[Korea duty-free in 2019] “Big 3 downtown flagship” is the key

기사입력 : 2020-06-18 15:53:39 안상준 기자
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The concentration of sales in downtown duty-free can be seen more clearly by comparing the difference between the sales of the shops at Incheon Airport and shops in downtown Seoul. In 2019, the large corporate operators at Incheon Airport had a total of 10 business packages Lotte (1), Shilla (3), Shinsegae (3) at T1, and Lotte (1), Shilla (1), and Shinsegae (1)2 at T2. Their total sales in 2019 was KRW 2,518.9 billion, equivalent to 14.3% of downtown duty-free sales in Seoul.

▲ Infographic = Hae Young Yuk

 

On the other hand, the major duty-free shops in downtown Seoul are 3 Lotte Duty Free Shops(Myeongdong, World Tower, and COEX), 1 Shilla Duty Free Shop (Jangchungdong in Seoul), and 2 Shinsegae Duty Free Shops (Myeongdong, Gangnam). In addition, 10 stores were operated by HDC Shilla Duty Free (Yongsan), Hanwha Galleria 63 Duty Free (Yeouido), Hyundai Department Store Duty Free (COEX), and Doota Duty Free (Dongdaemun). Their total sales in 2019 was KRW 17,606.9 billion, accounting for 84.76% of the total sum of Seoul downtown sales and Airport sales in 2019, which was 20,770.9 billion.
 

By analyzing duty-free sales in downtown Seoul, it can be clearly mentioned that the “flagship” stores of each operator are extremely important. In the order of sales amount of downtown duty-free in 2019, the 1st place is Lotte Duty Free Myeongdong (KRW 5,714.2billion), the 2nd is Shilla Duty Free Seoul (KRW 4,262.9billion), and the 3rd is Shinsegae Duty Free Myeongdong (KRW 2,542.3billion). All of them are the flagship stores of each large corporate.
 

The sum of total sales of these Big 3 stores accounted for 71.1% of the sales of downtown duty-free shops in Seoul (KRW 17,606.9 billion, p5. Korea Downtown Duty Free Sales 2019). It also accounts for 59.5% of the Korean downtown duty-free total sales (KRW 21,030.9 billion). In 2019, 3 stores raised half of sales as 50.3% of the total Korean duty-free sales (KRW 24,858.5 billion). During 4 decades of history since 1980, the 1st downtown shop by Lotte Duty Free Myeongdong has recorded the highest sales. Shilla Duty Free Seoul, which opened the duty-free business in 1986, is closely chasing the top position. The 3rd player, Shinsegae Myeongdong, who joined the leading group within a few years from the starting the business, became the 3rd performer in the market.

▲ Infographic = Hae Young Yuk
 

Besides the Big 3 flagship stores, Lotte Duty Free World Tower (KRW 1,313.2 billion) ranked at the 4th position and HDC Shilla Duty Free (KRW 1,285.7 billion) ranked at the 5th position. The above 5 shops are all those which broke through the total annual sales of above KRW 1,000billion.
 

The other downtown duty-free shops at Seoul Doota Duty Free3 recorded KRW 788.3 billion sales after a new entry into the market since 2015, Hyundai Department Store Duty Free COEX sold KRW 701.3billion, Shinsegae Duty Free Gangnam, KRW 526.6 billion, Lotte Duty Free COEX KRW 269.8 billion. Hanwha Galleria 63 duty-free shop4 recorded KRW 202.5 billion.
 

On the other hand, SMEs sold KRW 276.7 billion at Incheon International Airport, measuring up to 75.17% of SME downtown sales in Seoul(KRW 368.1 billion). However, downtown SME operators are quite different from Incheon Airport operators. The airport operators include City Plus (1), Enta Duty Free (1), SM Duty Free (1), and Grand Hotel Duty Free (1) at Terminal 1 and City Plus (1), Enta Duty Free (1), SM Duty Free Shop (1) at Terminal 2. SMEs are operating the total of 7 business packages at Incheon Airport.
 

Dongwha Duty Free, KRW 319 billion, accounted for 86.7% of the total SMEs sales in downtown. Besides Dongwha, the only SME operator which has shops in downtown and Incheon Airport together is SM Duty-free who recorded the sales of KRW 491 million.
 

In conclusion, SME operators had shown the performance advantage at the airport with the benefit of the lower rent and license fee, rather than the direct competition at the downtown Seoul.

[저작권자ⓒ (주)티알앤디에프뉴스. 무단전재-재배포 금지]

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