Shinsegae makes new duty free unitShinsegae Group will set up a new company to strengthen its footing in the duty free business, Korea’s No. 2 retail conglomerate said Tuesday.
The company will be named Shinsegae DF with Shinsegae Co. controlling 100 percent of the firm. Shinsegae Chosun Hotel CEO Sung Young-mok will lead the company.
Sung was formerly CEO of Hotel Shilla, which operates a major duty-free franchise in Korea.
“We decided to set up our duty-free business as an independent entity because we believe it has huge growth potential,” Shinsegae said in a statement.
“Shinsegae, which owns 100 percent of the duty-free business, also has premium outlets and Shinsegae International (fashion retailer) in its portfolio. Good synergy with the duty-free business is expected.”
The total investment has not been decided but the group announced in January this year that it plans to invest 3.35 trillion won in 2015.
“With Shinsegae DF at the helm, the group will proactively look into global expansion as well,” a Shinsaegae spokesperson said.
Shinsegae has entered a bid for a new duty-free license in Seoul. Three licenses to operate duty-free shops in Seoul are scheduled to be issued by the Korea Customs Service in July.
Retail companies are scrambling to find new sources of growth and profits. The duty-free industry is enjoying double-digit sales growths thanks to Chinese tourists.
According to Korea Customs Service data, Korea’s duty-free market was worth 8 trillion won last year compared to 4.8 trillion won in 2010.
A Hotel Shilla-Hyundai Development joint venture, Lotte Duty Free and Hyundai Department Store have joined the competition for the coveted Seoul licenses.
Hyudai Department Store said it was also planning to set up an independent company to oversee its duty-free business in May, and has decided to collaborate with a Kosdaq-listed tour agency Mode Tour Network.
“Besides Mode Tour, we are looking at other medium-sized enterprises for collaborations,” Hyundai Department Store spokesman said.
There are six duty-free shops in Seoul, three operated by Lotte and individual stores operated by Hotel Shilla, SK Networks’ Walkerhill and Dongwha.
Shinsegae Group vice-chairman Chung Yong-jin is first cousins with Hotel Shilla CEO Lee Bu-jin.
BY PARK JUNG-YOUN [email@example.com]