"Intensified Duty-Free Store Bidding Competition" Big 3 Clash at Gimpo Airport... Selection This Week

Ahead of the Chuseok holiday, the spread of COVID-19 is accelerating mainly in Seoul and the metropolitan area. On the 16th, the domestic terminal of Gimpo Airport in Gangseo-gu, Seoul, was crowded with passengers. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yuri Kim] Lotte, Shilla, and Shinsegae Duty Free are clashing over the operating rights of the Gimpo International Airport duty-free shop.

According to Korea Airports Corporation and the duty-free industry on the 26th, the bidding for the selection of the operator for the Gimpo Airport departure duty-free shop (DF1), which closed on the same day, saw participation from the 'Big 3' large corporations: Lotte, Shilla, and Shinsegae Duty Free. Hyundai Department Store Duty Free decided not to participate after reviewing the business feasibility. The airport corporation plans to evaluate the proposals and open the business rate bids within this week to select the candidate for the license operator.

The bidding target, DF1, is a 732.2㎡ area where cosmetics, perfumes, and other items are sold. The expected annual sales are around 71.4 billion KRW. Although the scale is not large, the industry expects fierce competition among companies because it is a symbolic location as a Seoul-area airport duty-free shop with many international routes to Japan, China, and Taiwan.

The current operator of this area, Lotte Duty Free, stated that it "highlighted its operational capabilities as the longest-running operator of the Gimpo Airport duty-free shop." They emphasized that since opening as the first private operator in 1999, they have continued their business at Gimpo Airport duty-free shops since 2010. Shilla Duty Free also expressed that it would be difficult to step back easily considering the synergy with the currently operated Gimpo Airport tobacco and liquor duty-free shop. Shinsegae Duty Free is aiming for the Gimpo Airport duty-free shop operating rights as a way to expand volume after withdrawing from the Gangnam branch in July and to show its commitment to the duty-free business.

The accelerating move toward phased daily recovery (With Corona) is also a factor raising expectations for the business outlook. For this reason, the industry expects the 'business rate competition' submitted by each company to be fiercer than that at Gimhae Airport. DF1 has a rent structure linked to sales, so even if the impact of COVID-19 continues for the time being, the cost burden is relatively low. The minimum business rate proposed by the airport corporation is 30%. It is also evaluated that the lease period, which can be operated for up to 10 years with '5 years + 5 years,' was taken into consideration.

Meanwhile, Hyundai Department Store Duty Free has decided not to participate in the Gimpo Airport bidding following Gimhae Airport. A Hyundai Department Store Duty Free official said, "We plan to focus on the Incheon Airport duty-free shop and downtown duty-free shops such as Trade Center and Dongdaemun," adding, "We will actively consider participating in the Incheon Airport Duty Free T1 and T2 bids expected next year."

Earlier, on the 14th, Lotte Duty Free, the existing operator, was selected as the candidate for the Gimhae Airport duty-free shop license operator.