Shilla DF seals ‘highly competitive’ Jeju tender

By Luke Barras-hill |

JejuLotteThe Shilla Duty Free has secured the five-year duty free concession at Jeju International Airport in what TRBusiness understands was a very tight contest with rival Lotte Duty Free.

Shilla Duty Free will now take over from Hanwha Galleria, following its decision earlier this year to discontinue the contract.

A source close to Shilla has corroborated a report in The Korea Herald claiming the retailer scored 901.41 points out of a possible 1,000 to snatch the contract.

As reported, Lotte Duty Free and Shilla Duty Free were selected as preferred bidders to operate the lucrative concession by the Korea Airports Corporation (KAC) last month, before proposals were evaluated by the Korea Customs Service (KCS).

KAC’s proposal of 20.4% as the percentage applied to sales to calculate rent payments (reduced from around 30% to 35% previously in a move designed to mitigate the impact of THAAD-Ed) is understood to still apply – according to the source – however a precise figure was not available at the time of writing.

WAITING GAME ON THAAD…

In reaction to the award, Shilla noted its ‘outstanding performance and unparralled speciality’ in airport duty free retailing as contributing factors to its win.

“The Shilla Jeju (Hotel) will continue our contribution to overall tourism industry of the island,” a statement read.

“Hotel Shilla CO. will also deliver our best effort to fulfil corporate’s social responsibility in Jeju island to build [a] sustainable and healthy relationship with [the] local community of Jeju.”

Hanwha

The Shilla Duty Free will take over the retail lot vacated by Hanwha Galleria Duty Free.

The seemingly positive diplomatic gestures between China and South Korea to assuage tensions over THAAD have resulted in early signs of a tourism revival.

However, the longer term picture remains unclear with regards to a more concrete and enduring resolution over the full lifting of the Chinese group tour ban to South Korea, and aviation rights between both countries.

“We are observing the situation getting better, but we will have to wait and see – The Shilla is optimistic. But we are waiting for clearer signals,” added the Shilla source.

LOTTE RENEWS COEX FOR 5 YEARS

As will come as no surprise, the tightly-fought contest’s result will come as a disappointment to Lotte Duty Free.

“We are still analysing our failure on what aspect we couldn’t outscore Shilla,” commented a Lotte Duty Free source. “Obviously, we expected to win, but we did not.”

More positively – and on an entirely separate note – Lotte Duty Free today confirmed the renewal of its Convention Exhibition Centre (COEX) Seoul downtown store licence – valid for a further five years. As revealed exclusively earlier, Lotte was the only bidder [see: https://www.trbusiness.com/regional-news/asia-pacific/lotte-confirms-it-is-bidding-to-renew-coex-store-license/132103]

Lotte Duty Free COEX Store

The Lotte Duty Free COEX Store. Click to enlarge.

The COEX store is located in a large shopping, hotel and commercial complex in the Samsong District and has traditionally been a favourite with Chinese shoppers.

 

Apart from featuring fewer boutiques than Lotte’s other main stores in Seoul, it has also historically concentrated on selling cosmetics, perfume and other beauty products, which have historically accounted for about 50% of all sales.

Main image photo credit: 螺钉

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