SOUTH KOREA: SHILLA DUTY FREE Unlock the full potential... for
Above: The Shilla Duty Free Gimpo International Airport Store.
As is unsurprising, perfume and cosmetics is the largest duty free category at Shilla’s Jeju downtown shop, with Korean cosmetics brands taking the largest share of sales during the past year. “Chinese men are interested in
cosmetics, so cosmetics have more than a 50% share of sales in Jeju,” reveals Kim. “It’s almost a 50:50 split between
South Korean and international cosmetics brands. Korean brands are slightly higher, but possibly that will change this year as
“We are sorry Korean brand demand is decreasing; we’re not sure why, but it does appear to be a trend.”
Taeho Kim, Hotel Shilla Co Ltd’s Travel Retail Business
demand for Korean cosmetics is declining gradually. “We are sorry Korean brand
demand is decreasing; we’re not sure why, but it does appear to be a trend,” notes Kim. Despite the slowdown in demand
for Korean beauty brands, Shilla remains confident that an increase in foreign visitors and its new airport shops will help to boost revenues this year. “We expect double-digit growth
in South Korea and almost double digit growth overseas,” according to Kim. “We expect this growth as we
expect some external factors to be solved; also, more foreign visitors will come to our shops. “We expect the business
environment to become better in the second half of the year. But, unlike 2018, we have concerns about more
competition, so we are thinking about having a better strategy.”
More licences anticipated Kim tells TRBusiness that the high level of competition in Korea is impacting the profitability of some companies. As such, it has been the small operators in particular who have been suffering most acutely. Unfortunately
them,
competition is likely to intensify as the South Korean Government considers issuing two new downtown shop licences in 2019, as TRBusiness reliably understands. One new licence is expected to be
approved in Seoul, where there are already 13 downtown duty free shops in operation. Another is in Jeju, which has two
downtown shops. “In my personal opinion there
are too many duty free licences, especially for Seoul,” say Kim. “Some shops have trouble luring
customers and making a profit; several SME duty free operators are already suffering losses. “We believe the duty free
market size defines how strong operators are. “For example, small duty
free companies do not have the power to attract super brands, but most customers want those brands, so if they do not have them then customers will not visit their shops.” «
This content is for subscribers only. Shilla to start on new Seoul flagship
The Shilla Duty Free is preparing to begin construction on its new flagship downtown store in Seoul, adjacent to its existing store in the Hotel Shilla compound. After receiving approval from the Seoul
Metropolitan Government in 2016, site clearance began the following year and is almost complete. “We are preparing the new store’s
parking lot,” says Kim. “We are at the final step and waiting for Seoul City Government to approve the start of construction. I’m sure we can start this year. “We are very excited about our new
store. We can provide our customers with a better shopping environment
86 TRBUSINESS
that’s different to our present store. “Our new store will give us a new
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competitive edge. All our staff and all the brands are excited about our new shop.” Shilla’s plans call for the new, larger
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Shilla hopes to renew its licence for the downtown Seoul store this year.
flagship store to be built on the present ground level car park, which is situated at the base of the entrance driveway slope that serves the existing Shilla Duty Free shop. Planned to open within the next two
to three years, the new shop is expected to be at least 10,000sq m in area. In addition to the enlarged retail space, the new shop will include a large basement car park and other customer service facilities. As part of the The Shilla Duty Free’s
new flagship store project plans, once the new downtown shop is open, the existing store will be demolished and a traditional three-storey Korean inn-style hotel will be built in its place.
MAY 2019
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