Yongsan duty free opens without luxury trio
The mega-sized Shilla I’Park Duty Free Shop has signed up 580 retailers, though the crucial high-end trio have held off booking a spot in the 27,200-square-meter (292,780-square-foot) space.
Located in Yongsan District, the shop is jointly run by the No. 2 duty-free operator Hotel Shilla and builder Hyundai Development Company (HDC).
“We are in discussions [with the three brands] and it is really going well,” Lee Boo-jin, CEO of Hotel Shilla and a daughter of Samsung Group Chairman Lee Kun-hee, said at the opening ceremony.
“We have secured agreements with some 580 brands out of the planned 600. Since the executives and employees are working hard, I look forward to a great result.”
According to a market estimate, the combined sales of the top three brands only account for 10 to 20 percent of the entire annual sales in local duty-free shops.
While the share might be considered insignificant, their symbolic status is crucial for tax-exempt outlets to attract high-end consumers at home and abroad.
The three luxury retailers are also among the most sought-after labels by Chinese shoppers, the biggest consumer base of duty-free shops.
Likely with the importance of the brands in mind, Lee visited France last September to meet Bernard Arnault, chairman and CEO of LVMH Moet Hennessy - Louis Vuitton, the world’s leading luxury products group.
While her trip may have been in vain, at least in the short term, the fact that the store opened without the three upscale brands reflects the challenges for operators of new duty-free stores.
The luxury retailers are known for being cautious about choosing the stores where they sell their products to retain their premium image.
New or smaller operators find it difficult to attract the exclusive brands. Hanwha Galleria, which opened a new duty-free shop in Yeouido, western Seoul, also failed to bring in the luxury trio.
Regardless of the missing brands, the Yongsan duty-free store is impressive.
Boasting the biggest size among local duty-free players at 27,200 square meters, the duty-free shop offers a range of premium brands including Jimmy Choo, Givenchy and Ermenegildo Zegna.
The outlet that takes up the third to seventh floors of the I’Park Mall also houses popular Korean fashion brands such as TIME, MINE and System and cosmetic brands Sulwhasoo and Fu, as well as specialty products and food from far-flung regions like Gangwon.
Lee said the decision to sell regional products on the seventh floor is linked to fostering farmers and smaller merchants.
HDC Shilla, the joint venture running the duty-free shop, said it expects annual sales of 500 to 600 billion won.
“In the beginning phase, daily sales of the store stood at around 200 million won,” a source at HDC Shilla said. “But as we opened stores like Sulwhasoo and Fu, we saw the sales rise to 900 million to 1 billion won.
With this pace, annual sales can reach in the range of 500 to 600 billion won.”
The Shilla I’Park Duty Free Shop partially opened in December ahead of the full opening on Friday.
Key business and political leaders - including Chairman Chung Mong-gyu of Hyundai Development Company and Gov. Choi Moon-soon of Gangwon - attended the grand opening ceremony.
BY PARK EUN-JEE [firstname.lastname@example.org]