The battle for opening a single downtown duty-free shop is heating up under the watchful eyes of the chiefs of some of the nation’s largest conglomerates.
The new duty-free store in central Seoul, whose license will be granted in July, is seen as a golden opportunity for local retail giants to open up a new revenue stream.
While the domestic retail market is nearing saturation, the duty-free market has expanded rapidly in recent years, recording double-digit growth since 2010.
Between 2010 and 2014, the country’s duty-free market value rose from 4.5 trillion won to 8.3 trillion won.
With the market representing a potentially lucrative revenue source, the competing companies’ chiefs are giving the matter very close personal attention.
“The bid for the downtown duty-free store needs to be supported across the group,” Hyundai Development Co. chairman Chung Mong-gyu said at a conference with the heads of the group’s subsidiaries.
Chung is also said to be personally reviewing the plans for the duty-free store that the company hopes to open at I’Park Mall in Yongsan, Seoul.
Reflecting the opportunity it represents and the importance of the project, Hyundai Development has teamed up with a formidable partner ― Hotel Shilla led by Lee Boo-jin.
Lee, the eldest daughter of Samsung Electronics chairman Lee Kun-hee, has also taken the project under her wing.
For Lee, the store appears to be more than a new source of income for her company.
At a meeting, Lee is reported to have expressed particular interest in the project, calling on those present to utilize Hotel Shilla’s experience in the duty-free sector to develop the store into “the best tourism complex in Northeast Asia.”
As part of the ambitious strategy, Hotel Shilla is said to be reviewing a range of plans including holding K-pop performances and using Yongsan’s established electronics retail network to boost the store’s sales.
While the Chung-Lee duo represents a strong combination, their competition is far from easy.
One of their rivals is Chung Yong-jin, Lee’s cousin and second in command of the retail giant Shinsegae.
Shinsegae’s presence in the duty-free market is relatively weak, but Chung has rolled out an aggressive strategy.
Under his leadership, the company acquired the Paradise duty-free store in Busan in September 2012 and opened its second duty-free store at Gimhae International Airport in 2014.
The company also managed to enter the duty-free section at the Incheon International Airport earlier this year.
At the time, he was reported to have highlighted Shinsegae’s extensive retail business, expressing his hopes for the duty-free business.
In line with Chung’s ambitions, the company has since announced plans to launch Shinsegae DF, a new subsidiary dedicated to the field.
The three chaebol scions may have scale and reputation behind them, but they also face another tough contender: namely, chairman Kim Seung-youn of Hanwha Group, who has built himself a reputation as an aggressive and strategic businessman.
Although Kim has a checkered past with a number of run-ins with the law, he has proven his drive time and again as he brought the group into the ranks of Korea’s top 10 conglomerates after taking the helm at age 29.
This already tough lineup has yet another giant jockeying for the license, one that has experience in operating a duty-free store in Seoul ― SK Networks of Chey Tae-won’s SK Group.
On April 19, the company revealed that it had narrowed down the possible locations for the proposed store to a handful of sites. The company said the sites considered included Hongdae, Euljiro and Shinchon in Seoul.
“We will finalize the location by early May as required before joining the bid,” SK Networks spokesman Lim Jin-taek said.
By Suk Gee-hyun (firstname.lastname@example.org)