EXCLUSIVE: Walkerhill expansion targets $340m-plus

By David Hayes |


Walkerhill Duty Free is launching a game changing major expansion project to double its space and sales, which last year stood at $171m.

 

In an exclusive interview with TRBusiness in Seoul, Kwon Mikyong, Senior Vice President and Head of Duty Free Division said that the downtown retailer’s sales grew by 17% last year – against South Korean duty free industry growth of 13% as a whole.

 

She added that this new and ambitious expansion plan will involve Walkerhill moving into temporary premises in the Walkerhill hotel and entertainment complex while the construction project takes place.

 

Once completed, the extended and upgraded store will offer more than double the retail floor space of the existing shop and is expected to help Walkerhill double its annual duty free sales to $340m-plus in future.

 

Kwon Mikyong said: “We are happy as we gained market share in the Seoul downtown duty free market. The change in China government group tour foreign travel regulations affected us in November and December [2013-Ed] but sales and visitor numbers still grew, but if there had been no new regulations we could have grown by 20%.”

 

 

Kwon Mikyong, Senior Vice President and Head of Duty Free Division.

 

 

DOUBLE-DIGIT SALES SO FAR

Kwon noted that 2014 has started well for Walkerhill with double-digit sales growth continuing during the first quarter this year.

 

“January and February were good; we saw a 25% sales increase as it was an early Chinese New Year holiday,” Kwon commented. “March was a 15% increase for us – very sound. But we have heard that some Chinese customers are going to Japan, as the yen is weaker. Chinese customers are conscious of value, so the weak yen is a big attraction for shopping.”

 

Walkerhill Duty Free Shop is one of several attractions at the Walkerhill hotel and entertainment complex that overlooks the Han River in eastern outskirts of Seoul.

 

“We are looking ahead to a major expansion; the plan and the schedule are all set,” Kwon said. “The whole project starts in May and involves co-working between the two Walkerhill hotels, us and the casino. It will be one swift construction project.

 

“We need to expand our store to accommodate all our customers; over 80% of our customers are Chinese.”

 

 

Walkerhill Duty Free is known for its extensive range of watches.

 

 

HUGE INVESTMENT

The present store has about 4,000sq m of retail space spread over three floors with entrances on the first floor and at the basement level through which casino guests can enter. The first floor and basement level both have about 1,500sq m of retail space at present while the second floor covers around 1,000sq m.

 

The ambitious expansion scheme calls for the retail floor space to double on each floor, in addition to which Walkerhill will construct VIP areas, cafeterias and other customer facilities on the three floor levels to enhance visitors’ shopping experience.

 

Known for its extensive and high luxury watch collection that attracts growing numbers of Chinese customers each year, Walkerhill Duty Free is looking to increase the range of luxury fashion brands on offer once the expansion scheme is completed

 

The operator plans to use additional retail floor space to invite top international fashion brands not already represented in the store to open boutiques that the Walkerhill Duty Free Shop previously did not have sufficient space to accommodate.

 

“We are trying to offer a different service experience, so we are maximising the ambience of the environment here,” Kwon explained. “There is no other location in Seoul with our view [on a mountainside overlooking the Han River] and ambience so the duty free offer here has to be right.

 

 

Walker Hill is hoping to attract more major brands when the huge store expansion is complete in 2015.

 

 

SIX-MONTH PROJECT

“We want customers to enjoy the luxury of our enlarged store and get personal service as well. Our duty free shop project will change this complex where people can shop, stay, dine and gamble.”

 

Currently, the plan is to move everything in the present shop completely and then demolish it and Kwon describes it as ‘a big project’.

 

Walkerhill is currently targeting its new store development project to take six months to complete. Moving the entire shop to temporary premises is expected to impact on sales this year with duty free revenue for 2014 forecast to fall by about 6% to $160m compared with the aforementioned $171m last year.

 

 

Kwon Mikyong says that a huge effort is being made to upgrade the whole retail operation.

 


Walkerhill’s re-opening schedule for the new enlarged duty free store calls for shops in the new basement level to open for business in January 2015. First floor and second floor boutiques and other outlets will open for service in August 2015. The grand opening ceremony will follow soon afterwards in September 2015.

 

“We are inviting new brands for the new shop. We are trying our best to cater for big space shops,” Kwon said. “We have acquired the exterior façade of our shop from the hotel so we can offer it to big brands for displays. We are trying our best to cater to big brands’ needs.”

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