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SOUTH KOREA. French luxury fashion house Chanel is set to withdraw from its location with The Shilla Duty Free at Incheon International Airport this September as controversy continues to simmer over the retailer’s planned opening of a Louis Vuitton boutique at the Korean gateway.
The Moodie Report understands reliably that Chanel is concerned about the size of the Vuitton store (at 550sq m it is more than three times bigger than its French rival) and the prominence of its fa̤ade Рpositioned right in front of the Chanel store. Chanel declined to comment when approached by The Moodie Report.
A Shilla senior executive said today that “any issue regarding Chanel’s withdrawal” had not been finalised.
Chanel has two stores at Incheon, one with Shilla and one with state-owned Korea Tourism Organization (in the western part of the main terminal). The company will believe that a single integrated store should prove very popular and help compensate for the planned closure of the Shilla outlet.
Chanel, one of the world’s most carefully nurtured luxury brands, undoubtedly has concerns about alleged preferential concession terms granted to Louis Vuitton (something Shilla denies – see below), but it is known to have made its Incheon stance solely on grounds of brand equity rather than any financial considerations.
As reported, Shilla’s agreement with Louis Vuitton to open the world’s first airport Louis Vuitton store has caused a major row in Korea’s travel retail industry. Shilla’s arch rival Lotte Duty Free originally filed a lawsuit against the airport alleging biased treatment but, as revealed by The Moodie Report, later dropped the case.
The Shilla Duty Free Executive Vice President, Head of Duty Free Division Jason Cha told The Moodie Report yesterday that the opening date of the company’s Louis Vuitton store at Incheon is still being finalised, suggesting it could be in the fourth quarter. He conceded that Chanel may withdraw one of its Incheon outlets.
Chanel’s fashion business at Incheon (see table of best-selling brands) is known to be enjoying spectacular growth.
As reported, another leading luxury fashion house, Gucci, is set to withdraw from its relationship with Shilla at Incheon and open with Lotte instead.
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Incheon International Airport: Soon to be home to the world’s first Louis Vuitton airport store |
The Shilla Duty Free Director Merchandise Planning Team Young-Hoon Kim told The Moodie Report that Gucci had requested “excessive modification of terms and conditions” to both Shilla and Lotte as a result of the Louis Vuitton opening. He claimed that Gucci finally decided to close its shop with Shilla and open a new one with Lotte “at a far inferior location” after Lotte agreed terms, which Shilla did not.
Kim said that while Shilla could not reveal details of the terms and conditions it had struck with Louis Vuitton, “We believe it was a very reasonable level reflecting the high rent of the Incheon Airport.
“Also,” he added, “Gucci’s argument seems to be unconvincing considering the difference in margin between Louis Vuitton and Gucci at our Seoul [downtown] store. Especially, when we consider this Louis Vuitton shop at Incheon Airport is the very first shop in an airport around the world, the information that says Louis Vuitton has been treated in a special and preferential way would be wrong.”
Kim said that Shilla would continue to successfully operate exclusive shops such as Miu Miu and Prada at Incheon. “Even with the closing of the Gucci shop, Shilla will launch a new exclusive Tiffany shop at Incheon as well,” he said, “which, along with the Louis Vuitton opening makes Shilla the anchor of Incheon Airport duty free shopping.”
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The Vuitton store at Incheon, now under construction, is thought to be the largest ever mono-brand airport fashion boutique |
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