The 2nd place went to Shilla iPark DFS, which saw its daily average sales increase by 105%, exceeding KRW1,619 million.
The daily average sales of Shinsegae DFS in Myeong-dong amounted to KRW2,148 million in October, further increasing the gap in sales among downtown new duty-free shops in Seoul. Shinsegae DFS in Myeong-dong saw its daily average sales skyrocketing from KRW1,690 million in September to KRW2,148 million in October. Also, the sales rankings, mentioned in the article titled “The gap in sales among large downtown new duty-free shops in Seoul is obvious,” which was reported by Korea Duty Free News last October, tend to be more entrenched. However, the total sales of each new duty-free shop increased over September.
For starters, the total sales of Shinsegae DFS in Myeong-dong, No. 1 in sales, increased by 126.3% from US$44.74 million in September to US$56.48million (KRW66,590 million). The 2nd place went to Shilla iPark DFS. Its total sales went up by 104.7% from US$40.67 million in September to US$42.58 million (KRW50.2 billion) in October.
The sales figures of the new duty-free shops are a very important indicator. First of all, some of these new duty-free shops, applied for new licenses in downtown Seoul in December. Korea Customs Service has made its official position clear that the license screening in December will be conducted as scheduled. Last September and October, Shinsegae DFS and Shilla iPark DFS, ranked No. 1 and No. 2 among the 4 large downtown new duty-free shops in Seoul, applied for the license screening in December. The reviewers participating in the license screening may regard the sales indicator as an objective success indicator good enough to persuade them.
In particular, it seems that Shinsegae DFS, which acquired the license later than others, will have a chance to present the fast growth in sales despite a short period of duty-free shop operation as its strength to the license reviewers. It is not clear yet exactly when the December license screening will be conducted. Considering the time when the November sales of those companies participating in the license screening can be accurately disclosed is around the end of December, however, it is likely that the currently disclosed cumulative sales until October will be used as an objective indicator.
Shilla iPark DFS, which was ranked No.2 in September and October, recorded cumulative sales of US$255.86 million (KRW301,660 million) until October. It seems that it can emphasize that it is No. 1 in cumulative sales among the new duty-free shops.
However, an industry insider pointed out that there are controversies over the sales figures of the new duty-free shops. “As the top three luxury brands are not officially launched yet, large new duty-free shops need to convince people of the recruitment and confirmation of these brands. Accordingly, they are doing well from the viewpoint of long-term investments even if a lot of expenses need to be spent for the time being,” said proponents of the large duty-free shops trying to increase sales quickly. “We need to look at the process-industry nature of the duty-free industry.”
On the other hand, opponents say, “Due to the addition of new duty-free shops, there will be too many negative problems, e.g. payment of excessive per-guest commissions to solidify their position in the market.” “Whoever gets the license in December, the vicious circle continues. According to the logic of capital, the per-guest commission will skyrocket, and ‘duty-free shop operators’ weaken their bargaining power against brands of their own accord.” They said it must be redressed urgently.
Despite the controversies in the industry, among the downtown new duty-free shops, which opened at the same time, the sales of No. 1 are 328% greater than those of No. 4, and the industry itself says that it is a problem. As the license is awarded based on the future ‘business plans,’ submitted by the operators, during the license screening of Korea Customs Service, in the current system, there is no way of verifying the future.
