Incheon Airport on track to meet US$2bn sales in 2017
Bumho Kim, Executive Director of Concessions Development Group, Incheon Airport remains bullish about the airport’s duty free prospects over the next year. Although he admits that the recent tenders for the new terminal 2, due to open next year, were announced at a difficult time for duty free in South Korea, due to the well documented issues between South Korea and China. In fact, this lead to the tender for fashion and accessories not attracting any bidders. The DF3 tender for the 4,889 square meter space covering 14 outlets has been issued again with revised conditions to attract bidders and Kim is confident that a successful operator will be announced in June.
Lotte Duty Free and The Shilla Duty Free were successful in bidding for the T2 Tobacco, Liquor & Packaged Food tender and the Perfumes & Cosmetics tender respectively. When asked why these companies were awarded the contracts, Kim says: “Lotte is the number one in the market with 40 years of experience and peak purchasing power. Shilla is equally capable and also has a thriving international business.”
Kim comments that Incheon Airport continues to have positive growth due to its more balanced passenger composition then that of the downtown stores. It is not so dependent on Chinese passengers with 50% of its clientele being Korean, and Chinese customers coming in second at 30%. This broader demographic led to sales figures in March only 2% down year on year, whereas downtown stores have seen up to a 40% reduction.
Kim is still confident of hitting target sales of US$2 billion again in 2017, with strong local spend and increase in passenger growth, which improves 10% annually. He is also hopeful that the recently elected government will look carefully at how it manages the duty free industry. Kim believes it is vital to look at finding solutions to help stabilize Korea’s fastest growing business.