Recently the sales of new large downtown duty-free shops in Seoul revealed obvious gaps. ‘Shinsegae DFS Myeong-dong,’ which obtained a new duty-free shop license in November 2015, turned over US $44.74 million (KRW50,882.8 million) in total during September, taking first place. The second place went to ‘Shilla iPark DFS’ with US $40.67 million (KRW46,253.99 million), followed by ‘Galleria DFS 63’ with US $19.57 million (KRW22,256.96 million). Lastly ‘Doota DFS’ was quite a distance from the first and second place, posting sales of US $13.74 million (KRW15,626.5 million). The 4 new duty-free shops won licenses in July and November 2015, i.e. ‘Shilla iPark DFS’ and ‘Galleria DFS 63,’ which opened in December 2015, and ‘Shinsegae DFS Myeong-dong’ and ‘Doota DFS,’ which opened in May 2016.
September, which marks the 5th month since the opening of ‘Shinsegae DFS Myeong-dong’ and ‘Doota DFS,’ can be said to be the time when these duty-free shops are stabilized. In particular, as the comparison was made almost a year after ‘Shilla iPark DFS’ and ‘Galleria DFS 63’ opened last year, the latecomer came from behind and took the first place. It was quite a meaningful result. For starters, although ‘Shinsegae DFS Myeong-dong’ opened nearly 6 months later, it came out on top in sales during September. The total sales of ‘Doota DFS,’ which opened around the same time, were merely 1/3 of those of the runner-up, ‘Shilla iPark DFS.’
A duty-free industry insider said about the September sales revenues of new downtown duty-free shops in Seoul, “The result is natural. Those companies which rushed into the duty-free industry without any knowledge of distribution would have a great deal of difficulties planting themselves in the duty-free market in such a short time. ‘Shinsegae DFS Myeong-dong,’ ranked No. 1, is already operating duty-free shops at the Incheon International Airport and in downtown Busan, and ‘Shilla iPark DFS’ has the ‘DNA’ of Shilla DFS, the second company in the domestic duty-free industry.”
In daily average sales, which is obtained by dividing the total sales of September by the number of business days, the first place went to ‘Shinsegae DFS Myeong-dong,’ reported daily average sales of KRW1,692.13 million, followed by ‘Shilla iPark DFS,’ which posted daily average sales of KRW1,538.92 million. Looking at the sales of September alone, ‘Shinsegae DFS Myeong-dong’ is ranked No. 3 among the downtown duty-free shops in Korea, following ‘Main Store of Lotte DFS (Sogong-dong)’ with daily average sales amounting to KRW8 billion and ‘Shilla DFS Seoul (Jangchung-dong)’ with daily average sales of KRW4.6 billion. The daily average sales of ‘Shilla iPark DFS’ also far exceed the daily average sales of ‘Lotte DFS COEX,’ i.e. KRW1 billion. In terms of sales figures alone, it is clear that these two new duty-free shops quickly settled into the market in a short time.
Furthermore, the daily average sales, which were obtained by dividing the total sales accumulated over a total of 274 business days from January 1, 2016 to September 30 by the number of business days for which each duty-free shop operated, were analyzed too. Looking only at the sales, excluding other factors, such as the ‘location’ of each new duty-free shop, the ‘brands they carry,’ and the ‘difference in the number of business days,’ ‘Shinsegae DFS Myeong-dong’ recorded daily average sales of KRW986.22 million in just 136 days after its pre-opening on May 18, ranked No.1 among the 4 large duty-free shops that won new licenses.
The runner-up was ‘Shilla iPark DFS,’ which opened on December 24, 2015. Its daily average sales were KRW882.95 million. The 3rd place was ‘Galleria DFS 63,’ which opened on December 28, 2015. It posted daily average sales of KRW536.8 million. Lastly, ‘Doota DFS,’ which opened the latest on May 20, 2016, reported the lowest daily average sales. Its daily average sales over 134 business days were only KRW362.03 million.
Not only industry insider, but also the offices of the National Assembly members who participated in the inspection of state administration in the 20th National Assembly, said about the above result with one voice, “it is doubtful that the Korea Customs Service selected duty-free shops properly during last year’s license screening. Some of the new duty-free shops seem to have stabilized in the market, but I doubt that others are quite fit to operate duty-free shops.”
In particular, “The Korea Customs Service does not disclose the names of license reviewers, and says it cannot disclose the management secrets of companies when it was requested to disclose specific data. Looking at the business performance of the new duty-free shops, the Korea Customs Service seems to be trying to hide their failure to select the right operators during the license screening,” said the offices of National Assembly member, which requested the Korea Customs Service and Chun Hong-uk, Commissioner of the Korea Customs Service to submit data during the inspection of state administration. “Still the Korea Customs Service seldom discloses information. Beating the purpose of Government 3.0, i.e. making a transparent government, we have strong doubts about the Korea Customs Service’s refusal to disclose data.”
