Jason Cha, Head of Shilla Duty Free said the South Korean operator is ‘very pleased’ to have won the P&C contract at Singapore Changi Airport.

 

Speaking exclusively to TRBusiness.com from Seoul, Executive Vice President Cha said this big news comes at the same time that the retailer has announced 8% sales growth overall in 2013.

 

“Yes, we are very surprised. This is a big event for us; we are very pleased. I express my thanks to Changi Airport for their choice of our partnership,” said Cha.

 

Celebrations were clearly under way when Shilla Duty Free was contacted at its Seoul HQ, after the operator became the first South Korean duty free operator in history to win a major $100m-plus annual sales duty free contract outside of the country – ahead of seven other bidders, including the incumbent of many years, Nuance-Watson.

 

The news was clearly still sinking in following yesterday’s announcement by the Changi Airport Group (CAG) that Shilla had been successful in securing the six-year beauty concession covering Terminals 1 to 3 and also T4 when it opens in 2017.

 

 

CHINESE KNOWLEDGE TRANSFER

Cha said proudly: “When you read Changi Airport’s bid award statement you can see they loved our proposal,” Cha said. “We mentioned that we are going to introduce new brands – recently there are a lot of new brands and high-end brands in the market.

 

“Also, we have a lot of knowledge about South Korean cosmetics brands as we operate at Incheon Airport. We have a lot of knowledge about Asian travellers’ shopping habits, particularly Chinese travellers; so we can apply our knowledge from Incheon.”

 

As already reported comprehensively [click here; http://www.trbusiness.com/index.php/regional/asia/14490.html] the Changi Airport beauty concession tenancy begins on 1 October 2014 comprising 19 outlets over around 5,500sq m from Terminals 1 to 3, and about 1,800sq m of space in the new T4, which is presently under construction.

 

Significantly, Shilla’s evident ability to set up the necessary logistics infrastructure to supply its Changi Airport shops has been an important factor in winning this concession.

 

“We have done a lot of studies to solve logistics with our existing shops in Changi Airport,” Cha said. “Also, as Shilla Duty Free is an associate of the Samsung Group, it will not be a problem for us to organize logistics in Singapore.”

 

Shilla Duty Free at its flagship downtown duty free store in Seoul.

 

A MAJOR STEP UP FOR SHILLA

Winning the Changi concession rounds off a successful 12-month period for Shilla which saw its total duty free revenue grow by 8% in South Korea in 2013, as Cha explained.

 

“We got US$1.9bn duty free sales; we are very happy,” Cha revealed. “Sales growth at our downtown shop was a little stronger than at Incheon Airport because of Chinese customers who like luxury watches and jewellery. Sales in our Incheon Airport Louis Vuitton shop were also very good.

 

“We expect 15% revenue growth this year. The only growth area is Chinese customers; with the yen at its current exchange rate we cannot expect Japanese tourists to come.”

 

The Shilla Duty Free-managed Louis Vuitton store at Incheon Airport has been a great success.

 

This victory for Shilla is a major step forward for the South Korean operator whose last major international duty free bid was at Los Angeles Airport, where it teamed with Aer Rianta International for a contract which was eventually won by DFS Group.

 

This important contract gain will also do much to elevate Shilla’s reputation with other airports in this and other regions and its knowledge of Chinese, Korean and Japanese consumer behaviour will be invaluable at Changi. It will also need to familiarise itself with the wide brand preferences of the very cosmopolitan customer mix at the airport, which is also one of Changi Airport’s core strengths.

 

[Written and researched by David Hayes, with additional reporting by Doug Newhouse].

 

[TOP IMAGE: An artist’s impression of how the new Shilla Duty Free beauty offer might look at Changi Airport. Below: Shilla Duty Free at Incheon Airport].

[Artist’s impression ‘COSMETICS & PERFUMES’ image courtesy Changi Airport Group/Shilla Duty Free. All other images copyright: TRBusiness.com].