Fashion
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.
