SOUTH KOREA. Paradise Duty Free, based in the country’s second city of Busan, is reaping rich rewards from a major expansion of its downtown store in late 2006. Last year company sales rose +30% to US$140.6 million, this year they should hit US$160 million.
The retailer is part of the Paradise Group founded in 1972 and which operates in a number of sectors including construction, casinos, hotels, manufacturing and duty free. Its stated mission is to be the world’s best duty free retailer.
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An external view of the spectacular Paradise Duty Free store in Busan – widely rated as one of Asia’s best |
Since the expansion, the four-storey Paradise Duty Free complex features a much enhanced fashion, luxury, eyewear, fragrances and cosmetics offer. The company operates over 7,300sq m – the largest downtown duty free shopping space in South Korea. Paradise Duty Free is part of the Paradise Hotel complex, located in the beachside area of Haeundae – “˜the summer capital of Korea’ – and part of the Leading Hotels of the World group.
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Duty Free Paradise President You Young-Sub (left) and Director Merchandising Department Jin-Mo Kim |
Boutiques on the arrivals level include Louis Vuitton, Bvlgari, Cartier, Gucci, Tiffany and Christian Dior. The second floor is entirely dedicated to cosmetics & fragrances spread over 1,050sq m – claimed to be the largest space dedicated to the sector in the country’s travel retail channel. Sales in this department surged by +44% last year to US$27 million.
The third floor features a wide range of fashion boutiques such as Paul Smith, Daks and Hugo Boss as well as an ocean view cafeteria allowing customers the chance to relax before or after shopping.
In his first interview with the travel retail industry press, Paradise Duty Free President You Young-Sub told The Moodie Report that the company’s commitment to investment, quality and its customers and employees was paying off. “We invested US$25 million in the new store in 2006 and our clients really love it.
“Since then I think that duty free has become the best business in Paradise. It is still smaller than the casino business but the duty free is increasing very rapidly. This year our target is US$160 million – last year we reached US$140 million.”
Paradise has ambitions to open elsewhere, both in South Korea and overseas. The company missed out on the Incheon International Airport duty free tender last year but is keen to open another downtown outlet – particularly in Seoul. However due to new regulations designed to limit duty free outlets, such a move would mean having to buy an existing retailer and licence as new ones are unlikely to be issued.
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Set over four storeys, Paradise Duty Free exudes luxury and elegance |
“In economic volume Seoul is over ten times that of Busan,” You said. “But we will have to wait another four years for another opportunity in the airport so we will look downtown and at foreign countries. One example is the Philippines, another is Vietnam. We will do our best to increase our presence in Korea and overseas markets. But productivity and efficiency matters – just going there and losing money is of no interest. We have no interest in bidding where there is no profit.”
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The company retained the duty free concession at Daegu Airport (in South Korea’s fourth-largest city) in 2007 but a competitive bid meant it won’t make money until at least the second year of the contract. Sales there rose +4% last year to US$8.5 million.
But despite the intense competition that has always been a hallmark of the Korean duty free business, prospects are good said You. “I am quite positive about the business. Korean GDP is rising fast so that means a lot more spending power. In the past our government tried to regulate foreign currency spending but nowadays it’s more and more liberalized.”
That liberalisation is finding voice in a likely increase of the value allowance for Korean customers from US$3,000 to US$5,000. And with the government also working hard to develop the country’s in-bound tourism industry there is plenty of cause for optimism, You said. The new government of President Lee Myung-bak is also very pro-business and pro-tourism, he noted.
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Paul Smith (left) on the third floor and Louis Vuitton on the arrivals level are just two of the many big-name boutiques | |
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Eyewear sales are booming (up +72% last year) as are cosmetics and skincare, up by +44% | |
The full interview with You Young-Sub and a walk through Paradise Duty Free with Director Merchandising Department Jin-Mo Kim features in the next edition of The Moodie Report PLUS and in the May edition of The Moodie Report Digital Print Edition.
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MORE STORIES ON PARADISE DUTY FREE
Welcome to Paradise – The Moodie BLOG
Entering Paradise – The Moodie BLOG
New foreign shopper quota threatens South Korean downtown duty free shops – 27/12/07
