Additional reporting from Andrew Pentol

Incheon International Airport is set to welcome South Korea’s first duty free arrivals store on a trial basis, sources in Korea have confirmed to TRBusiness.

The decision to deregulate the business was made by government officials at a meeting on Thursday, according to Korean media reports verified by this title.

A trial period of between three to six months is envisaged to begin in the first half of next year, an airport source told TRBusiness, in doing so clarifying that the exact length of the trial is yet to be decided.

Accordingly, the measure is designed to ‘reduce discomfort’ experienced by tourists travelling with duty free goods, while increasing domestic consumption.

Bids for the contract are restricted to small-medium enterprises only and excludes ‘major’ operators, it is reliably understood.

The shop will retail all major categories excluding tobacco. A $600 allowance ceiling will apply to purchases made by South Korean nationals. “It depends on the situation… we have to prepare,” the source added.

SME BID STATUS ‘COULD CHANGE’

As reported in the TRBusiness Top 10 Operators report (available from the press racks at TFWE next week), there appears to have been mixed reaction from the country’s industry on the prospect of arrivals shops following reports that surfaced in August.

Commenting on the policy in an interview, Lotte Duty Free Marketing Director Kim Bo-joon said: “If it [arrivals duty free] is to ‘enhance tourist convenience and boost consumption’, I believe raising the minimum purchase limit ($600, currently) is a practical, appropriate solution.”

Reacting to the news, a Korean industry source said: “It’s not surprising; it was anticipated. The market consensus is that it has become friendlier to SMEs, the government is trying to take care of them. In the case of the first arrivals store at Seoul Incheon, only SMEs can bid, but this might not always be the case.

“There will be a testing period for six months. After that the government will decide if they will expand the arrivals duty free concept to other international airports such as Gimpo, Gimhae and Busan. At that time, they will probably re-evaluate the terms and conditions for the concession.”

A Korean SME travel retailer source added: “I imagine most SMEs will welcome this approval, but for existing operators, this could be threatening especially in [the] liquor business. In [the] cosmetics category, online and downtown shops have stronger price competitiveness.”