Shinsegae joins race for duty-free shop in Seoul
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Shinsegae said it will apply for the highly competitive bid as three duty-free operating licenses are set to expire within the year. The deadline is set for Friday and the Korea Customs Service will announce the result in November.
Currently, Lotte Duty Free, the nation’s No. 1 operator, has two stores in Myeongdong, a major shopping district, and the affluent Gangnam region, and SK Networks Co., a trading and hotel unit under SK Group, has a store in the Sheraton Grand Walkerhill Hotel in the southeastern part of the capital.
Separately, Shinsegae will renew its operating license for Paradise Duty Free in the southern port city of Busan as its current license also expires in December.
“We will propose a multi-complex shopping mall in Myeongdong, the nation’s No. 1 tourist attraction,” said Sung Young-mok, who is in charge of Shinsegae’s duty free business. “For Busan, we will relocate the duty-free shop to Shinsegae Centum City to recreate it as Busan’s tourism icon.”
It is the second bid this year after Shinsegae applied for a new license in May, proposing to renovate its landmark outlet in Myeongdong. The building, established in 1930, was home to the country’s first department store.
If it wins the bid, the retail giant will be opening its first duty-free store in downtown Seoul.
The bid is seen as a major opportunity for local retailers who are in search of new cash cows amid lackluster domestic demand. Duty-free stores have emerged as one of the most lucrative retail channels in tandem with a sharp influx of deep-pocketed shoppers from China.
Last year, the six duty-free stores across the capital, mostly dominated by Lotte, posted combined sales of 4.4 trillion won (US$4 billion). Sales by a Lotte Duty Free branch in the Myeongdong area accounted for a whopping 45 percent of the total.
Questions & Answers
Q.Which other companies currently operate duty-free stores in Seoul that might also be affected by the license renewals?
Which other companies currently operate duty-free stores in Seoul that might also be affected by the license renewals?
Lotte Duty Free operates two stores in Myeongdong and Gangnam, and SK Networks Co. Runs a store in the Sheraton Grand Walkerhill Hotel. These are the current operators mentioned in the capital.
Q.What is Shinsegae's plan for its existing duty-free operation in Busan?
What is Shinsegae's plan for its existing duty-free operation in Busan?
Shinsegae intends to renew its operating license for Paradise Duty Free in Busan. They plan to relocate this shop to Shinsegae Centum City to re-establish it as a tourism icon for the city.
Q.Why is securing duty-free licenses considered particularly important for retailers at this time?
Why is securing duty-free licenses considered particularly important for retailers at this time?
Duty-free stores are seen as a significant opportunity for local retailers seeking new revenue streams. This is due to a surge in high-spending Chinese shoppers and sluggish domestic demand.
Q.How significant were the total sales for Seoul's duty-free stores last year?
How significant were the total sales for Seoul's duty-free stores last year?
Last year, the six duty-free stores in Seoul, mostly controlled by Lotte, recorded combined sales of 4.4 trillion won. One Lotte branch in Myeongdong alone contributed 45 percent of this total.
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