Incheon T1 tender: No bids for ‘much-vaunted’ DF2 beauty concession

By David Hayes and Luke Barras-hill |

PandC-Shilla-Incheon-T1bids

Anticipated bidding interest in Shilla’s flagship beauty concessions stumbled.

The Shilla Duty Free’s perfumes & cosmetics concession (DF2) at Incheon International Airport Terminal 1 failed to attract any bids, TRBusiness can confirm, after bidding for the duty free tender closed yesterday (26 February), 

As reported, operator Incheon International Airport Corporation (IIAC) issued the tender last month, which covers a total of eight airside packages (five general enterprises; three small and medium-sized enterprises) with each contract lasting five years.

The perfume and cosmetics shop tender (1,258sq m) was expected to attract significant interest but did not tempt a single bid for reasons that are still not clear, a well-informed duty free industry source in Seoul told this title. Shilla’s lease currently covers a footprint of 1,106sq m and four shops.

HYUNDAI IS SOLE BIDDER FOR DF6

“Everyone expected DF2 to be hotly contested but there was no bidder, so Incheon International Airport Corporation will have to have one more tender for DF2,” commented a well-informed duty free source in Seoul.

“It’s very unusual as perfume and cosmetics is the top category; everyone was focused on this tender package. DF2 is the most important bid package. No one expected that there would be no bidder.”

Tender-bids-2020-Incheon

Lotte Duty Free and Shilla Duty Free will compete directly for the L&T packages while fashion/misc will pit Hyundai Department Store Duty Free, Lotte Duty Free, Shilla Duty Free and Shinsegae Duty Free against each other. One glaring omission is the lack of foreign bids. Source: IIAC. 

Lotte Duty Free, Shilla Duty Free and Shinsegae Duty Free were all expected to bid for DF2.

Lotte Duty Free in particular is known to be keen to regain the perfume and cosmetics licence, having previously relinquished a concession (now held by Shinsegae Duty Free) citing onerous license fee payment obligations as the reason.

In another unexpected twist, the operator confirmed directly to TRBusiness as this report went to press that only one bid was received – from Hyundai Department Store Duty Free – for Shilla’s DF6 Fashion/Accessories (1,852sq m) concession spanning 10 shops, as the full bid lineup emerged.

NO PROPOSALS FROM OVERSEAS COMPANIES

“There was a failure of bidding in DF2 and DF6; except those packages there isn’t a change to the tender timeline,” said an IIAC spokesperson.

Despite IIAC in the build-up to the tender making clear that the bidding doors would be well-open to foreign businesses, the tender has not attracted any bids from overseas operators.

Aside from the barren participation in DF2, the five general enterprise concessions attracted a total of nine bids, while the three small and medium-sized enterprise packages drew the same level of participants.

Outline-IncheonT1

Source: IIAC.

Interested parties for the T1 duty free concessions were expected to submit their business and financial submissions today (27 February) at the main conference room on the fifth floor of West Hall after bids for the concessions closed yesterday (26 February).

IIAC will notify bidders within five days as to when they will be required to make presentations, a South Korean duty free retailer source told TRBusiness.

These are understood to be taking place in early March, before the bids are recommended to the Korea Customs Service and proceed through the controversial two-stage selection process.

It had already been established that the ‘big three’ giants of Lotte Duty Free, The Shilla Duty Free and Shinsegae Duty Free were likely to compete for packages at T1, although reports had been circling that newcomer Hyundai Department Store Duty Free would also look to mount a bid.

TRBusiness had previously been informed in conversations with a source that Hyundai Department Store Duty Free had mounted two bids, a rumour subsequently confirmed.

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