SOUTH KOREA. The bids are in for the duty free concessions at Incheon International Airport and a battle royal between some of the world’s most powerful travel retailers is set to ensue.
As reported, bidding closed yesterday 28 February) for the duty free contracts on offer at Terminals 1 and 2.
The republic’s leading duty free retailers – Lotte Duty Free, The Shilla Duty Free and Shinsegae Duty Free – all submitted multiple bids within the five-package framework available to bigger corporations. Hyundai Duty Free is also in the mix.
They are joined by the world’s number one travel retailer, China Duty Free Group (CDFG) in an intriguing contest for what historically ranked as one of the world’s two biggest airport duty free sales locations, alongside Dubai International Airport.
Plenty of big guns then. But will they come out blazing in terms of financial offers?
The Korean duty free market has been ravaged by the pandemic and structural problems. As reported, sales in the channel dropped by -11.5% year-on-year in 2022 to US$13.8 billion, largely due to a decline in downtown revenues. That represented a -35.4% decline compared with record sales in 2019 of US$21.3 billion.
Moreover, duty free sales in January slumped by -30% year-on-year to KRW797.4 billion (US$603.6 million) in the wake of sharply reduced commission rates to travel agencies linked to bulk daigou reselling into China. The newly-published figures from the Korea Duty Free Association show a -41% decline month-on-month.
The Moodie Davitt Report can confirm local reports that CDFG has bid on four of the contracts set aside for the bigger corporations, choosing not to bid on DF5 (see packages below). Click here for our detailed analysis of the tender packages.
Strong interest has also been shown in the concessions set aside for small and medium enterprises (SMEs). Incumbents Cityplus Duty Free and Kyung Bok Kung Duty Free are understood to be in the mix. Sources say KAL CND Service (Korean Air’s inflight sales & catering outsource company), Busan Duty Free (which operates at Busan seaport) and DS Solution have also entered the fray. The Moodie Davitt Report is attempting to verify details.
Pre-pandemic, Incheon International Airport historically ranked as one of the world’s two biggest airport duty free sales locations, alongside Dubai International Airport.
Sales were devastated, however, by the COVID-19 crisis. The total Korean duty free market reached just US$13.8 billion last year, down by -11.5% year-on-year (largely due to a decline in downtown sales) and representing a -35.4% slump compared with record revenues in 2019 of US$21.3 billion.
CDFG will face strong local rivalry for the contracts set aside for big corporations from Korean giants Lotte Duty Free and The Shilla Duty Free. The Republic’s next biggest players, Shinsegae Duty Free and Hyundai Duty Free, may also bid though both (in common with Lotte and Shilla) are under much financial pressure due to tough market conditions {look out for our report on the dramatic upheaval in the all-important daigou channel, coming soon} and onerous existing contracts at Incheon Airport.
If successful, CDFG would become the first foreign retailer to hold a duty free contract at Incheon International Airport since incumbent DFS Group was ousted in the 2007 tender. DFS had won a five-year concession with a two-year extension, operating from when Incheon opened in 2001.
Chinese shoppers overtook Koreans as Incheon International Airport Terminal 1’s leading spenders by total sales in pre-pandemic 2019, representing more than 46% of revenues, ahead of Koreans with 40%.
In Terminal 2, home to national carrier Korean Air, Chinese customers generated 31.7% of sales in 2019 compared with 53.2% by Koreans.
Incheon International Airport Corporation is offering seven business licences (five general licences covering 63 stores, and 20,842sq m of space) to big companies and two small and medium-sized licences (embracing 14 stores and 3,280sq m). ✈
Note: The Moodie Davitt Report is the industry’s most popular channel for launching commercial proposals and for publishing the results. If you wish to promote an Expression of Interest, Request for Proposals or full tender process for any sector of airport or other travel-related infrastructure revenues, simply e-mail Martin Moodie at Martin@MoodieDavittReport.com.
We have a variety of options that will ensure you reach the widest, most high-quality concessionaire/retailer/operator base in the industry – globally and immediately.
The Moodie Davitt Report is the only international business media to cover all airport or other travel-related consumer services, revenue-generating and otherwise. Our reporting includes duty free and other retail, food & beverage, property, passenger lounges, art and culture, hotels, car parking, medical facilities, the Internet, advertising and related revenue streams.
Please send relevant material, including images, to Martin Moodie at Martin@MoodieDavittReport.com for instant, quality global coverage. 
