UPDATED: Incheon International Airport reports DF&TR sales of KW.2 trillion ($1.8bn) so far this year, but Dubai Duty Free is still challenging for ‘Number One’.

 

Incheon Airport has formally confirmed its final sales push to try and claim the 2014 crown for the world’s number one duty free airport sales ranking in a statement dated 23.12.14.

 

Referring to the $1.8bn sales total so far, Incheon’s President and CEO Park Wan-su said: “Thanks to the interest and support from our customers, we could achieve this meaningful record for the first time in the world. We will keep providing the best service and products, differentiated events and shopping experience to our customers.”

 

In its statement [Korean language only] Incheon claims to have surpassed both Dubai and Heathrow’s retail sales, thanks to “a small, customer-friendly shopping environment and professional sales force which is analyzed as being the driving force behind the number one sales”. However, Dubai Duty Free may still have something to say about this.

 

 

 

“THANKS TO THE INTEREST AND SUPPORT FROM OUR CUSTOMERS, WE COULD ACHIEVE THIS MEANINGFUL RECORD FOR THE FIRST TIME IN THE WORLD.”

PARK WAN-SU, PRESIDENT AND CEO, INCHEON INTERNATIONAL AIRPORT CORP.

 

 

Park Wan-soo (pictured here) said the sales achievement at Incheon was thanks to the strong customer support and ‘the first great influence of Chinese customers’, who accounted for 35% in annual sales.

 

He added that convenience and customer-friendly service, a classy and trendy product mix, plus the reliability and authenticity of the product offer were big factors for the Chinese customers.

 

Park Wan-soo added that various promotions celebrating the National Day and the Korean Wave have also resonated with Chinese customers. He also points to various awards from magazines such as Business Traveller and Frontier which have continued to recognise Incheon’s achievements.

 

[One-on-one interviews with retailers in Seoul by TRBusiness in 2014 show that Lotte Duty Free’s average spend across all customer nationalities at Incheon Airport was $90 last year, while it was $400 for Chinese customers. The average spends by Chinese customers at the Seoul downtown stores operated by both Lotte Duty Free and Shilla Duty Free were much higher-Ed].

 

Last year, Dubai Duty Free and Incheon Airport ran a close two-horse race and it was difficult to separate the two organisations from their relative sales claims in terms of determining who ended up being number one. Colm McLoughlin, Executive Vice Chairman told TRBusiness.com back in late November that he is confident that the retailer will hit the $1.9bn sales total mark this year.

As an important marker, DDF hit first 10-month sales of $1.527bn by the end of October this year, despite an 80-day runway refurbishment period which restricted and disrupted airport operations. [DDF’s duty free sales are expected to pull significantly ahead of Incheon’s over the next four years, with Dubai Airports and DDF expecting DF&TR sales of $3bn in 2018 and passenger traffic in excess of 95m by 2020].

The retailer’s prospects of taking the number one DF&TR spot could also be aided by Dubai’s expectation that it will hit 72m passengers this year compared to last year’s 66m – elevating it to the position as the largest international airport in the world.

 

 

The huge multi-million dollar sales turnover contribution made by the Shilla Duty Free-managed Louis Vuitton store at Incheon Airport should also not be forgotten as a major contributor to the airport’s retail revenues. Incheon opened its 550sq m [since expanded] Louis Vuitton store in September 2011 and in less than six months sales were averaging $300,000 a day on average.

 

 

CHINESE DRIVING SALES AT INCHEON
As already meanwhile, the well being of Incheon’s duty free business today is inextricably linked to its high-spending Mainland Chinese passenger base in terms of ‘significant growth’. In total, 40.8m international departing and arriving passengers used Incheon Airport in 2013, representing a 4.6% increase compared with almost 39m in 2012.

The changing customer mix in favour of Chinese passengers at Incheon Airport has continued to have a major impact on duty free sales at the airport over the last two years in particular. For example, in 2013 Chinese passengers at Incheon outnumbered Japanese for the first time. As a result, duty free purchases by Chinese passengers increased, while Japanese passenger purchases fell.

According to TRBusiness.com’s regular interviews with all of Incheon’s major retail operators and IIAC itself, Chinese passengers have been responsible for virtually all of the significant spending growth in Incheon’s airport shops this year – hence the aforementioned pointed reference to this important high-spending customer group by Incheon’s President and CEO Park Wan-su.

[Korea Customs reported more than one year ago that Mainland Chinese had become the highest spenders at Korean duty free shops. In the first seven months of 2013 it recorded Chinese duty free spending at $863m, – ahead of the $845m spent by South Koreans. This total has since increased much further-Ed].