Duty-free shop owners ready for airport battle

The passenger terminals at Incheon International Airport are about to become a battleground, as duty-free shops fight for the right to pitch their wares to the millions of travelers that pass through the airport every year on their way in and out of the country.
The airport will accept bids from shops in March. The stores’ contracts will expire at the end of February 2008. Currently, the airport’s four duty-free shops are operated by Lotte Shopping, Duty Free Korea, AK and DFS, operated by LVMF, owner of luxury brands such as Louis Vuitton.
The four will compete for space with about six other operators.
Shilla Duty Free, the second-biggest duty free shop operator, which was forced out by the high bidding prices when the airport opened in 2002, wants a store at Incheon.
Lotte, the biggest duty-free operator, is feeling the heat. “We have formed a special task force team to win the renewal bid,” said an executive at Lotte who declined to be identified. “Not just Korean, but foreign companies like Dufry of Switzerland are also expected to compete for a store space.”
The Korean duty-free market is as big as 900 billion won ($959 million) annually and has been growing more than 15 percent a year with the increasing number of Koreans traveling overseas.
When the airport authority opens the new boarding bay building and connects it to the terminal in July 2008, the space for duty-free shops will increase by as much as 50 percent, opening up room for more operators.
Meanwhile, the COEX SKM duty-free shop in southern Seoul is for sale, according to KTB Network, one of Korea’s largest venture capital firms and owner of the shop.
KTB will sell a 96-percent stake in the store. The shop is located in COEX, which is one of Seoul’s largest commercial malls at more than 45,300 square feet, but sales have been lagging. It is currently the worst performer among duty-free shops here.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]