Shinsegae to run duty free shops at Incheon airport

By Lee Kyung-min

Shinsegae Group, Hotel Shilla and Hotel Lotte have won the bidding to operate duty free shops at Incheon International Airport, the airport’s operator said Wednesday.

They will run the shops from September this year until 2020, according to the Incheon International Airport Corp. (IIAC).

Hotel Shilla and Hotel Lotte are currently operating shops at the airport, but joined the bidding to extend their contracts. Shinsegae will be a new contractor.

Out of 12 sections up for the bid, the three conglomerates won eight of them ― four for Hotel Shilla, three for Hotel Lotte and one for Shinsegae.

The remaining four sections were allotted to small- and medium-sized companies, but only Charmzone, a cosmetics maker, obtained the rights to have one section as a sole bidder. There were no bidders for the remaining three sections. IIAC said it will hold another round of bidding for these.

The companies will sell perfumes, alcohol, cigarettes, fashion goods, cosmetics and jewelry.

Hotel Shilla and Hotel Lotte will each use one section for selling cosmetics and perfumes, and one section for selling alcohol and cigarettes, which are the most lucrative.

Since last year, many companies have expressed heated interest in winning the duty free shop operating rights to cash in on the growing number of foreign tourists.

At the briefing for the bid held on Dec. 11, officials from 27 companies attended.

Among them were major domestic duty free shop operators Dongwha and the Korea Tourism Organization (KTO), according to IIAC.

Several foreign duty free retailers, including DFS, Dufry and King Power also attended the briefing.

Several small- and medium-sized companies took part, eyeing the four sections reserved for them.

“Sales at duty free shops have been growing consistently while those at Korea's major department stores have been in the doldrums for many months,” one company official said.

IIAC said that on average, sales at the airport's duty free stores had increased 14 percent over the past five years.

The duty free shop business is promising because of the increased number of inbound tourists.

Chinese visitors accounted for 35 percent of inbound tourists, Japanese 22 percent and Americans 6 percent last year. A Chinese tourist spends $2,272 in Korea on average, nearly double the $990 a head spent by Japanese visitors.