SOUTH KOREA. Bids closed on Friday on the duty free retailing tender at Incheon International Airport, the world’s biggest duty free contract package.
Intense interest is expected in the various opportunities on offer (see below for details). As revealed by The Moodie Report, Incheon International Airport generated duty free sales of US$2 billion in 2014 – a world-record performance in the 67-year history of the airport duty free industry.
Against the backdrop of a prolonged surge in Chinese visitors and travel retail spending in 2014, local and international retailers are competing across two broad groups of duty free tenders for core categories within Incheon International Airport’s overarching Airstar Avenue shopping complex
Incheon’s duty free sales outstripped international passenger traffic growth of +10.1% (to 44.9 million) in 2014. Business was spurred by an extraordinary +41.6% rise in Chinese visitors to 6,126,865, a 43.1% share of total arrivals to South Korea.
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The complex tender structure allows opportunities for large and small & medium enterprises |
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Cross reference the map locations with the table above to see where the major and SME retailers respectively will be operating. Click on the above to view the enlarged image (then hover over graphs with your cursor and click for full detail) |
About 47% of Incheon duty free sales were to Korean travellers (47%) with the Chinese and Japanese collectively generating a further 39% (of which the Chinese were by far the dominant group).
Cosmetics & perfumes (collectively) ranked as the leading category, accounting for 38% of overall sales, followed by leathergoods (18%), liquor & tobacco (16%), and fashion & accessories (14%).
The 2014 performance was all the more impressive given the soft Japanese market, for so long the linchpin of South Korean travel retail. Driven by a weak Yen, which drove a -16.7% fall in visitors to South Korea in the first 11 months of 2014, spending by Japanese tourists (16.1% of total arrivals in the same period) on travel retail was very soft last year.
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Accumulative figures of selected arrivals to South Korea by purpose and nationality for the 12 months to December 2014 – note the Chinese boom; Source: Korea Tourism Organization |
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Selected arrivals to South Korea by purpose and nationality in December 2014; Source: Korea Tourism Organization |
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Departures by Koreans for the 12 months of 2014 by gender (above) and by age (below) |  |
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A highly competitive field of Korean companies (large as well as small & medium enterprises) and international retailers is expected to contest the Incheon duty free tender, where the Airstar Avenue concessions are currently held by Lotte Duty Free, The Shilla Duty Free and Korea Tourism Organization |
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