Incheon Airport Duty-Free Store Bid Brings Joy and Sorrow... Hyundai Department Store Smiles

Lotte and Shilla Selected as Priority Negotiators
Shinsegae Considering Participation in Failed DF6
Also Possible Competition with Hyundai Department Store

[Asia Economy Reporters Minyoung Cha, Seungjin Lee] In the bidding for the duty-free business rights at Incheon Airport Terminal 1 (T1), Hyundai Department Store Duty Free succeeded in entering Incheon Airport by surpassing Shinsegae Duty Free. Among the big three duty-free operators, only Shinsegae Duty Free failed to secure business rights. Shinsegae Duty Free is considering participating in the two business zones that were passed over, but the situation is challenging.

According to industry sources on the 10th, in the T1 duty-free bidding, Shilla, Lotte, and Hyundai Department Store were selected as the preferred negotiators for DF3 (liquor & tobacco), DF4 (liquor & tobacco), and DF7 (fashion & others) zones, respectively.

In the case of DF7, Hyundai Department Store Duty Free’s winning bid is particularly notable because all four major companies?including the big three duty-free operators Lotte, Shilla, and Shinsegae, as well as Hyundai Department Store Duty Free?participated in this bidding. Previously, the industry expected that Hyundai Department Store Duty Free, which has no experience operating airport duty-free shops, would find it difficult to win the bid. However, Incheon Airport favored Hyundai Department Store Duty Free, which offered the highest bid (minimum guaranteed amount).

This has complicated the calculations for Shinsegae Duty Free, which failed to secure business rights. Among the five large-scale duty-free business rights at T1, two were passed over. DF2 (perfume & cosmetics) was passed over because none of the companies participated due to an annual rent exceeding 100 billion KRW. Even if a re-bid is held, DF2 is likely to be passed over again. On the other hand, DF6 (fashion & accessories) was passed over due to lack of competition, as only Hyundai Department Store Duty Free participated in the bidding.

Ultimately, the only option left for Shinsegae Duty Free is DF6, but the problem is "money." Compared to the DF7 case, Shinsegae Duty Free can no longer rely solely on its relatively long experience in operating duty-free shops as an advantage, and the industry situation is tough, so it cannot simply offer a high bid. Shinsegae Duty Free plans to reconsider participation if these zones are re-announced. The re-bid announcement for the passed-over business rights is expected to be made within two weeks at the earliest.

Meanwhile, there were mixed results in the bidding for three small and medium-sized enterprise duty-free business rights. DF8 (all items) was won by Grand Tourism Hotel, DF9 (all items) by City Plus, and DF10 (liquor, tobacco, food) by Entas Duty Free. SM Duty Free, which operated DF8, participated in the bidding for the zone but withdrew midway due to the heavy burden of high airport rent. Busan Duty Free, which participated in the Incheon Airport duty-free bidding for the first time, was eliminated.

Grand Tourism Hotel, which is close to securing two business rights including DF11 (cosmetics & perfume) and DF8, plans to expand its buying power focusing on luxury cosmetics where it has strengths. City Plus and Entas Duty Free, which succeeded in retaining their existing business zones, also breathed a sigh of relief.

City Plus evenly allocates all items including food, cosmetics, liquor, and tobacco. Entas Duty Free, which specialized in liquor and tobacco, plans to focus on these areas. New duty-free operators will be finalized as official operators once they receive license approval from the Korea Customs Service on July 14. Full-scale operations will begin from September.

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