SOUTH KOREA: HYUNDAI DUTY FREE
for an estimated 60% of total sales in the COEX store in 2019 and daigou customers made the majority of purchases. Fashion accessories made up
20% of sales, while luxury fashion and watches represented 10%. Souvenirs and food accounted for the remaining 10% share. Meanwhile, buoyed by its terrific
Currently, international perfume and cosmetics brands represent a 95% share of total P&C sales for Hyundai Duty Free.
Below: Watches on the eighth floor of the Hyundai Department Store.
comes out and for the DF2 perfume and cosmetics licence,” indicated Cho. He continued: “No one participated for DF2 the first time but if they have some MAG discount we may bid, considering the present circumstances.” The timing of Hyundai Duty Free’s
domestic duty free expansion is not ideal, which Cho admits. “It’s a risky time to invest because
of the coronavirus situation, but when we look ahead we predict a bright future. We are investing now and when the situation is back to normal we can maximise our efficiencies. “Tourism is still stagnant, but
vacation time will be coming. People will come out. Our new Incheon
“By 2023 we are looking to be a top 10 global duty free operator. We have to go global, so international airport operations are mandatory.”
Cho Jun Ki, Hyundai Department Store Duty Free
Airport T1 stores will open on 1 September, so there is time for things to get back to normal.”
COEX store: $1bn target Hyundai believes that because of its strong performance in 2019 – which as mentioned marked the first full year of operations for its COEX duty free store at the Samseong COEX branch – the company is in a strong position to recover. “Our 2019 COEX shop sales
performance exceeded our expectation,” enthused Cho. “We added Cartier, Prada and Celine brand boutiques which were a hit with our customers looking for that luxurious duty free store ambience.” Occupying 14,200 sq m, Hyundai
Duty Free is located on floors eight, nine and 10 in the Hyundai Department Store’s COEX branch. Sales in the COEX store reached US$900m in 2019, enjoying growth of +29% above the original target. “Our target was US$700m and
we exceeded that by $200m; a huge amount,” said Cho. “We attribute this to our merchandise and marketing, and because the shop location has great potential to draw people in. Also, we benefitted from Hyundai Department Store customers. “Most Hyundai department store
VIP customers have a higher spending power than the average customer we receive. We successfully converted many of them to become our duty free customers.” Perfume and cosmetics accounted
56 TRBUSINESS
first full-year performance, Hyundai Duty Free has set an ambitious $1bn sales target for the COEX store in 2020 and a further $1bn first- year target for the newly opened Dongdaemun store. Cho admitted that the total target
of $2bn will be hard to achieve, given the impacts of the Covid-19 crisis on South Korea’s tourist industry and given the sales in the COEX and new Dongdaemun store so far this year. The downtown sales target does
not include sales at Incheon Airport, where Hyundai Duty Free recently captured a fashion concession licence (DF7), currently run by Shinsegae Duty Free. “We are not sure of our target for
Incheon Airport DF7 as we have not selected our fashion brands yet,” said Cho. “We have not finalised specific plans, but we will retain most of Shinsegae’s brands. We will be going for other top-tier brands and we will make sure we have the best brands for DF7.” Being selected to operate Incheon
Airport’s DF7 concession marks an important step forward for Hyundai Duty Free in its quest to become a major international travel retail operator. “2020 is a big year; it’s very
important for us,” said Cho. “We are confident as our management has a clear vision and commitment to have a successful duty free business, and the will to utilise all the resources at our disposal to succeed in South Korea and globally. “By 2023 we are looking to be a top
10 global duty free operator. We have to go global, so international airport operations are mandatory. “We are starting our airport duty
free business at Incheon Airport. Perhaps we will then continue to extend our airport footprint inside Asia before aiming for international hub airports.” «
MAY 2020
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