S.Korea picks Hotel Shilla JV, Hanwha to operate new Seoul duty-free stores
In this article (5)
South Korean retail giants HDC Shilla Duty Free and Hanwha Galleria Timeworld on Friday clinched a high-profile bid to operate duty-free stores in downtown Seoul in what is seen as a golden ticket to bolstering their footing in a retail industry struggling from anemic consumer spending.
Seven companies had vied for the license, the first of its kind open to large corporations in 15 years. Lotte Duty Free, HDC Shilla Duty Free, a joint venture between Hotel Shilla and Hyundai Development Co., and SK Networks were aiming to increase their market share, while E-land, Hanwha Galleria Timeworld, Hyundai DF and Shinsegae DF were trying to make a fresh entrance into the duty-free sector.
Currently, four companies run seven duty-free stores in Seoul, whose main customers are foreign tourists, especially those from China. Their insatiable appetite for shopping has been a rare bright spot in the local retail sector grappling with sagging sales amid a weak economy.
Buoyed by their spending, the duty-free market has been posting double-digit growth in the past five years, compared with crawling sales growth at department stores and hypermarkets.
In 2014, duty-free stores in Seoul posted a combined sales of 4.4 trillion won (US$3.9 billion), which accounts for more than half of the country’s 8.3 trillion won duty-free market.
Meanwhile, the customs agency also announced two smaller retailers who will be operating duty-free stores in Seoul and Jeju, South Korea’s southernmost resort island, respectively.
The new licenses will be valid for five years under a revised customs regulation that shortened the contract period from 10 years. The winning bidders are required to open their stores within six months.
Questions & Answers
Q.Which companies were ultimately chosen to operate the new duty-free stores in Seoul?
Which companies were ultimately chosen to operate the new duty-free stores in Seoul?
The high-profile bids to operate new duty-free stores in downtown Seoul were won by HDC Shilla Duty Free, a joint venture involving Hotel Shilla and Hyundai Development Co., and Hanwha Galleria Timeworld.
Q.How long will the new duty-free store licenses be valid for the winning bidders?
How long will the new duty-free store licenses be valid for the winning bidders?
The new duty-free store licenses will be valid for a period of five years. This duration reflects a revised customs regulation which shortened the contract period from the previous ten years.
Q.What is the primary motivation for companies to secure these duty-free store licenses in Seoul?
What is the primary motivation for companies to secure these duty-free store licenses in Seoul?
These licenses are considered a 'golden ticket' because they allow companies to bolster their presence in a retail industry struggling with low consumer spending. Foreign tourists, especially from China, drive significant sales in this sector.
Q.Are the newly awarded licenses the only ones recently issued by the customs agency?
Are the newly awarded licenses the only ones recently issued by the customs agency?
No, in addition to the Seoul licenses, the customs agency also announced two smaller retailers. These companies will operate duty-free stores in Seoul and Jeju, South Korea’s southernmost resort island, respectively.