TOP 10 OPERATORS 3: SHILLA DUTY FREE
Sales at downtown shops flourished, up 23% year-on-year, but the airport business posted more meagre growth of +6% year-on-year.
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KRW1,226.5bn, with operating profit up 9% to KRW69.8bn. Travel retail sales growth
outstripped Group growth of +15% to KRW1,354.9bn, which includes contributions from Hotel Shilla’s hotel and leisure division. Sales at downtown shops
tender victory in 2017, which sealed a triumvirate of duty free beauty concessions at Asia’s key airport hubs: Seoul Incheon, Singapore Changi and the aforementioned HKIA. Shilla now operates airport
concessions at Incheon (5,580sq m), Jeju (400sq m), Gimpo (553sq m), Singapore Changi (8,044sq m), HKIA (3,283sq m), and Macau (1,120sq m) International Airports. These add to its main downtown
Seoul store (7,178sq m) and others at Shilla I Park (11,417sq m), Jeju (6,384sq m), Phuket (8,155sq m) and Tokyo (2,317sq m).
Downtown sales prosper In January this year, Shilla began its five-year L&T operations at Gimpo International Airport; in doing so, it completed the so-called duty free belt of contracts in Korea. Meanwhile, licence renewals in
May this year at its Seoul and Jeju downtown shops continued its positive retail trajectory. According to the most recent
consolidated
travel retail revenue jumped by 16% in Q2 year-on-year to
flourished, up 23% year-on-year, but the airport business posted more meagre growth of +6% year-on-year. Renovations at its Jeju downtown
shop, resulting in an expanded sales area to house small and medium- sized Korean P&C brands plus souvenirs and food items in addition to more prominence for global labels, will have played a part in the result. At the time of writing, Hotel Shilla
pointed to ‘solid growth’ in daigou shuttle trader sales (Q3) and at this point in time that momentum appears to be continuing unabated. This publication reported in
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February the negligible effect on South Korean duty free and travel retail revenues following the introduction of China’s new e-commerce law in January, which regulates online merchandising and affords consumers with increasing protections. “The new e-commerce law
Established 1998
Q2 results from parent company Hotel Shilla,
Official Partner
implemented in China has not had any material impact on Shilla yet, however, we will continue monitoring the situation,” reinforces Kim. Although Shilla harbours
ambitions to be one of the most powerful beauty retailers, that hasn’t
prevented it from concentrating on different areas. “The Shilla Duty Free is trying
to invest in other categories – we actively utilise the online duty free store which doesn’t have space limits to offer more of a variety of categories such as pet products and golf goods,” says Kim. “When it comes to the fashion
category, we keep discovering diverse Korean fashion/accessory brands to help get them into the global market.”
WeChat members double Kim reminds TRBusiness that Shilla stated its KRW1tn overseas sales target when it won the P&C duty free contract at Changi in 2014 and that objective was reached last year. Online, an important recent
development has been the explosion in Shilla’s WeChat membership. This has almost doubled since WeChat Pay capabilities were added to its official WeChat account. In March, Shilla declared itself as
the first Korean duty free company to incorporate WeChat Pay capabilities into its WeChat account, allowing Chinese customers to buy directly through the WeChat app by connecting to the retailer’s online store. “The newly added WeChat
Pay service making it possible for customers to purchase goods directly via Shilla’s official WeChat account is very meaningful in terms of increasing Chinese customers’ accessibility to The Shilla Online Duty Free,” comments Kim. “Partnering with large businesses
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Janice@trbusiness.com Changha Shin, Managing Director, Shilla Travel Retail Hong Kong Limited. 24 TOP 10 OPERATORS
like WeChat Pay is of great help to us in attracting new customers.” Exposure through the recruitment
of high-profile social media beauty influencers Lin Xiao Zhai and Changmakeup has helped push the retailer to 11 million foreign customers. Additionally, a large part of Shilla’s
exponential online reach is down to its Tipping mobile review service. This helps Shilla to promote
a seemingly endless multitude of new – often travel retail exclusive – products. Launched in September 2018, the platform boasts tens of thousands
OCTOBER 2019
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