Three-way battle in duty-free market

Shinsegae jumps into local duty-free market dominated by Lotte and Shilla


A three-way race is expected as Shinsegae jumped into the local duty-free market which has been so far dominated by Lotte Group and Hotel Shilla.

Shinsegae Group announced Wednesday that it had acquired an 81 percent share of Paradise Duty Free for 93 billion won ($82 million). The duty free shop is located inside Paradise Hotel in Busan Metropolitan City and is the 6th biggest in the market.

The nation’s duty-free industry is worth about 5.29 trillion won. Lotte takes up 53 percent of the market, with annual sales of 2.7 trillion won. Shilla is next, with annual sales of 1.5 trillion won. 

Hotel Shilla duty-free shop in Incheon International Airport

Though Paradise ranks 6th in the market with annual sales of 145 billion won, market insiders expect that when supported by Shinsegae it may soon outrun Jeju Tourism Organization, Korea Tourism Organization or Walkerhill, respectively the third, fourth and fifth players in the market.

The group’s vice chairman Chung Yong-jin had said earlier that the group would expand into the duty-free market to enhance competence in the retail industry.

“We plan to make the duty free shop a must-visit spot for foreign tourists, as well as Shinsegae Centum City, the world’s biggest department store, and the premium outlet which is slated to open next year,” said Kim Yun-seob, a spokesperson at Shinsegae.

Speculation is growing on whether Shinsegae will enter the bidding for duty-free shops in Incheon International Airport. The airport submitted on Aug. 30 its intention to Korea Tourism Organization, which runs duty-free shops in the airport, that it would open the shops up for bidders instead of immediately renewing its contract with KTO. The bid is expected to be concluded within a month.

Lotte and Shilla were expected to compete for the new shops, but now eyes are also drawn to Shinsegae. Lotte currently has about 50 percent of the duty free shops at the airport, Shilla 40 percent and KTO 10 percent.

Another reason the power struggle among the three conglomerates is drawing interest is that daughters of the chaebol companies are in charge of the duty-free shops.

Lotte Duty Free is headed by Shin Young-ja, chairwoman of the Lotte Foundation and daughter of Lotte Group honorary chairman Shin Kyuk-ho while Hotel Shilla CEO Lee Boo-jin, daughter of Samsung Group chairman Lee Kun-hee, runs the group’s duty-free business.

At Shinsegae, Lee Myung-hee, chairwoman of the group, and her daughter Chung Yoo-kyung, vice president of the group, are expected to take charge of the duty-free business.

By Park Min-young  (claire@heraldcorp.com)