'1 Trillion Won Sales' Incheon Airport Duty-Free Shop Bid Approaching... Intensifying 'Nunchi Battle'

Duty-Free Operator Bidding for 8 Districts Possibly Next Week
5 Districts with Large Corporation Participation... 2018 Sales of 1 Trillion Won
Key Players: Latecomer 'Hyundai' and 'Lotte' Seeking Pride Restoration

Over the past year, the number of passengers using Incheon International Airport exceeded 70 million for the first time since its opening in 2001, setting a new annual passenger record once again. According to Incheon International Airport Corporation, the total number of passengers using Incheon Airport in 2019 was approximately 71,169,000, an increase of about 4.3% compared to the previous year. The photo shows the duty-free area at Incheon Airport on the 9th.
Photo by Kim Hyun-min, Yeongjongdo kimhyun81@

[Asia Economy Reporter Seungjin Lee] The bidding for the duty-free operator at Incheon International Airport Terminal 1 is just around the corner. The main point of interest in this bidding is undoubtedly the participation of Hyundai Department Store Duty Free. While the existing top three duty-free operators?Lotte, Shilla, and Shinsegae Duty Free?have already expressed their intention to participate, Hyundai Department Store Duty Free has yet to announce its position, leading to intense strategic maneuvering.

According to the duty-free industry on the 11th, the bidding announcement for the duty-free operator at Incheon International Airport Terminal 1 is expected as early as next week. The bidding covers 8 out of the 12 zones, whose lease contracts expire in August. Among these, 5 zones fall under the general competitive category open to large corporations, with sales reaching approximately 1 trillion KRW as of 2018.

Industry insiders expect that if Hyundai Department Store Duty Free joins alongside the existing three companies, the winning bid prices will rise significantly. Since Hyundai Department Store Duty Free aims to expand its presence from downtown duty-free shops to airport duty-free shops, it is highly likely to offer higher bids to gain a competitive edge in the auction.

Another point of interest is whether Lotte will restore its pride. In 2015, Lotte secured DF1 (cosmetics and perfumes) and Zone 8 in the boarding area (all items), with at least three bidders competing for each, pushing the bids well above the minimum acceptable amounts of 104.9 billion KRW and 104.3 billion KRW, respectively. However, after being hit hard by the deployment of the Terminal High Altitude Area Defense (THAAD) system, Lotte eventually relinquished the rights to two zones in 2018.

Therefore, there is speculation that Lotte might aggressively invest funds in this bidding to restore its reputation. If Lotte, aiming for redemption, and the latecomer Hyundai Department Store both participate, the winning bid prices could fluctuate once again.

Regarding this, a duty-free industry official stated, “Since Lotte has experienced the ‘winner’s curse,’ it is unlikely to make reckless bets as in the past,” adding, “Given the many variables, competition is expected to occur at levels at least 20-30% higher than the minimum bid price.”

Meanwhile, the bidding announcement, initially scheduled for the end of last year, has been postponed to this month, leading to speculation that the bidding will proceed under different conditions. The industry is also considering bundling popular items like cosmetics and perfumes with less popular categories such as fashion and accessories for the bidding process.

Despite numerous variables, none of Lotte, Shilla, Shinsegae, or Hyundai can afford to miss out on the Incheon Airport duty-free market. This is because Incheon Airport, the world’s top duty-free revenue generator and the country’s largest gateway, holds significant brand value. Additionally, the number of Chinese tourists, which had sharply declined due to the THAAD issue, is showing signs of recovery, raising expectations for high profitability in the industry.

In this regard, all duty-free industry insiders have cautiously stated, “We need to wait for the bidding announcement before deciding on participation.”

This content was produced with the assistance of AI translation services.