Incheon Airport strikes SOS on Hyundai and Shinsegae after withdrawal of Lotte and Shilla duty free shops

Input 2021.01.21 10:40

Lotte and Shilla Duty Free Shops will be closed next month at Incheon Airport Terminal 1
With 34% duty-free area vacant… Cut off employment of 760 outsourcing/brand manpower
Expanded operation review to existing operators such as Incheon Airport Corporation, Hyundai and Shinsegae

Incheon International Airport Corporation will withdraw the Lotte Duty Free Shop and Shilla Duty Free Shop from Terminal 1 next month. Hyundai Department Store (069960), Shinsegae Duty Free is planning to minimize it by expanding the store area. It was decided that the bid for a new business would be difficult for the time being, as it is not known when overseas travel will resume due to the coronavirus infection (Corona 19).

According to the internal data obtained by Chosun Biz through the Democratic Party Assemblyman So Byung-hoon’s office on the 21st, IIAC said, “After February, when the Terminal 1 duty-free shop contracts with Lotte and Shilla were ended, a follow-up business operator started operation to minimize vacancy. Until before, we will promote a plan to operate a temporary store by expanding the operating area of ​​the existing Terminal 1 operator.”

Lotte and Shilla operate 23 stores in the cosmetics, fashion, liquor and cigarette sales areas (DF2, DF3, DF4, and DF6), which are considered the yolk seats of Incheon Airport Terminal 1. It accounts for 34% of the total duty-free area. The contract was scheduled to end in August of last year, but due to Corona, the Corporation could not find a new business operator, and applied a special case of the Customs Act and signed a six-month extension contract. When the extension contract ends next month, the two companies will withdraw.

There are four businesses remaining in Terminal 1: Hyundai (DF7), Shinsegae (DF1·DF5), Grand Duty Free Shop (DF12), and Gyeongbokgung Duty Free Shop (DF11). Hyundai and Gyeongbokgung Palace operate duty-free shops until August 2025, and Shinsegae and Grand each operate until August and September 2023. It is known that the KTO is considering plans to temporarily expand and operate stores within 5% of the existing business rights. In the industry, it is believed that it is more likely to offer proposals to large corporations that have operational capacity rather than mid-sized companies.

The reason that KDHC cannot neglect large-scale vacancy is because the number of outsourcing and brand dispatch personnel working at Lotte and Shilla reaches 760. Unless they are hired directly from the head office, it is highly likely that they will lose their jobs with the withdrawal of duty-free shops. “I am concerned about the cutoff of employment of 760 people,” the KTO explained. “It is unclear whether the bid will be successful, but it is necessary to promote the selection of a business operator as soon as possible after the contract is terminated.”

Hyundai and Shinsegae said, “We haven’t received a proposal from the KTO yet,” and said, “If a proposal comes, we will discuss with each other.” In a situation where most large duty-free shops are in the red due to the corona, the expansion of stores is a factor that increases the cost burden. However, if the current government, which places great importance on the employment issue, proposes to expand stores, it will not be easy to refuse from the standpoint of large corporations that must continue their duty-free business. Some argue that the government and the corporation should provide additional incentives to existing companies in addition to rent reductions.