SOUTH KOREA: SHINSEGAE DUTY FREE Shinsegae pins hopes on new Jeju licence
Shinsegae Duty Free is looking to expand its retail operations at Incheon International Airport. As David Hayes learns, the company is also interested in entering Jeju Island’s downtown duty free market as part of ambitious plans to expand its domestic travel retail footprint.
Island will be awarded this year; we expect and hope, but it’s not confirmed,” Ho tells TRBusiness. “The government has set a target
to increase total retail sales and to increase the number of travellers in the southern region, so there’s a high possibility for a Jeju downtown licence to be issued. “Our proposed Jeju shop is at
the planning stage. it’s a free- standing building, but it’s too early to give details as it’s still in the planning process; the government has not decided about the licence tender yet.”
Above: Shinsegae Duty Free already operates a P&C concession at Incheon T1, but is now eyeing another in an anticipated re-bid.
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purred on by the loss of its Incheon International Airport fashion and general
goods concession (DF7) in the recent Terminal 1 duty free tender, Shinsegae Duty Free [correct at the time of writing - Ed] was planning to bid for the fashion and general goods (DF6) licence when the airport invites second round bids [Hyundai Duty Free emerged as the sole bidder for DF6, which necessitates a re-bid according to Korean custom law - Ed]. Shinsegae was also planning to
bid for the unclaimed perfume and cosmetics (DF2) licence, subject to Korea Customs Service (KCS) approval. To avoid any operator monopolising a duty free category
“We expect that at least one downtown duty free licence for Jeju Island will be awarded this year; we expect and hope, but it’s not confirmed.”
Hong Seok Ho, Senior Vice President Merchandising Division, Shinsegae Duty Free
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within Incheon Airport’s T1, KCS requires the two perfume and cosmetics concessions to be run by different operators [Shinsegae already operates one P&C concession at T1 - Ed]. This is also the case for the terminal’s two liquor and tobacco concessions. However, as the DF2 licence failed
to attract a single bid at first asking, Shinsegae feels the KCS may be open to the travel retailer bidding in the second round. “We are preparing to bid for
two concessions: DF2 perfumes and cosmetics and DF6 fashion and general goods, when Incheon International Airport Corporation (IIAC) retenders them,” according to Hong Seok Ho, Shinsegae Duty Free Merchandising Division Senior Vice President. “The final decision on our DF2
bid will be made by KCS; there is no problem for us to make a bid, but KCS has the final decision and we may be denied.” Elsewhere in South Korea,
Shinsegae is keen to enter Jeju Island’s downtown duty free market in the future and has already identified a site for its proposed store. “We expect that at least one downtown duty free licence for Jeju
Sales circa $4bn in 2019 Shinsegae’s total sales reached almost US$4bn in 2019, jumping 40% compared with sales recorded in the previous year as larger numbers of customers visited its Seoul downtown and Incheon Airport shops. Unsurprisingly, sales in the first
quarter have dropped dramatically (-25%) as customers have been forced to quarantine during the coronavirus (Covid-19) pandemic. Sales in March declined sharply by -60% year- on-year. With the number of new Covid-19
cases starting to fall, Shinsegae Duty Free’s senior management is hoping that South Korean duty free will make a strong recovery once the crisis passes and daily life begins to return to normal. Shinsegae, along with South
Korea’s other leading operators, sense pent-up demand in China for luxury goods. These include cosmetics, fashion and other luxury items. Along with people’s desire to travel, it is hoped that sales will return quickly once cases of Covid-19 reach a nominal level. “We do expect the situation to
get better, but right now departing passengers from Incheon Airport are down 90% compared to this time last year,” says Ho.
MAY 2020
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