Leading travel retailers in South Korea have lined up to compete in the coveted duty free liquor & tobacco tender at Seoul Gimpo International Airport after the deadline for bids closed yesterday (15 January).

Lotte Duty Free, The Shilla Duty Free (Shilla) and Shinsegae Duty Free have submitted proposals to snare the seven-year (DF2) departures contract, TRBusiness understands from well-placed sources.

The concession space, which spans 733sq m, is currently held by Shilla after it first won a five-year contract in 2018.

An on-site presentation and briefing is expected to take place in the coming days/week.

“We carefully reviewed the concession bidding announcement and worked hard to prepare and participate”, a Shilla  spokesperson told this publication.

Meanwhile, a Lotte Duty Free source said: “We carefully reviewed the bidding announcement and business feasibility, and submitted a vision for differentiated customer service and long-term co-prosperity with the airport corporation in our business proposal. We will prepare well to have good results in line with the bidding schedule in the future.”

Separately, Shinsegae Duty Free has confirmed its participation in the duty free L&T tender in accordance with the RFP guidelines.

‘Rent tied to sales’

As is customary in South Korea, the airport operator – in this case Korea Airports Corporation – is expected to nominate two frontrunners for the lease contract following scrutiny and scoring of the companies’ respective business proposals.

These will then be submitted to the Korea Customs Service, who will determine the successful tenant following a patent examination review.

Korean press have reported that Hyundai Duty Free is another likely bidder, though TRBusiness was unable to independently verify this at the time this report went to press.

Lotte Duty Free was confirmed as the recipient of Gimpo Airport’s 10-year beauty, fashion and other categories contract (a five-year term, plus a five-year extension) in 2022 and reopened its store – which is similar in size to the latest L&T store being tendered – in May last year following a programme of renovations.

Speculation has been rife in local media reports in recent days around the outcome of the latest L&T tender and its ability to influence the fiercely competitive domestic retailer rankings in South Korea.

After Shilla, Shinsegae Duty Free and Hyundai Duty Free swooped last year for the five major duty free contracts in the Incheon Airport Terminal 1 tender, Lotte Duty Free will be hungry to make up ground elsewhere [Lotte Duty Free and China Duty Free had dropped out of the bidding race at Incheon T1 – Ed].

The suggestion of a more flexible rental agreement at Gimpo tied to sales performance rather than rigid fixed guarantees, according to reports subsequently verified by TRBusiness, would go some way to alleviating any burden associated with possibly fiscally onerous MAG payments for the eventual winner.

One Korean industry source with knowledge of the matter told TRBusiness: “If Shilla secures this area, Lotte and Shilla are not expected to exhibit notable differences. However, if Lotte successfully secures the mainstream tobacco area, the sales gap with Shilla may potentially widen to some extent.”

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