SOUTH KOREA. Hyundai Duty Free today announced the closure of its Dongdaemun, Seoul store, effective 31 July, the latest victim of profoundly challenging market conditions in Korean travel retail.
The travel retailer, part of Hyundai Department Store, will instead focus its downtown duty-free business on the remaining Trade Center branch in Gangnam, Seoul. But even that store will be reduced from three floors (8 to 10) to two (8 and 9).
Revealing the changes in a document called ‘Turnaround strategy for the duty-free business’, Hyundai Department Store spelled out a combination of factors that have hit Korean downtown travel retail hard.
These include China’s economic downturn; a growth in FIT travel at the expense of group tours; China’s surging ‘Guochao’ (national wave) trend that has seen millions of consumers, particularly younger generations, favour Chinese brands; intensive competition; and excessive pricing due to a reliance on daigou resellers.
Hyundai Duty Free commented: “Since the establishment of the company, we have done our best while holding expectations for a market recovery despite numerous crises. However, the domestic and international management environment, including changes in the Chinese market and consumer trends, is worsening.
“After much deliberation, we have decided to pursue management efficiency in order to overcome the duty-free industry’s overall crisis, improve management conditions and resolve our deficit.”
A Hyundai Duty Free executive added, “This management efficiency drive is an inevitable choice in order to normalise business amid the crisis facing the duty-free industry and to promote future growth. We will do our best to achieve transparent and stable business normalisation.”
The company continues to operate four stores in Incheon International Airport terminals 1 and 2. ✈
An open and shut caseHyundai Duty Free’s shutting down of its Dongdaemun business is not the first downtown duty-free closure in the ailing Korean travel retail sector and almost certainly will not be the last. Hyundai Duty Free’s closure follows hot on the heels of Shinsegae Duty Free shutting down its Busan downtown duty-free store (in Shinsegae Centum City) on 24 January. Other closures over recent years include:
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The company is also introducing an array of measures to boost organisational efficiency and profitability, including a voluntary retirement scheme.
“This promotion of management efficiency is an inevitable choice to normalise the business and further promote future growth amid a crisis across the duty-free industry,” a Hyundai Duty Free spokesperson said. ✈
