Public Bidding Next Month for Arrival Hall Duty-Free Store Amid Uncertainty in Departure Hall... Industry Attention

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Kim] The duty-free shop space at the arrival hall of Incheon International Airport, vacated by SM Duty Free, will be put up for public bidding next month. Unlike the departure hall duty-free shops, the key factor for bidding success?the rent?is set based on a minimum sales commission rate, making the business potential favorable. However, due to the overall difficulties in the industry caused by COVID-19, attention is focused on the outcome.

◆ Bidding for Arrival Hall Duty-Free Shop Begins = According to industry sources on the 4th, Incheon International Airport Corporation recently announced a bidding notice to select a new operator for the arrival hall duty-free shop at Terminal 1 of Incheon International Airport. The price bidding will take place on the 11th and 12th of next month. The airport corporation will hold a business briefing on the 9th and accept bidding applications until 6 p.m. on the 10th of next month.

SM Duty Free voluntarily returned its duty-free business rights and ceased operations at the end of last year. The bidding targets two stores on the east and west sides of Terminal 1, covering an area of 380㎡. Only small and medium-sized enterprises can operate these stores, and all product categories including perfume, cosmetics, tobacco, and liquor are allowed. The contract period is five years from the start of operations.

The rent calculation method is based on a sales-linked commission rate. The minimum sales commission rates by product category are set from 21.7% (perfume and cosmetics) to 26.3% (liquor). The duty-free industry views this sales-linked rent system as sufficiently viable since rent is the biggest burden. Among small and medium-sized enterprises, Entas Duty Free and Grand Tourist Hotel are reportedly showing interest.

◆ Concerns over Variables such as COVID-19 = The fundamental limitations of the arrival hall duty-free shop remain a concern amid the ongoing COVID-19 situation. Compared to the departure hall, the scale and product range are smaller, and the number of users has also decreased, making it crucial to determine how much to bid. A representative from a small duty-free company said, "It is difficult to secure popular luxury brands, and the number of users is limited, so there are many factors to consider," adding, "We are still deliberating on whether to participate in the final bidding."

Meanwhile, the departure hall duty-free shops at Incheon International Airport are facing a crisis with over 30% vacancy expected this month due to the withdrawal of Lotte and Shilla Duty Free. The industry is calling for a re-bidding process that adopts a sales commission system by product category, similar to the arrival hall duty-free shops, to cope with the difficulties caused by the COVID-19 pandemic.

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