SOUTH KOREA. The Shilla Duty Free and Shinsegae Duty Free are the front-runners for the major corporation duty free concessions out to bid at Incheon International Airport Terminals 1 and 2 after the first round of assessments by Incheon International Airport Corporation (IIAC). Shilla bid highest on two of the five concessions ahead of Shinsegae with the order reversed on the other three (see details below).
However, there is still much to play for due to the unique two-stage structure of the tender and the fact that a single retailer can only win one package within the two groups on offer (Group One: DF1 and DF2; Group Two: DF3, DF4, and DF5).
The short-listed parties (to be announced later today) will go forward to a second round of judging conducted by Korea Customs Service (KCS). The IIAC scoring is based on a combination of business plan (60%) and financial offer (40%). So far only the financial bids have been disclosed.
In the subsequent KCS judging, the financial offer accounts for 400 points and the business plan 500, with the IIAC business plan worth another 100.
The Moodie Davitt Report can confirm The Shilla Duty Free topped the financial bid for DF1, a 17-store combination of perfumes & cosmetics and liquor & tobacco stores (see table below), followed by Shinsegae Duty Free, China Duty Free Group and Lotte Duty Free in that order.
For DF2 (16 stores) across the same categories, the running order was the same.
For DF3, Shinsegae Duty Free made the highest financial offer, ahead of The Shilla Duty Free and China Duty Free Group, with the same order applying for DF4. Lotte Duty Free bid on neither concession.
For DF5, Shinsegae bid highest, ahead of The Shilla Duty Free, Lotte Duty Free and Hyundai Duty Free. China Duty Free Group did not bid on DF5.
Key talking points include the aggressive approaches of Shilla and Shinsegae and the highly conservative offers by Lotte Duty Free, clearly concerned about the future profitability of the airport business.
China Duty Free Group, which would become the first foreign retailer to operate at Incheon since DFS was ousted in the 2007 tender if it won a contract, bid with prudence, while apparently its presence drove up the offers of the two lead candidates, Shilla and Shinsegae.
KCS is expected to reveal the winner for each package by mid-April. The concessions kick off on 1 July.
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) with the various players having presented to IIAC earlier this week.
Incumbents Cityplus Duty Free and Kyung Bok Kung Duty Free have bid alongside DS Solution, backed by Korean fashion accessories company Metrocity. ✈
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