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SK vows to open duty free shop in Dongdaemun
SK Networks CEO Moon Jong-hoon speaks during a press conference at company headquarters in downtown Seoul, Tuesday. Moon pledged to win a license to open a duty free shop in Dongdaemun, central Seoul, while retaining a license for its shop at the Sheraton Grande Walkerhill Hotel, eastern Seoul. / Courtesy of SK Networks
By Lee Hyo-sik
Third-largest chaebol on collision course with Doosan for ‘golden goose’ in retail
By Lee Hyo-sik
SK Networks, a trading and hotel unit of SK Group, has vowed to win a license to open a new duty free shop in Dongdaemun, central Seoul, while retaining the right to continue to operate a store at the Sheraton Walkerhill Hotel in eastern Seoul.
SK’s plan to run the duty free store in Dongdaemun, a shopping district frequently visited by Chinese and other Asian tourists, puts itself on a collision course with Doosan Group, which also seeks to open such a store in the area.
SK Networks CEO Moon Jong-hoon said Tuesday that the company is the most suitable entity to transform Dongdaemun into Seoul’s most-visited shopping and leisure district, pledging to spend 240 billion won ($215 million) to improve tourism infrastructure, and support small business partners and nearby merchants.
“If we secure two licenses as planned, we will spend 240 billion to create the ‘shared ecosystem’ in areas where we operate duty free shops,” Moon said during a press conference at company headquarters in downtown Seoul, Tuesday. “The company will spend 90 billion won for the Walkerhill store and the remaining 150 billion for the envisioned Dongdaemun outlet.”
The CEO said SK’s two duty free shops would generate the accumulated sales of 8.7 trillion won from 2016 through 2020 and create 67,000 new jobs.
“We will do everything we can to turn Dongdaemun and Walkerhill into an attractive tourist destination for Chinese and other foreign visitors,” Moon said. “Based on our knowhow and expertise from operating the Walkerhill duty free store for 23 years, we will soon head overseas to establish a presence in Malaysia and other Asian nations to solidify our status as Korea’s No.3 duty free operator.”
SK’s bid to open a duty free shop in Dongdaemun is not good news for Doosan, the 12th-largest family controlled conglomerate, which seeks to enter the duty free business ― dubbed the “golden goose” of the retail industry ― as its construction and heavy equipment making businesses have faltered in recent years.
Doosan has pledged to win one of three expiring licenses to set up a store at the Doosan Tower in Dongdaemun.
At stake are Walkerhill Duty Free in eastern Seoul, Lotte Duty Free in downtown Seoul and Lotte Duty Free in Jamsil, southeastern Seoul. Their five-year license will expire at the end of November. The KCS accepted bids in September and will announce winners in late November.
Lotte Duty Free, Korea’s largest duty free operator, promised to spend 150 billion won over the next five years for small business partners and local communities in a bid to retain its two licenses in Seoul.
Shinsegae, which wants to open a duty free store at its main department store in downtown Seoul, also vowed to spend 270 billion won for next five years to turn Seoul into a global tourist site if it wins the license.