Lotte, Shilla, Shinsegae and Hanwha Galleria fight out major Incheon T2 duty free tenders; but no interest in fashion

SOUTH KOREA. Four retailers have tabled bids for Incheon International Airport’s T2 perfume & cosmetics (DF1 in table below) and liquor/tobacco/foods concessions (DF2) reserved for major companies. The Moodie Davitt Report can confirm that they are Lotte Duty Free, The Shilla Duty Free, Shinsegae Duty Free and Hanwha Galleria Duty Free.

The DF3 packages, for fashion and miscellaneous items, attracted no bidders, according to an Incheon International Airport Corporation (IAAC) source.

For the dedicated SME (small and medium enterprises) concessions, the bidders were SM Duty Free, City Duty Free and Entas Duty Free.

SM Duty Free and Citi Duty Free bid only only for the DF4 and DF6 areas, while Entas Duty Free made a proposal for the DF5 store only.

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Six concessions are available, three to big players and three to SMEs. No company can win multiple contracts.

Bids for the Incheon International Airport Terminal 2 duty free contract close in two phases – today at 18.00 (5 April) with IIIAC and a day later with Korea Customs Service (KCS).

As reported, the long-awaited T2 tender is being conducted on an unprecedented two-stage basis, following a major dispute between the IIAC and KCS over how bids should be judged. That row was resolved in early February with an agreement between the two parties to hold a two-tier assessment. This involves IIAC first judging bids on all six licences (three for big players, three for small & medium enterprises) based on a 60% technical and 40% financial weighting.

IIAC is to recommend two players for each licence with KCS deciding the outright winners based on its own scoring system, including contribution to small & medium enterprises.

While KCS will make the final awards, IIAC’s evaluation is likely to prove key.

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This table details duty free sales at Incheon International Airport Terminal 1 from 2011 to 2016. All figures are in 100 million Korean Won, making 2016 sales around US$1.98 billion
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This table details duty free sales at Incheon International Airport Terminal 1 from 2011 to 2016 by key nationality. While T2’s traffic mix will be different (national carrier Korean Air and partners will use it), these figures are useful indicators, helping to explain Incheon’s pre-eminence in the duty free world.

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