Duty Free companies trying to spread their wings

Industry

Published: 02 Nov. 2021, 18:18 Updated: 03 Nov. 2021, 15:32

Duty Free companies trying to spread their wings

An image of a Lotte Duty Free store that is planned for Changi Airport, Singapore. [LOTTE DUTY FREE]

Duty free stores are gearing up for a revival in travel with the easing of Covid-19 restrictions.

Redesigning city duty free stores and opening more shops in airports overseas are some of the effort being undertaken by major duty free operators.

Lotte Duty Free is resuming overseas projects that were halted last year as a result of Covid-19.

Lotte Duty Free, the No. 1 duty free company in Korea by sales, recently resumed construction of duty free shops at Changi Airport in Singapore.

Eight are under construction and five are completed. A total of 19 shops are planned to open gradually.

The total space of the shops is 8,700 square meters (93,646 square feet). Lotte expects to be able to generate more than 500 billion won ($430 million) in annual sales when all 19 shops open at Changi Airport.

“We recently resumed the construction of the shops at Changi Airport following the Singapore government’s announcement last month that it is easing Covid-19 lockdown restrictions,” said Park Seok-in, a spokesperson for Lotte Duty Free. “The construction had been on and off since last year depending on the number of Covid-19 cases. "We don’t think the construction will be halted again unless the number of the pandemic-linked deaths spike.”

Lotte Duty Free opened a Tiffany & Co. shop at Kansai International Airport in Osaka, Japan, last month. It was the sixth luxury brand store it opened at the airport since last December.

The company expects to generate around 100 billion won in annual sales from the shops at the Kansai International Airport when they are fully operated. Currently, they only open when there are international flights taking off from the Kansai International Airport.

It is also planning to open city duty free shops in Sydney, Da Nang and Hanoi in coming months. Their openings were delayed due to the pandemic.

The company plans to strengthen its online business as well.

It opened “Sogong 1st Ave,” a service that enables customers to purchase luxury brands like Fendi and Alexander McQueen.

Previously, only a limited number of luxury brand products were available online.

But the three major high end luxury brands – Louis Vuitton, Hermes and Chanel – are not available on Sogong 1st Ave.

“Duty free is expected to be one of the last industries to recover from Covid-19 because people need to fly internationally for duty free shops to actually recover,” said Park from Lotte Duty Free. “This means foreign tourists, especially Chinese, have to travel to Korea and Koreans must travel abroad for duty free to recover. But that seems pretty far away as foreigners still have to be quarantined.”

All foreigners have to be quarantined for two weeks after arriving in Korea even if they are vaccinated, according to a spokesperson for the Ministry of Land, Infrastructure and Transport. Koreans vaccinated abroad who return home are not quarantined.

Shilla Duty Free is also trying to expand overseas business. Its focus is China.

In July, Shilla Duty Free signed an agreement with Hainan Tourism Investment Duty Free (HTDF) to start a joint venture. Shilla said the joint venture is part of its effort to prepare for the post Covid-19 era.

Through the joint venture, HTDF can benefit from Shilla’s sourcing capacities, and Shilla will be able to open a duty free shop in China.

A Chanel store at Incheon International Airport Terminal 1 that opened last month by Hyundai Department Store Duty Free. [HYUNDAI DEPARTMENT STORE DUTY FREE]

Others are focusing on the domestic market.

Hyundai Department Store Duty Free opened a Chanel store at Incheon International Airport Terminal 1 last month.

The company said that it “plans on strengthening the competitiveness of merchandising in all of our duty free stores in preparation for the era in which people live with the Covid-19.”

To attract more visitors, Shinsegae Duty Free opened an art space in its Myeongdong branch in central Seoul in August.
Artwork by illustrator Soña Lee and Eunah Kim are offered.

An art space at Shinsegae Duty Free store in Myeongdong, central Seoul. [SHINSEGAE DUTY FREE]

“Tourists have to enter Korea for duty free” to be operated, said a spokesperson for Shinsegae Duty Free. The art space was created “because a fresh motivation to visit [our] store when tourists come to Korea is needed. Before the recovery, [finding ways] to lock in customers is of the utmost importance.”

Despite the pandemic, total sales generated by the duty free industry reached 1.77 trillion won in September, up 19 percent on year, according to the Korea Duty Free Shops Association.

BY JIN MIN-JI [jin.minji@joongang.co.kr]