Shinsegae Duty Free to close Gangnam store in July

SOUTH KOREA. Shinsegae Duty Free is set to close its downtown store in Gangnam, Seoul in July, a victim of the collapse in inbound and outbound tourism driven by the COVID-19 pandemic that continues to rage in the Republic.

The retailer confirmed the decision to The Moodie Davitt Report this morning Seoul time.

“The COVID-19 pandemic is significantly changing the entire business, especially for the travel retail market,” a spokesperson told The Moodie Davitt Report.

“In such a fast-moving situation, it is imperative for us to restructure and consolidate our business to ensure sustainable growth. Thus, after careful evaluation, we have concluded to close our Gangnam store.”

In an email yesterday to business partners seen by The Moodie Davitt Report headed Shinsegae Duty Free Gangnam closure, the retailer said the store would close on 17 July, three years after its much-heralded 18 July, 2018 opening. It asked partners for their understanding and cooperation.

The premises will be converted to expanded shopping space for parent company Shinsegae Department Store, the retailer told The Moodie Davitt Report. Shinsegae invested around KRW75 billion (US$69 million at the time) in opening the 13,350sq m store in 2018 amid buoyant times for South Korea’s duty free industry.

Today though, the Republic finds itself in the grip of a health crisis that won’t go away. Daily new coronavirus cases stayed in the 600s for the second straight day today as the country’s fight against COVID-19 reached what The Korea Herald called “a critical juncture of bracing for another wave of the pandemic”.

Today saw 673 new cases, including 652 local infections, according to the Korea Disease Control and Prevention Agency. That was down from 698 on Thursday and the 731 cases on Wednesday, which marked the highest level since 7 January. In such a troubled climate and with the heavy cost burden borne by the business, closure was inevitable one senior source told The Moodie Davitt Report.

When things were looking up: Scenes from happier times as expectant shoppers pour into the dazzling new store in July 2018

Shinsegae Duty Free’s full-year revenues in 2020 slumped -45.9% to KRW1,693 billion (US$1.53 billion). While downtown duty free sales held up better than the disastrous airport business (down by just -22%  year-on-year in Q4 compared with an overall -47.5% fall), that result was spurred almost entirely by a resilient group daigou channel. Shinsegae Duty Free’s flagship store in Myeong-dong will continue to serve that business.

Shinsegae Department Store and Shinsegae Duty Free results for 2020 full year and Q4. Click to enlarge.
These tables, courtesy of Korea Tourism Organization, underline the gravity of the inbound and outbound travel slump that has hit the country since the pandemic began in early 2020. Note the dramatic fall in the key Chinese and Japanese arrivals numbers and the near total collapse of outbound travel by Koreans. Click to enlarge.

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