HDC Shilla Duty Free to feature Hermes, Chanel brands

Hotel Shilla CEO Lee Boo-jin explains about the hotel’s updated business strategies in a shareholder meeting held in a Samsung Electronics building in downtown Seoul, in this file photo. / Korea Times file

By Kim Yoo-chul

HDC Shilla Duty Free, the joint venture of Hotel Shilla and Hyundai Department Co. (HDC), is in talks with Hermes and Chanel to host the luxury brands at its newly opened Shilla I’Park Duty Free Mall in Yongsan, Seoul.

According to sources, HDC Shilla Duty Free approached the brands to clinch new contracts with them after the operator signed a contract with LVMH Moet Hennessy Louis Vuitton SE (LVMH) to sell LVMH’s 20 brands at the Yongsan I’Park shop.

“Lots of details have to be worked out,” the source said Friday, requesting anonymity. “But chances are high that HDC Shilla will ink new deals with Hermes and Chanel.

“As the brand awareness and value of newly established duty-free shops such as HDC Shilla will be decided according to the number of famous luxury brands it sells, HDC Shilla will try hard to win new clients.”

If the plans materialize, this will be a boon for HDC Shilla, because the operator could be the first duty-free shop among those granted licenses last year to win a “global top 3” luxury brand.

HDC Shilla competes with the Hanwha and Doosan conglomerates for duty-free business.

Under the leadership of Hotel Shilla CEO Lee Boo-jin, the joint venture has been aggressive in expanding, in line with the corporate strategy to diversify sales channels amid the growing number of tourists in Korea.

Lee, who is also the oldest daughter of Samsung Electronics Chairman Lee Kun-hee, plans to appeal for greater accessibility, well-structured design and more floor space to develop business talks, according to the source.

Hotel Shilla, established in 1986, was the world’s No. 2 duty-free shop operator in sales by 2014. The hotel’s duty-free business volume was 2.5 trillion won.

The creation of HDC was aimed at accelerating Lee Boo-jin’s efforts to take control of non-consumer electronics businesses as a power shift in Samsung is under way, mainly led by the chairman’s only son, Samsung Electronics Vice Chairman Lee Jae-yong.

“Lee has long been planning to develop her duty-free business as one of the world’s best,” another source said. “The latest agreement with LVMH provided her with new growth momentum. Hermes and Chanel hold the key whether or not to elevate HDC Shilla’s standing in the local industry.”

Korea Customs Service (KCS) data showed the number of foreign visitors to Korea as of March this year rose 12 percent from a year earlier, while the sales of duty-free operators were up about 29 percent.

HDC Shilla is on a tract of 16,500 square meters and already handles 600 brands, including luxury items, cosmetics, fashion, food, confectionery and jewelry.

With the new 2,000-room Accor Ambassador hotel due to open in Yongsan next year, the addition of Hermes and Chanel is expected to boost significantly the duty-free venture’s annual sales.