shilla Duty Free’s main target. “The millennial generation is eager
to share their experiences and not simply shop. “Tipping provides a platform to
share product reviews within The Shilla Online Duty Free’s mobile application. Customers can search for reviews and check them out without leaving the platform. “Through the introduction
of such a sustainable system, Tipping is striving to create its own mobile ecosystem.” In terms of embracing digital
opportunities, Shilla is planning to implement more advanced sales strategies by introducing
“From now on, we will conduct real-time marketing, which will analyse customer behaviour patterns based on big data, and provide personalised offers in real-time.”
Spokesperson, Shilla Duty Free
personalised marketing based on big data. Previously, marketing activities were carried out based on the analysis of customer demographics such as age and gender. “From now on, we will conduct
real-time marketing, which will analyse customer behaviour patterns based on big data, and provide personalised offers in real-time. “We expect this to provide the
best shopping experience for our customers,” the spokesperson vows. As far as challenges are concerned,
Shilla must contend with intensifying competition among Korean duty free operators. “To survive this intense competition, The Shilla Duty Free focuses on increasing global competitiveness. “We also target millennials who
are the main customers in duty free shops and implement various marketing initiatives. “These include inviting Chinese
influencers to participate in live streaming events, partnering with webtoon artists, using social networking services and trying to catch the latest trends to entice consumers,” the spokesperson concludes. «
TRBUSINESS 45
Above: Shilla began trading at Gimpo Airport on 9 January.
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