TOP 10 OPERATORS 3: THE SHILLA DUTY FREE


are,” says Kim. Earlier this year, Shilla rebranded


its renowned ‘Tipping’ blog to ‘Global Shilla Tipping’. The aim is to expand the platform’s


international reach with multiple language services such as Chinese, Japanese and English to promote K-beauty brands and trends to foreign consumers. TRBusiness hears that Shilla Tipping


China has witnessed an influx of new subscribers, with active traffic engagement around searching for and sharing K-beauty information. Amid the pandemic, the South


Korea government has helped companies stimulate duty free sales by temporarily easing restrictions to allow duty free goods to be sold in domestic channels. “While our competitors sold


their stocks through outside channels, Shilla took advantage of its own online channel, which led to sales growth and larger customer profiles,” explains Kim.


Protracted Incheon tender At South Korea’s gateway Incheon Airport, where Shilla operates at both terminals, passenger traffic has been decimated by Covid-19. This is largely due to the traditionally heavy reliance on Chinese travellers. Having attracted much fanfare,


the airport’s long-awaited Terminal 1 tender for eight duty free licences covering more than 6,100sq m was released in January. Unfortunately, the request for


proposals was stifled by protracted rental negotiations relating to current concession agreements. This, combined with a lack of


bidder interest in some of the lots and Shilla and Lotte withdrawing their preferred bidder statuses for the DF3 and DF4 liquor & tobacco concessions, respectively, led the airport to issue another tender in September for six remaining licences. As revealed by TRBusiness.com,


the new contracts could begin in March 2021 once preferred bidders have been named [at the time of writing in early September these had yet to emerge – Ed]. The fresh bidding round contains


several caveats to tempt suitors, including a 30% cut in minimum


OCTOBER 2020 The Shilla Duty Free Jeju downtown outlet. TOP 10 OPERATORS 17


rental prices and a waiving of minimum annual guarantees until passenger traffic restores. In key amendments, IIAC has


removed the minimum annual guarantee threshold linked to annual increases or decreases in passenger levels (+9%:-9%) until normal monthly demand returns. Asked whether Shilla intends to


mount bids in the new tender, Kim responds: “The new bid has altered conditions and we are discussing internally.”


Global growth intentions Elsewhere, and in an important sign of its global growth intentions, Shilla recently closed a transaction to acquire a 44% shareholding in 3Sixty Duty Free & More. “The acquisition of the 3Sixty share


signifies that Shilla has got one step closer to American markets and new business sectors including inflight, border shop and cruise terminal,” says Kim. “3Sixty, on the other hand, has a


chance to learn Shilla’s operational knowhow and to access the Asian market. Under this pandemic situation, Shilla, as the stakeholder, will support 3Sixty’s internal stabilisation.” In Singapore, Shilla will face stiff


competition at Singapore Changi Airport for traffic and sales [provided levels revive in the near-future – Ed] from rival Lotte Duty Free, which began operating the liquor & tobacco concession in June. Lotte won the concession in a


Lotte Duty Free is now competing with The Shilla Duty Free at Changi Airport.


“The acquisition of the 3Sixty share signifies that Shilla has got one step closer to American markets and new business sectors.”


Taeho Kim, Executive Vice President Korea Division, The Shilla Duty Free


competitive tender after long-term incumbent DFS Group surrendered the business last year. «


*Includes the AS Takashimaya Duty Free and HDC Shilla joint ventures.


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