Introduction: It’s late afternoon on a chilly Autumn day in Yeouido, the fulcrum of southwest Seoul’s heavily developed Yeongdeungpo District. As I peer out the window of my cab trying to get my bearings in the seemingly endless swirl of traffic that constantly engulfs the Korean capital, a towering golden building suddenly looms in front of us. It is one of Seoul’s most famous landmarks, the world’s tallest gold-clad structure and a mandatory stop for over 3 million tourists each year.
63 Building, as it is known, is also home to one of the country’s new duty free market entrants, Galleria Duty Free 63 which opened in December 2015. The store and the building are owned by powerful Korean department store retailer Hanwha Galleria, which took the plunge into the duty free sector after a controversial bidding war for three new Seoul licences earlier that year.
The company pledged to “wow and delight” visitors, offering a convenient one-stop shopping, entertainment and dining extravaganza. Its focus, the retailer promised, would mirror the parent store’s emphasis on luxury and VIP service.
Dubbed ‘A Journey to Modern Luxury’, the duty free offer is sited on the first lower level floor of the main 63 Building and the first to third floors of the annex building, giving some 10,072sq m of retail space.
Commercially it has not been an easy start. As The Moodie Davitt Report has pointed out many times in our extensive coverage of the Korean duty free market, retailers face two burning challenges – the daunting intensity of competition that has resulted from the proliferation of licences, and the escalating cost of tour group commissions as operators fight to attract Chinese group tourists.
[Song Seung-heon, one of Korea’s hottest acting stars, introduces Galleria 63 Duty Free in this stylish new film. Click on the arrow to view.]
For the first nine months of 2016 Galleria 63 posted sales of US$129.5 million, over 92% of them generated by foreigners, mainly Chinese. That represents an average monthly turnover of around US$14.4 million but encouragingly sales have trended upwards significantly as the operation has begun to settle in. In September, for example, sales reached US$19.6 million and by early November were edging up towards US$1 million a day.
Recently The Moodie Davitt Report Founder & Chairman Martin Moodie toured the store and some of 63 Building’s other attractions. Here is his photo-journalistic view of some of the highlights.
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The ground floor features an array of luxury boutiques and international cosmetics brands, the latter bolstered (or, judging by the crowds they attract, underpinned) by Korean blockbusters such as The History of Whoo, Laneige and Sulwhasoo. Golden Goose, Stefano Ricci, Launer London and Corneliani are among the boutique brands making their international duty free debut here and are complemented by established travel retail names such as Bottega Veneta and Balenciaga (both recently opened), Longchamp, Gucci and Ermenegildo Zegna.
From the ground floor combination of beauty and luxury boutiques, the shopper moves up to the luxury watches & jewellery offer on the first floor. There’s a strong Swatch Group presence here from Tissot, Longines and Rado, along with Panerai, Qeelin, Breitling, Hublot, Tag Heuer and Chopard, plus a wide range of mid- to high-end watches, including Mido, Hamilton, Gucci, Oris, Titoni and Enicar.
It’s an elegant, quiet floor, deliberately styled that way after the rush and clamour of the beauty offer below. The colours – white, gray and black – have been carefully chosen to convey a mood of comfort and simplicity. The key target is more mature, wealthier Chinese customers.
Next up is general fashion, fashion watches & jewellery and Korean cosmetics on the second floor. The former is targeted at younger fashion lovers and features international brands such as Furla , Repetto and Vivienne Westwood, plus an interesting concept called G. Street 101 (the G stands for Galleria), which introduces a compelling line-up of established, trendy and/or up-and-coming Korean designers or brands, such as Youk Shim Won, Rosa.K and Stone Henge.
The Korean cosmetics department features almost 50 brands, some of them household names such as The History of Whoo, Sulwhasoo, Laneige, Innisfree, the fast-rising Dr.Jart+ (now part-owned by The Estée Lauder Companies) and Etude House but also many other smaller brands that enjoy surprising support among young Chinese shoppers, who have learned about them online.
The History of Whoo face Lee Young-Ae’s astonishing popularity in China, particularly for the recent historical drama ‘Saimdang, the Herstory’, has played a pivotal role in the relentless surge in Korean skincare sales to Chinese shoppers.
The third floor features a ‘K-Special Hall’, where visitors can find an eclectic range of some 141 brands from Korea’s leading SMEs (Small and Medium Enterprises) and high-potential businesses. It also houses a Korean characters store for children and a IT product zone for ‘kidults’.
There is also more space for local cosmetics, a high-class destination merchandise offer, foodstuffs (led by Korean ginseng) and a small liquor & tobacco line-up.
A lot of Chinese shoppers buy baby products when abroad, and have particular trust in Korean names. Baby bottles therefore are a huge seller here, another example of how Korean retailers tend to spot trends that many of their international counterparts, always focused on traditional categories, do not. Traditional (and, it has to be said, cute) Korean pillows are another big hit with the Chinese.
The excellent consumer technology offer is deliberately targeted at male consumers. Not only does it drive significant sales but also gives male partners a distraction while their wives and girlfriends shop elsewhere.
About Hanwha Galleria Since its inception in 1976, Hanwha Galleria has carved out an outstanding reputation as a premium retailer. Galleria Luxury Hall, which opened in 1990, was South Korea’s first upscale department store, quickly becoming a hot spot for both tourists and domestic shoppers. The company has since positioned itself as the ‘pilot shop’ for the Korean fashion industry, seeking to attract unique brands that cannot be found elsewhere. Today Hanwha Galleria operates branches in Suwon, Cheonan, Daejeon and Jinju. In 2014, Hanwha Galleria Timeworld was awarded the duty free concession at Jeju International Airport, a success soon followed by the Seoul licence breakthrough. |
Overall Galleria 63 Duty Free is an elegant, quietly impressive new addition to the ranks of Korean duty free shops. In keeping with the parent group’s heritage, the emphasis is on style and subtlety rather than an out-and-out shopping fest, something encapsulated in a nice change of pace and mood on each floor.
Like all the industry newcomers, Galleria 63 has not had it easy. Competition for brands is intense, competition for consumers even tougher. The latter has spurred a huge rise in commission fees to the tour agents that provide the lifeblood of Chinese group tourists. But parent company Hanwha Galleria is taking a long-term view, believing that the store’s location in Yeouido (a large island on the Han River that ranks as Seoul’s main business and investment banking district) – an area much favoured by Chinese visitors – and its relative proximity to Incheon International Airport will help it prosper.
Critically, the 63 Building also hosts some other top attractions, including Hanwha Aqua Planet 63, a stunning aquarium opened last July that features a magnificent array of marine life and a mermaid show set to music and lights.
For the more culturally inclined, there is the 63 Sky Art Musuem, well-named as when you’re 60 floors up taking in the magnificent views of the Han River and the city beyond, it is like being in the sky. The musuem offers a variety of exhibitions and cultural experiences throughout the year. During The Moodie Davitt Report’s visit in late October, an exhibition called Craving Colours was underway. The enthralling showcase of artistic talent featured diverse connotations, symbols and narratives linked to seven colours – red, gold, black, white, pink, blue and green.
With its commendable focus on a pluralistic approach to tourism, Galleria 63 Duty Free is an important addition to the shopping streets of Seoul. But the retailer, in common with other new market entrants, has already learned that those streets are not paved with gold.
