SOUTH KOREA. Hyundai Department Store Duty Free has joined the ‘big three’ of South Korean retailers – Lotte Duty Free, Shilla Duty Free and Shinsegae Duty Free – in registering for the highly-anticipated Incheon International Airport Terminal 1 concession tender, according to well-sourced local media reports.
Hyundai Department Store Duty Free’s registration, along with the recent opening of its second downtown duty free store, signals the company’s aggressive intent to compete against the big three, who currently dominate the Korean duty free market.
The odds, however, may be against Hyundai Department Store Duty Free, given the methodology used by Incheon International Airport Corporation (IIAC) in reviewing bids and awarding contracts. IIAC tallies the total score by reviewing the business and financial proposals of each company and awards the concession contracts to the company with the highest score.
Given that the business proposal accounts for 60% of the total score, Hyundai’s lack of experience in airport duty free – it has never operated such a concession – will make success difficult. The company will need to offer an aggressive financial bid, which is worth 40% of the total score.
While the larger companies compete against one another for five concessions, there are also three duty free contracts available to small & medium enterprises (SMEs). According to Korean media, all of the current duty free operators at Incheon International submitted bids. These are: SM Duty Free, City DFS, Entas Duty Free and Grand Duty Free.
The MAG for SME concessions is lower than that for larger companies. And while bigger players often run operating losses from their airport duty free concessions, SMEs which win the concessions with competitive bids can generate positive profits.
The tender registration deadline has now passed. Companies involved in the process must now present their business and financial proposals between 10am and 4pm [time in Korea] today (27 February).
NOTE TO AIRPORT OPERATORS: The Moodie Davitt Report is the industry’s most popular channel for launching commercial proposals and for publishing the results. If you wish to promote an Expression of Interest, Request for Proposals or full tender process for any sector of airport revenues, simply e-mail Martin Moodie at Martin@MoodieDavittReport.com.
We have a variety of options that will ensure you reach the widest, most high-quality concessionaire/retailer/operator base in the industry – globally and immediately.
Similarly The Moodie Davitt Report is the only international business intelligence service and industry media to cover all airport consumer services, revenue-generating and otherwise. We embrace all airport non-aeronautical revenues, including duty free and other retail, food & beverage, property, passenger lounges, hotels, car parking, hospital and other medical facilities, the Internet, advertising and related revenue streams.
Please send relevant material, including images, to Martin Moodie at Martin@MoodieDavittReport.com for instant, quality global coverage.
