The Shilla Duty Free’s Younghoon Kim outlines expectations for 2023

By Trb Editor |

Younghoon Kim, Executive VP/Sales HQ, The Shilla Duty Free.

Younghoon Kim, Executive VP/Sales HQ, The Shilla Duty Free.

Renovations of its physical stores and transformation of its online sales channels are in focus for The Shilla Duty Free in 2023, according to the company’s Executive VP/Sales HQ, Younghoon Kim.

Kim has highlighted the need to “understand the entire purchase journey of the customer based on the results and deliver a personalised customer experience that encompasses both the online and the offline” with a view to having a “positive effect on increasing the conversion rate” in his comments for the TRBusiness Global Industry Survey 2023*.

Kim also delivered his assessment of the travel retail industry in 2022, pinpointing key factors impacting the business landscape.

“We saw some meaningful changes in covid-19 quarantine policies, which marked the transition into the post-pandemic era,” he said.

“Travel restrictions between countries have been eased significantly or lifted in some areas and there are signs of an increase in global pax and a recovery in travel retail industry sales.

“Concerns still remain, however, with regard to unclear quarantine policies in some countries, as well as factors that are contributing to an economic recession, including global inflation and interest rate hikes.”

Read on for Kim’s answers to more top survey questions…

Question: What are your expectations for your business in travel retail in 2023 and what are the major challenges you anticipate?

Answer from Younghoon Kim,Executive VP/Sales HQ, The Shilla Duty Free: First of all, we hope that the impact of covid-19 around the world will be mitigated and global pax will bounce back to pre-pandemic levels.

In preparation, we plan to reorganise the inventory management system in line with growing travel retail demand and expand marketing to FITs (free independent travellers). In addition, with bidding for major duty free business licences expected to start, we will be reviewing business feasibility and participating in the process accordingly.

READ MORE: L’Oréal, Shilla and Anchor Equity JV launches new Shihyo skincare brand

We are also going through an extensive renovation of our offline stores as well as an online digital transformation in response to the new consumption patterns due to the pandemic. Finally, we are seeking to establish the market position of the beauty brand soon, which we jointly launched with L’Oréal.

Shihyo

L’Oréal Groupe, Hotel Shilla and Anchor Equity Partners have devised a new luxury skincare brand ‘Shihyo’ through Loshian, a third party joint venture.

How do you anticipate inflation and the risk of global recession affecting your business and the consumer appetite to spend in the travel retail channel in 2023?

Inflation and the global economic recession are likely to lead to a decrease in global pax and conversion due to a decrease in travel demand, as well as a decrease in per-capita purchasing power. In addition, an imbalance in travel demands due to unstable exchange rates, although different by country/region, could further weaken duty free channels, which won’t be favourable for the TR channel.

However, we anticipate that the shock caused by the economic recession will be alleviated to some extent through a recovery in travel demand as the impact of the pandemic diminishes.

How has the shift in passenger demographics as a result of the pandemic/travel restrictions affected your product portfolio and growth plans?

Prior to the pandemic, a large proportion of sales came from Chinese customers, which explains why the product composition and management strategies were designed to suit the needs of those customers.

“We anticipate that the shock caused by the economic recession will be alleviated to some extent through a recovery in travel demand as the impact of the pandemic diminishes.” – Younghoon Kim, Executive VP/Sales HQ, The Shilla Duty Free

This type of business structure that specifically targeted a particular group of customers required adjustments during the pandemic years. Therefore, we diversified our sales strategies to target customers from other countries in addition to China, including Korea as well as Southeast Asia.

READ MORE: Gucci Beauty pairs with The Shilla Duty Free in metaverse ‘first’ for DF&TR

We also launched a reverse direct purchase online store that would be able to address the constraints of cross-border movement restrictions, on top of an extensive digital transformation to meet the contact-free shopping needs, including AR, metaverse, and O2O (online-to-offline) stores.

Stagnant conversion rates continue to pose a challenge for duty free and travel retail. How should the industry be addressing this in a post-pandemic environment?

We expect that factors that affect the purchase decisions of customers have changed in many aspects during the pandemic years.

What needs to be done first and foremost would be to accurately identify these factors by doing data analysis and market research and then we should understand the entire purchase journey of the customer based on the results and deliver a personalised customer experience that encompasses both the online and the offline, which is expected to have a positive effect on increasing the conversion rate.

CLICK HERE: To read the Global Industry Survey 2023 in full.

*The Global Industry Survey was conducted during November 2022 up until the second week of January 2023. Some of the views expressed are representative of individuals rather than their entire organisations. Some of the comments were also shared prior to China’s announced easing of travel restrictions from 8 January. 

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