Silent After Rent Reduction Talks Collapse
In Contrast to Shilla Duty Free Returning Some Business Rights
Shinsegae Group Executive Reshuffle Expected This Week
Possible Replacement of CEO Yoo Sinyeol Amid Poor Performance and Failed Negoti
Shinsegae Duty Free, which had previously raised the possibility of withdrawing from its business at Incheon International Airport if rent reductions were not granted, has remained silent following the breakdown of arbitration negotiations with Incheon International Airport Corporation. This stands in contrast to Shilla Duty Free, which quickly withdrew from certain zones after failing to reach an agreement with the corporation, returning its business rights and paying a penalty. Industry insiders believe that Shinsegae Duty Free's quiet stance is related to the upcoming regular executive reshuffle at Shinsegae Group, which is expected to be announced soon.
According to industry sources on September 24, Shinsegae Group is expected to carry out its 2026 regular executive reshuffle as early as this week. This move will make Shinsegae the first among major retail conglomerates to initiate personnel changes this year, advancing the schedule by about a month compared to last year, when the reshuffle took place at the end of October. Factors cited for the earlier schedule include the upcoming Chuseok holiday, which will create a break of up to 10 days in early October, as well as the 2025 National Assembly audit, which is set to begin on October 13.
Exterior view of the liquor store at Shinsegae Duty Free located in Incheon Airport Terminal 2. Provided by Shinsegae Duty Free
Shinsegae DF, which operates Shinsegae Duty Free, is being discussed as an affiliate with a high likelihood of a CEO change in this reshuffle. Yoo Sinyeol, who became CEO in December 2020, has held the position for nearly five years, making him the longest-serving leader. However, he may be held accountable for the company’s underperformance and for failing to resolve the issue of reducing rent at Incheon Airport-a cost-saving initiative he pursued.
An industry official commented, "Hotel Shilla, led by an owner-operator, was able to make a decisive move to withdraw from the Incheon Airport duty-free business early, even at the cost of losses, when its demand for rent reductions was not met. In contrast, for Shinsegae Duty Free, which is run by professional managers, there are more factors to consider, so a cautious decision is inevitable."
Previously, Shilla Duty Free, operated by Hotel Shilla, filed for arbitration with Incheon District Court in May, asking for rent reductions due to poor business conditions. However, Incheon International Airport Corporation cited fairness issues, such as the presence of unsuccessful bidders, and did not attend two arbitration sessions by August 14, resulting in a breakdown of negotiations. Subsequently, on August 18, Hotel Shilla’s board of directors decided to cease operations in the DF1 zone at Incheon Airport.
Shinsegae DF posted an operating loss of 87.3 billion won in 2020, with sales of 1.6926 trillion won, turning to a deficit due to the COVID-19 pandemic. However, after Yoo Sinyeol took office, the company focused on structural improvements and achieved profits for three consecutive years from 2021, overcoming the pandemic’s impact. Despite winning the Incheon Airport duty-free license in 2023 and expecting further growth, the company’s performance declined. Although the number of travelers increased, duty-free purchases decreased, and the burden of fixed rent continued to accumulate, resulting in an operating loss of 35.9 billion won last year. In the first half of this year, the company also recorded an operating loss of 3.8 billion won (including internal transactions).
As a result, Shinsegae Duty Free also filed for arbitration to request a rent reduction at Incheon Airport at the end of April, ahead of Shilla Duty Free, but the airport corporation rejected the request. While there has been speculation that the company might file a lawsuit or return its business rights as a follow-up measure, Shinsegae Duty Free has not made any specific comments. A company representative stated, "We are internally reviewing various possibilities regarding the operation of our duty-free business at Incheon Airport," declining to elaborate further.
Meanwhile, this Shinsegae Group reshuffle may also see changes in other leadership positions, including William Kim, CEO of the fashion division at Shinsegae International, Honggeuk Kim, CEO of Shinsegae Casa, and Youngseop Kim, CEO of Shinsegae Simon, all of whose terms are set to expire in March next year. There is also a need to form a management team for the joint venture between Shinsegae and China’s Alibaba Group, which received conditional approval for business combination from the Fair Trade Commission on August 18.
A source familiar with the group’s affairs noted, "Compared to the Emart division, which changed its key business CEOs and made ad hoc personnel changes last year, the department store division-undergoing its first reshuffle since the promotion of Chairwoman Chung Yoo-kyung-is expected to see the most significant changes in executive positions."
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