Shinsegae Duty Free looks for further growth in Asia after promising sales at Incheon

By Benedict Evans |

Shinsegae Duty Free

Shinsegae Duty Free unveiled its Paul and Bani characters in November 2023, embodying the retailer’s “commitment to sophistication and style”.

Shinsegae Duty Free recorded total sales of KRW2.18 trillion (approx. US$1.6 billion) in 2023, with operating profit of KRW86.6bn ($65m). The travel retailer is seeking to improve on its position in Asia, building on promising sales at Incheon International Airport, as traffic levels normalise and travel to and from Mainland China increases.

Incheon International Airport has re-entered the ACI World rankings as one of the world’s top 10 busiest transport hubs for international passengers, welcoming 55.7m international pax in 2023 (representing a significant 212.9% yoy increase and closing the gap to -21% behind 2019 levels). It now stands as the seventh busiest globally.

This has no doubt contributed to strong growth for Shinsegae Duty Free’s (Shinsegae) operations at the airport. “The operating profit of Shinsegae Duty Free saw an increase in 2023 compared to 2022. Shinsegae Duty Free is also striving to enhance its profitability in 2024,” noted Joo-Yeon Ahn, Public Relations Director at Shinsegae Duty Free, who attributed the uplift in profit, in part, to a huge win for the retailer at Incheon Airport in April 2023.

Success at Incheon

Alongside fellow South Korean travel retailers The Shilla Duty Free and Hyundai Department Store Duty Free, Shinsegae shared in the spoils of a tender win for five major contracts from Korea Customs Service (KCS). Shinsegae was awarded the DF2 perfume, cosmetics and liquor & tobacco concessions, as well as the DF4 fashion, accessories, and boutique lease.

Canada Goose at Incheon

Shinsegae DF unveiled ‘Asia-first’ Canada Goose pop-up shops at its Incheon and Myeongdong downtown stores in November 2023.

As of April 2024, the Korean duty free retailer operates three vibrant stores – at Incheon International Airport and downtown in Myeongdong and Busan, offering a diverse portfolio of over 1,000 brands across various categories – alongside its online business. It is confident it will continue to see growth through 2024.

“We aim to continue to increase customer experience through partnerships with various companies such as hotels, resorts, aviation, and art in the future,” said Joo-Yeon Ahn, Public Relations Director, Shinsegae Duty Free.

Growth and recovery

“Sales are on the rise, particularly at Incheon Airport, in tandem with the growth in the number of individual tourists,” said Ahn, who did note, however, that while the number of Chinese tourist groups is on the rise, it will likely be some time before the Korea-China air route fully recovers. “Reaching 2019 levels is not expected until the latter half of this year,” she said.

V Groove art at Myeongdong

A snapshot of the V Groove media art exhibition in collaboration with Nam June Paik Art Center at the Myeongdong store in September 2023.

Ahn also pointed to a series of ongoing initiatives that Shinsegae has introduced to bolster its wines and spirits offerings. “Various initiatives are being undertaken at Incheon International Airport. For example, within Incheon International Airport Terminal 2, the company runs a single malt whisky shop designed as a shop- in-shop, which has been well received.

Perfume performance

Ahn noted that while wines and spirits were performing well, the FY23 standout was its perfume category: “Total perfume sales in the second half of 2023 (July-December) increased by about 20% compared to the first half of 2023 (January-June), and sales among 25- to 35-year-olds increased by 45% during the same period.”

The intent to expand its ‘ecosystem’ of products  is evidenced not only by its extensive collection of luxury brands available across fashion, cosmetics, watches, jewellery and alcohol, but also by opportunities for inorganic growth through various partners.

A version of this feature first appeared in the TRBusiness May 2024 issue, as part of the annual Leading Americas Operators report. Click here to read the ezine.

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