SOUTH KOREA. Hyundai Department Store has opened its first duty free store in Seoul.
The opening took place today (1 November) at the company’s Trade Center branch in Seoul’s Samseong-dong business district. The 14,250sq m store occupies the eighth, ninth and tenth floors and features 420 brands, including 40 foreign luxury brands.
The ninth floor is dedicated to cosmetics, while the store also features a separate foreign fashion zone and the first official Alexander McQueen store in South Korea.
Hyundai Department Store Duty Free Co. President Hwang Hae-yeon said that the company expects to generate KRW670 billion (US$593 million) in sales revenue next year, and more than KRW1 trillion (US$885 million) in 2020.
Local media reports have noted that Chanel, Hermès and Louis Vuitton are not part of the luxury offer. Hwang explained in a press conference that the brands were hesitant to open in a newly-launched duty free store in a climate where the number of Chinese visitors to South Korea has dropped sharply. Hwang told reporters (perhaps optimstically in Vuitton’s case -Ed) that he believed the brands would open at the store soon.
[Hyundai Department Store’s trailer for the new downtown store.]
The latest Korea Tourism Organization (KTO) figures showed that Chinese visitor arrivals in South Korea rose +36.4% year-on-year in September, to 434,595, continuing the sustained recovery from the THAAD-hit 2017 numbers. However, the September total was still -40.2% down on the same month’s figure in 2016.
As reported, South Korean duty free sales hit an all-time high of US$12.9 billion between January and September 2018. This was largely attributable to the daigou (shuttle trader) phenomenon. This trade involves hundreds of thousands of Chinese shoppers purchasing Korean and international duty free goods for customers in Mainland China at well below prevailing Chinese domestic prices and then reselling them. However that business now seems increasingly exposed, following reports of a crackdown by Chinese customs officers during the recent Golden Week holiday.
Hyundai’s opening comes nearly two years after it was awarded a downtown duty free licence in Seoul by the Korea Customs Service.
