South Korea: Lotte and Shilla are closing duty-free stores at Incheon Airport
Lotte and Shilla are two of South Korea’s leading major duty-free operators. Both have opened outlets inside the Incheon Airport Terminal 1, but they will be vacating the area next month, according to the reports.
The pandemic crisis badly hit the duty-free retailers
As per The Korea Herald, the said airport will have more empty spaces once Lotte and Shilla discontinue their operation in the facility, but they can’t do anything about this. This happened after the two retailers have withdrawn their respective bids for the concessions at the Incheon International Airport Terminal 1. The main reason for this is the negative effects of the COVID-19 pandemic, as very few people are visiting.
Min Yong Jung, senior retail and commercial analyst, stated that with the move, Lotte Duty Free and Shilla Duty Free will also have to give up their deposit guarantees due to their decision to withdraw.
It was added that the said duty-free retailers have leases that actually expired in August last year, but these were extended for six months as new bidders for concession backed out just before they sign a deal with Incheon Airport. The worsening pandemic situation played a big part in this turn out of events in the business sector.
While Shilla and Lotte continue to operate, they were not able to overcome the slump and struggled to stay afloat. Overseas travels are also mostly banned, so there are no customers coming their way. Thus, there is no other option but to close the stores even if they may be given another extension to operate at the airport’s terminal 1.
The declining business in the travel industry
Apparently, the dwindling aviation and travel businesses have widely affected Shilla and Lotte Duty Free’s sales. Their exit is the latest indication that the pandemic is hitting the industry very badly, and it may be hard to recover.
Last year, it was predicted that the sales in Duty Free shops will shoot up, but it is clear that this is not an accurate prediction. If this is true, Lotte and Shilla would have stayed and kept the business running.
"Duty-free sales are tipped to further increase in the third quarter, compared with three months earlier, on the back of the government's eased restrictions on sales channels of duty-free goods," The Korea Times quoted Na Eun Chae, an analyst at Korea Investment Securities Co., as saying in the last quarter of 2020.