SOUTH KOREA. The new Shilla IPark Duty Free, soft opened on 24 December, will hit US$500 million in first-year sales and US$1 billion in annual sales within five years. That’s according to HDC Shilla Duty Free President Gil Han Lee.
The new store (located within the IPark Mall in Yongsan, Seoul) will celebrate its Grand Opening in March 2016. When fully open, the complex will be the world’s largest downtown duty free facililty, offering over 600 brands, HDC Shilla claimed. It will house a powerful array of international brands and the biggest-ever “˜K-wave’ (Korean wave) zone. That zone on the sixth floor already houses 3,500sq m of space, which will double within a year.
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The third floor (the entry level for most visitors) features a wide array of international beauty names as well as the major Korean skincare brands such as Whoo and Sulwhasoo (below) |
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Total space will eventually reach 30,000sq m once the duty free store is completed. A number of leading luxury brands have yet to take their place at Shilla IPark but many will join before the Grand Opening, said Lee. “We will expand the luxury fashion offer considerably with many new boutiques under construction. We are confident that more will come. Shilla has a strong track record in attracting the world’s great brands, and we were the first to introduce Louis Vuitton to an airport.”
Once fully open, the four floors of retail will house fragrances & cosmetics and luxury watches on the third level, luxury fashion over two floors (levels 4 and 5) and a sixth floor comprising Korean cosmetics, fashion & accessories, liquor & tobacco, electronics and food (notably Korean specialities).
The partially opened store, visited this week by The Moodie Report, is notable for its impressive ceiling heights, a factor that the joint venture retailer believes will be a major lure for other luxury brands. It will also prove a major attraction for independent Chinese travellers and high value Korean visitors in particular, noted Lee.
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A stunning digital display greets travellers coming from the lower floor bus parking zone |
“We have started with around 1,500 Chinese visitors per day, and that figure will reach 7-8,000 soon,” Lee predicted. “We are developing special cultural content that will attract them. This will include the famous Nanta theatre (Korean theatre) performances year-round, the world’s largest IMAX movie theatre, a newly built hotel complex with 1,800 rooms, a hypermarket and a wonderful food & beverage offer. This will include Korean cuisine, a Café Street, Dessert Café and the first ever outlet inside a duty free store opened by Pierre Hermé, the famous French chef known for his macaroons.
“The site will also be the best located downtown duty free store in Seoul, close to the most visited museums, easy transport links both urban and rural and near the river. Within one year Yongsan station will connect with Incheon Airport and within two years we will have a new City Airport Terminal where you can check in your bags before you leave the city. There are many compelling reasons to visit.”
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HDC Shilla Duty Free President & CEO Gil Han Lee: Targeting US$1 billion in annual sales within five years |
Shilla IPark is located in the middle of one of Korea’s biggest shopping and cultural complexes and is a joint venture created by HDC Group and Hotel Shilla. The Moodie Report will bring you more images and an in-depth on location report soon.
Phuket opening
In other Shilla developments, the company aims to open its first overseas downtown duty free operation in Phuket, Thailand by the end of May. That’s according to The Shilla Travel Retail Business President Ingyu Han.
He told The Moodie Report: “We are working closely with our partners and there is a lot to prepare. We will have a store of around 10,000sq m, which is under construction. We have our licence and importantly the rights for the airport pick-up counter. We will target Chinese visitors in particular. We are also actively searching for other opportunities overseas. We cannot only rely on growth in Korea.”
We’ll bring you an extensive interview with Ingyu Han soon.
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Q4 performance
In related news, Hotel Shilla’s travel retail division posted Q4 2015 sales of KRW757 billion (US$620 million) but operating profit plunged by -53.1% year-on-year to KRW14.5 billion (US$12 million).
The company’s downtown duty free business in Korea posted a healthy +18% rise to KRW466.2 billion (US$382 million) though airport sales (principally at Incheon International) fell sharply mainly due to store relocation and renovation. The growth in the downtown business was aided by a recovery in Chinese traffic after the MERS crisis. Chinese inbound traffic fell by -32.5% in Q3 but bounced back in Q4, rising by +12.4%.
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Source: Hotel Shilla |
In a statement to the market, Shilla said it expected an upturn in Q1. “The business environment is expected to be improved thanks to domestic and foreign demand for travel increases as Chinese inbound rises during the Spring Festival season,” said the company.
In a note to investors, KDB Daewoo Securities Equity Analyst Regina Hahm added that “Changi Airport and other miscellaneous overseas operations generated KRW120.7billion (US$99 million) in sales during the quarter, with KRW12.6 billion (US$10 million) of operating losses.
“The local duty free stores overall continued to suffer from increased Selling, General & Administrative expenses, triggered by the MERS outbreak, which are inclusive of travel agent commissions and marketing expenses.”
She added: “I believe Hotel Shilla will continue to build competitiveness despite all the unfavourable external conditions, primarily led by its continued effort to meaningfully improve the gross profit margin.”
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The Shilla Duty Free: Downtown sales performed well in Q4 but operating profit fell sharply |
