[Asia Economy Reporter Kim Yuri] Lotte, Shilla, and Shinsegae Duty Free Shops are once again competing for the operating rights of the Gimpo International Airport duty-free shop. While Lotte aims to retain its position and Shilla and Shinsegae are challengers with different intentions, all have a strong determination to secure the Gimpo Airport operating rights, promising a fiercer competition than the previous Gimhae Airport bidding.
According to Korea Airports Corporation and the duty-free industry on the 27th, the big three conglomerates?Lotte, Shilla, and Shinsegae Duty Free Shops?participated in the bid to select the operator for the Gimpo Airport departure hall duty-free shop (DF1), which closed yesterday. The DF1, the subject of the bid, covers an area of 732.2㎡ and sells cosmetics, perfumes, and other items. The expected annual sales are around 71.4 billion KRW. Although the scale is not large, 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 is Lotte Duty Free. Lotte, which was the first private operator to open a store at Gimpo Airport in 1999, reopened the Gimpo Airport store in 2010 by acquiring AK Duty Free and has been operating it since. Lotte is determined to succeed in this bid to continue its long-standing operational experience, and if it fails to secure the operating rights, it would mean one less duty-free shop, so it is openly showing its determination to defend its position. Lotte Duty Free emphasized, "In this bid proposal, we highlighted our operational capabilities as the longest-running operator of the Gimpo Airport duty-free shop."
The determination of Shilla Duty Free and Shinsegae Duty Free, who are challenging, is also strong. Since the rent is linked to sales, the burden is relatively lighter against external variables such as the COVID-19 situation, and through this bid, they can operate for up to 10 years, so the value of the Gimpo Airport duty-free shop in the 'post-COVID' era must also be considered. The recent acceleration of the phased return to normal life (With COVID) was also reflected.
Shilla Duty Free, which won the operating rights for the Gimpo Airport tobacco and liquor duty-free shop in 2019, aims to succeed in this bid as well to comprehensively manage the Gimpo Airport duty-free shops and strengthen synergy effects. Before bidding for the Gimpo Airport duty-free shop, Shilla Duty Free formed a task force (TF) to comprehensively examine market conditions and profitability before ultimately deciding to participate in the bid.
Shinsegae Duty Free is also in a position where it cannot back down due to the nature of the duty-free business, which emphasizes economies of scale. After withdrawing from the Gangnam store in July, Shinsegae is targeting the Gimpo Airport duty-free shop operating rights as a way to expand its reduced volume and demonstrate its commitment to the duty-free business.
Korea Airports Corporation plans to evaluate each company's proposals and open the business rate bids within this week to select the candidate for the license operator. A duty-free industry official said, "The business rates submitted by each company will ultimately determine the final operator," adding, "The current Gimpo Airport bidding situation will also affect the expected Incheon Airport duty-free shop bidding next year."
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