Chanel and Rolex to Open at Incheon Airport Terminal 1 in September...

Hyundai Department Store Duty Free at Terminal 1 to Open in September
Revenge Spending and Travel Bubble Effects
Attention Amid Industry Recovery Expectations

[Asia Economy Reporter Kim Yuri] In September, global luxury brands Chanel and Rolex will open stores at the duty-free shop in Incheon International Airport Terminal 1 (T1). Amid the intensifying 'revenge spending' focused on luxury goods domestically due to COVID-19, these two representative brands are already drawing long queues of customers waiting before the stores even open, raising high expectations in the duty-free industry. With the expansion of vaccine distribution and travel bubbles increasing hopes for a recovery in the duty-free sector, attention is focused on whether the opening of these popular luxury brand stores will become another variable.

◇ Chanel and Rolex at Incheon Airport T1

According to the duty-free industry and Incheon International Airport Corporation on the 30th, French luxury fashion brand Chanel and Swiss luxury watch brand Rolex will open in the DF7 zone on the west side of Incheon International Airport Terminal 1 in September. Chanel's return to Incheon Airport T1 comes six years after its withdrawal in 2015. Chanel has been present at Terminal 2 (T2) since 2018 within the Shinsegae Duty Free store.

Chanel will consolidate several stores previously located in T1 into a single ultra-large store measuring 400㎡ (approximately 121 pyeong). The Rolex store will also be sizable, at about 212㎡ (approximately 64 pyeong). The Incheon International Airport Corporation stated, "Each store began interior construction in earnest from late May to early June for their openings," adding, "The stores are scheduled to open in September."

The operating rights for the DF7 zone belong to Hyundai Department Store Duty Free. Although a latecomer entering the duty-free business in 2016, Hyundai Department Store Duty Free is positioning the duty-free business as a new growth engine and is expanding its business scope mid- to long-term. The acquisition of Chanel and Rolex airport duty-free stores aligns with this strategy. Hyundai Department Store Duty Free obtained the license for the Incheon International Airport Terminal 1 store (DF7) last year, following its Trade Center store in 2016 and Dongdaemun store in 2019. The DF7 license is valid until 2024. The cumulative sales target for the Incheon Airport store over five years is 1.0354 trillion KRW.

To compensate for its latecomer disadvantage, Hyundai Department Store Duty Free has maintained an aggressive operational stance even during the COVID-19 situation. The company is expanding its business into airport and overseas duty-free shops, increasing sales scale and market share, while also attracting major luxury brands to boost customer traffic.

◇ Duty-Free Industry Spreads Its Wings Again

The duty-free industry is expecting sales recovery due to the expanded COVID-19 vaccine distribution and the promotion of travel bubbles. Especially, domestic consumers who have been unable to travel abroad since last year have engaged in revenge spending centered on luxury goods, raising greater expectations for sales recovery once overseas travel becomes unrestricted. Even before COVID-19, the proportion of luxury goods sales within duty-free fashion sales was increasing.

Reflecting these expectations, domestic duty-free sales in May reached 1.5687 trillion KRW, the highest since February last year when the impact of COVID-19 began in earnest. A duty-free industry official said, "With travel bubbles progressing mainly among vaccinated individuals, full-scale overseas arrivals and departures are expected to begin this fall," adding, "The opening of popular luxury brand stores at Incheon Airport timed with this period raises expectations for industry recovery."

Meanwhile, the re-bidding for the duty-free business rights at Incheon International Airport Terminal 1 is expected to take place as early as the fourth quarter of this year. The related service has just begun, and results are expected around October. The targets include four large company business rights at Incheon Airport T1 duty-free zones DF2 (perfume and cosmetics), DF3 and DF4 (liquor and tobacco), and DF6 (fashion), as well as two small and medium-sized enterprise business rights at DF8 and DF9 (all items), totaling six licenses. These licenses have been unsuccessfully bid three times due to the sharp decline in airport users caused by COVID-19.

Incheon International Airport Corporation plans to focus on developing the entire terminal to enhance experiential value for passengers through this service. They will also comprehensively review the location, size, and rental fee methods of the new bidding spaces. An official from Incheon International Airport Corporation said, "Once the service results come out, we will decide on the timing and policies after receiving related advice."

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