SOUTH KOREA. Incumbents Lotte Duty Free and The Shilla Duty Free, together with department store group giant Shinsegae and small & medium enterprise Charmzone have carried off the spoils in the much-anticipated Incheon International Airport duty free tender, The Moodie Report can reveal.

Lotte and Shilla will share the key Perfumes & Cosmetics (three and four stores respectively) and Liquor & Tobacco (five shops each) concessions.

Lotte also captured four luxury boutiques in the main Passenger Terminal Building as well as 23 multi-category stores in the remote concourse. Crucially, Lotte has won package DF5, which includes the 550sq Louis Vuitton boutique opened in September 2011 and run ever since by The Shilla Duty Free. The decision means that Lotte Duty Free will become the new Vuitton concessionaire (subject to the brand’s approval).

Shilla has won the package for 11 general merchandise stores, with Shinsegae taking the other general merchandise contract for 12 stores. Small & medium-sized enterprise Charmzone wins a beauty concession plus a number of other stores.

Shortly after the awards announcement, Lotte Duty Free Director – Global Business Planning Team Steve Park told The Moodie Report: “We are very pleased with the result of the tender. We will prepare carefully for the new concession. Based on our proposal we will improve the shopping environment and we’ll develop a strong marketing programme to improve our airport shops. The sales volumes will increase a lot compared to the current concession.”

“I’m OK. Happy for the result,” was the short but satisfied reaction from Senior Executive Vice President and Head of The Shilla Duty Free, Jeong-Ho (Jason) Cha.

How the winners break down by category

The decisions make terrific reading for Korean powerhouses Lotte and Shilla, each of which retains a strong presence at Incheon. Shinsegae’s success is no surprise either. Since the company acquired Paradise Duty Free in September 2012 it has made its intentions clear to become a giant of Korean travel retail.

Today’s news also means a clean sweep of duty free contracts for Korean companies; King Power International Group of Thailand was the sole international bidder.

The world’s first Louis Vuitton airport store, opened at Incheon in 2011; now Lotte will take over the operation from Shilla

Contracts are for five years, confirmed Incheon International Airport Corporation (IIAC). Several SME packages were not awarded (specifically DF9, DF11 and DF12 from the list below) and will be retendered, the company added.

IIAC said that its choice of retailers, with dual operators for the core categories, would offer a new shopping experience with enhanced consumer choice It said this would mean “better prices, better choice and better service for airport passengers”.

IIAC also revealed that in weighing the bids, business proposals accounted for 60% and financial proposals 40% of the selection criteria.

It also noted that the “total tender amount” was an increase on the previous time these contracts were tendered, in 2007. Details will be made available soon.

Companies that competed for the main tender packages were: Lotte, Shilla, Korea Tourism Organization (one of the incumbents, which missed out altogether), Shinsaegae-chosun and King Power (Thailand).

SME participants included Donghwa, Entas, Charmzone, Grand Hotel and City Plus.

Incheon International Airport generated duty free sales of US$2 billion last year, buoyed by an extraordinary +41.6% rise in Chinese arrivals.

More on this story via Moodie Live on our home page.

The complex tender structure allowed opportunities for large and small & medium enterprises
Cross reference the map locations with the table above to see where the major and SME retailers respectively will be operating. Click on the above to view the enlarged image (then hover over graphs with your cursor and click for full detail)
A competitive field of Korean companies (large as well as small & medium enterprises) and King Power International Group from Thailand contested the Incheon duty free tender, where the Airstar Avenue concessions are currently held by Lotte Duty Free, The Shilla Duty Free and Korea Tourism Organization