SOUTH KOREA. In big breaking news, The Moodie Report can reveal that a joint venture beween Shilla & Hyundai Development Company, plus Hanwha Galleria, SM Consortium and Jeju Tourism Organization have been awarded the four new downtown duty free licences that have been the subject of a major bid over recent months, ahead of intense competition.
Shilla & Hyundai Development Company and Hanwha Galleria won the contracts reserved for major players in Seoul and SM Duty Free Consortium (a consortium of enterprises led by Hana Tour) that for a small & mid-sized enterprise (SME) in the capital, while Jeju Tourism Organization won the licence for Jeju Island.
The result has surprised many local observers. “Everyone in this industry has been stunned,” one of Korea’s leading travel retailers told The Moodie Report. “First no one expected Shinsegae could be ruled out. And Hanwha’s success wasn’t expected. Despite the oligopoly controversy many expected HDC/Shilla would win a license.”
For Shilla, which will trade with Hyundai Development Company as HDC Shilla Duty Free, the result is a triumph. As first revealed by The Moodie Report, the alliance will open in Youngsan iPark mall with South Korea’s largest downtown duty free store.
A delighted Jason Cha, Shilla Duty Free Head of Duty Free and Senior Executive Vice President/Board Director, told The Moodie Report: “It’s very tough competition but our joint venture’s business proposal was good enough to get an award.”
Regina Hahm, Equity Analyst (Cosmetics, Hotels & Leisure, Fashion) at KDB Daewoo Securities Co, commented: “It is a very reasonable and rational triumph for Hotel Shilla, who has fulfilled all the requirements that have been suggested by the government. The government has once again confirmed my belief… that they deeply understand the critical competencies that a travel retailer should have to be successful in running a new licence, which must be backed by long-term experience in running the largest duty free market in the world.”
She also noted that the granting of the Seoul SME licence to a consortium made sense. “The decision to give a license to SM Duty Free seems very rational indeed,” Ms Hahm said. “For a SME to be successful in running a downtown duty free business, they should at least have one of the two most important qualities – a customer base or merchandising capability. There would not be a single SME which has [sufficient] merchandising capability as such a quality is rooted in years of actual experience.
“The only candidate which has an already structured customer base was Hana Tour – the largest outbound tourism agency having around 23% market share.”
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White-hot interest. This table, courtesy of KDB Daewoo Securities Co, underlines just how competitive the contest for the three new Seoul downtown duty free licences was |
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The Seoul success (in partnership with Hyundai Development Company) is a huge boost for The Shilla Duty Free, which has had to operate within increasingly frustrating space restraints in its flagship store for years |
