Breakthrough, break-even: HDC Shilla Duty Free Shop posts first monthly profit

shilla ipark-sign-1-300x225SOUTH KOREA. HDC Shilla Duty Free Shop, operator of Shilla IPark duty free, has posted its first monthly profit since its soft opening in December 2015

For January 2017, the retailer posted sales of KW53.2 billion (US$46.2 million) and an operating profit of KW125 million (US$108,536).

While describing the profit as “small”, HDC Shilla put the positive result in the context of total 2016 sales of KW397.5 billion (US$340 million) and an operating loss of W20.9 billion (US$18.2 million).

It commented: “We believe the company has now built a sustainable business capacity amid a full-fledged earnings turnaround.”

The company claimed that it is the first of Seoul’s downtown duty free newcomers to break even.

HDC Shilla aims to achieve sales of KW750 billion (US$651.5 million) this year, driven by what it described as sound management policies.

HDC Shilla Joint Managing Director Yang Chang-hoon said: “It is of great significance that we are the first of the new business operators to have secured a sustainable growth engine. We will not be satisfied with our achievements so far and will continue to make efforts to maintain a steady and profitable business.”

The joint venture retailer said that Korea’s duty free business is becoming “more and more uncertain” due to concerns about declining Chinese tourist numbers and excessive competition between duty free shops. Against such a backdrop, the company said, it had done well to achieve top-line growth underpinned by profitability.

hdc_shilla_600_002

The retailer said it had achieved profitable growth through “robust management” rather than being overly aggressive in its sales approach, a trap that it said leads to enormous marketing costs in an uncertain market environment.

[dvgallery id=”161395″ vertical=”no”]

HDC Shilla said it is committed to attracting more free independent travellers (FIT). It is focusing on the MICE (meetings, incentives, conferencing, exhibitions) sector and has hosted several ‘Wang Hong’ (Chinese power bloggers) to help promote its shopping offer.

“We believe that customised marketing strategies, efficient allocation of resources, and strong expertise within the organisation have played a significant role in turning the business into profit,” the company commented. It also noted the synergies between the business capabilities of the two partners – Samsung’s The Shilla Duty Free and Hyundai Development Company.

[dvgallery id=”161412″ vertical=”no”]

The company said it expects to generate “strong growth momentum” this year by the addition of several key brands, which will join a host of other powerful luxury names such as Bottega Veneta, Gucci, Bvlgari and Burberry, which opened last year. The company is hopeful of securing Louis Vuitton, a major drawcard, in the first half but that deal has not been confirmed The Moodie Davitt Report reliably understands.

The company said it is strongly supportive of the ambitious expansion of Hyundai Ipark Mall, in which Shilla IPark duty free is housed. By the end of this year, 64,000sq m of new shopping, tourism, leisure and leisure facilities will be added.

The company is working with South Korea’s top theatre chain CJ CGV to create a multiplex facility called Hallyu Town, which will celebrate Korean pop and drama culture.

“We expect the duty free shop to welcome as many as one million visitors per year once the Hallyu Town is completed,” the company said.


[Shilla IPark duty free’s ‘I live colorfully’ commercial features some famous Korean faces]

Click on the YouTube video above to watch Martin Moodie’s tour of Shilla IPark duty free.

sip-sulwhasoo-crowds
(Above and below) Chinese shoppers surround the counters of Korean skincare brands Sulwhasoo and The History of Whoo

sip-whoo-crowds

Food & Beverage The Magazine eZine