David Yu, CEO of Entas Duty Free, told TRBusiness in an exclusive interview, that the company was able to grow sales by +25% year-on-year at its shop in Incheon Airport, following the exit of the previous operator.

 

The Incheon Airport shop concession currently is the largest of Entas’ three duty free operations in terms of sales.

 

Government efforts to increase SME operators’ share of South Korea’s duty free market and reduce the dominance of larger companies encouraged a number of SME duty free retailers, like Entas, to set up operations over the past two years.

 

Entas launched its newest venture in September 2015 with the opening of its SME concession DF12 liquor, tobacco and general goods shop. This is located in the central luxury boutique hub area of Incheon Airport’s main terminal facing the airport’s landmark Louis Vuitton boutique.

 

CHINESE VISITORS RETURN…

With Chinese visitors returning to South Korea now the MERS crisis has ended, Entas has set a revenue target of US$75m in 2016 from all its duty free retail activities combined.

 

“Our sales now are US$6m a month from all operations combined,” said Yu. “It’s less than we expected but considering MERS we have done well.

 

 

“There is still a drop in the market for South Korean duty free, but we are happy, especially with Incheon International Airport Corporation who have been very supportive.

 

“Incheon Airport is about 50% of our revenue while Incheon Seaport is second, and then comes our downtown duty free shop in Incheon.”

 

CHANGING UP THE RETAIL MIX

Meanwhile, Entas has seen higher spending by Chinese travellers in its Incheon Seaport Terminal 1 duty free shops following the company’s decision last year to change the retail mix on offer and increase the range of affordable products on sale.

 

Incheon Seaport has two passenger terminals that are used by ferry boats sailing 10 routes to different ports in China.

 

Entas operates a 740sq m mixed category duty free shop in T1 which handles about 60% of all international passengers using Incheon Seaport, many of whom are Chinese.

 

“Incheon Port had a total of about 500,000 arriving passengers last year, there were about 300,000 in T1,” Yu said. “Passenger traffic was down 9% last year because of the MERS outbreak in May, but sales were up 20% as passengers were spending more per head.

 

“The average spend by Chinese tourists is down but we do well at Incheon Port as we put in put in new brands and categories.

 

“Having the right portfolio has maximised our sales. Our sales are up at Incheon Seaport in spite of the lower passenger traffic.”

 

LIQUOR & TOBACCO MAKE UP 60% OF SALES

Entas took over the Incheon Seaport T1 duty free concession from previous operator Korea Tourism Organisation in July 2014.

 

Liquor and tobacco are the main items selling in the port shops and account for 60% of sales with revenue, equally divided between liquor and tobacco items.

 

 

Perfume and cosmetics account for 30% of sales with most of the purchases being skincare products. Ginseng products and food items account for most remaining sales.

 

“Last year at Incheon Seaport we changed from luxury to more medium to low priced South Korean perfume and cosmetics as passengers are low to medium income travellers,” Yu explained.

 

“Also, at seaports it’s not a good idea to show luxury brands as these are cost conscious passengers who want reasonably priced products and those items are performing well.”