TOP 10 OPERATORS 3: THE SHILLA DUTY FREE 3


P&C ‘will remain powerhouse category’ for Shilla Duty Free after Covid-19


Having revealed in its most recent second quarter results that airport revenues suffered a 90% plunge year-on-year, Hotel Shilla was unequivocal that it would focus on ‘minimising the continued effects of Covid-19 by actively responding to changes in the market’. Luke Barras-Hill reports.


reached KRW9.1tn/$7.8 billion based on average exchange rates. On a like- for-like basis, this represents growth of +30.7% year-on-year. Domestic sales totalled KRW7.9tn, with overseas sales notching KRW1.3tn. Today, the new ‘normal’ – or


‘abnormal’ as some see it – has forced travel retailers to systematically pivot towards new revenue streams as the industry endures its toughest year in living memory. To cope with the transformative


Above: Beauty&You celebrated its one-year anniversary at Hong Kong Airport in 2019.


I


n comments shared with TRBusiness recently, The Shilla Duty Free clarified the importance of


ensuring internal stability to prepare for the post-coronavirus (Covid-19) revival. This will be no mean feat given what were already a number of challenges for the company in 2019. A proliferation in downtown duty


free licences in South Korea, fiercer competition between duty free companies and dampened Chinese traveller volumes linked to the THAAD crisis has created a perfect storm in recent years. This has been made no easier by an increasing reliance on daigou-driven trading. Despite the challenges, Taeho


Kim, Executive Vice President Korea Division, The Shilla Duty Free points to a ‘fruitful’ 2019 buffered by the company’s ‘edge’ in merchandise,


Among the highlights in 2019 was the commencement of the five-year liquor & tobacco concession at Gimpo International Airport and licence renewals at the Seoul and Jeju downtown stores.


TRBusiness 16 TOP 10 OPERATORS


sales and marketing. “Last year we showed continuous


growth despite the competitive situation,” he comments. Shilla currently runs airport shops


at Incheon (5,580sq m), Jeju (400sq m), Gimpo (553sq m), Singapore Changi (8,044sq m), Hong Kong (3,283sq m), and Macau (1,120sq m) International Airports. Joining these are downtown shops


in Seoul (7,178sq m), Jeju (6,384sq m), Phuket (8,155sq m), Tokyo (2,317sq m) and at Shilla I Park (11,417sq m).


Shilla fastens Korean belt Last year yielded some notable highlights,


including


changes in the current retail climate, Shilla has coined two new phrases to sharpen communications: ‘Untact’ (‘un’ is an English language prefix meaning ‘not’, and ‘tact’ an abbreviation of ‘contact’) and ‘Ontact’ (‘on’ being an English language preposition with ‘tact’ signalling the popular shift towards virtual connections and meetings). Kim says: “First of all […] our


consumption space has been displaced by online platforms. Second, purchasing time, customer ages and purchasing methods have diversified. People purchase regardless of


weekdays/weekends and we are seeing a growing number of our customers in their forties to sixties. “People will be more familiar


the


commencement of the five-year liquor & tobacco concession at Gimpo Airport – completing the so-called Korean ‘belt’ of duty free concessions – and licence renewals at Shilla’s Seoul and Jeju downtown stores. At Macau Airport, Shilla won


the five-year north side duty free concession and revealed its upgraded Terminal 3 departures shop at Singapore Changi Airport. Factoring in revenue from its *overseas ventures, total sales in 2019


with Untact services even after the Covid-19 era, as behaviour patterns have become much closer to mobile services.” One example of a strengthened


digital footprint has been the recent move to unify existing Shilla online ‘Lala cash’ and offline prepaid card loyalty mechanisms into the global membership programme ‘S. Rewards’. “Thanks to this change,


customers can accumulate points and participate in real-time events through mobile apps wherever they


OCTOBER 2020


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