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Tag: hanwha galleria

  • Korea looks elsewhere as Chinese shoppers vanish

    Korea looks elsewhere as Chinese shoppers vanish

    South Korea has stepped up efforts to overhaul its dependence on Chinese shoppers by shifting the focus to other Asian countries.

    The country’s tourism sector – especially the duty-free retail industry – is bearing the brunt of the fallout triggered by the stationing of an advanced US missile defense system in Korea.

    In what appears to be acts of retaliation by Beijing against Seoul’s decision reached in July to host a Terminal High Altitude Area Defense (THAAD) battery, since Wednesday, all package trips from China to South Korea have been banned at the behest of authorities.

    China has vehemently objected to the missile move, saying THAAD’s high-power radar can be used to spy on its own military.

    This week, Chinese airlines have cut back on South Korea-bound flights and Chinese cruises are no longer making stopovers at local ports in popular tourist destinations.

    The slew of restrictions by Beijing has caused concerns among the local tourism and related sectors, such as the duty-free business, as they have heavily depended on Chinese visitors as sources of profit. Not only did they account for half of all foreign travellers last year, but they were big spenders who spent at least US$2000 per person buying things in Korea.

    In an effort to minimise the impact, Korea’s central and provincial governments are pushing to diversify foreign visitors to Southeast Asians and those from the Middle East, where Korean pop stars and TV drama series have gained huge popularity.

    Busan, South Korea’s largest port city, plans to bolster designing various tour programs that target Middle Eastern visitors, who are mostly big fans of Korean dramas, its city government said earlier.

    The city will also work with local businesses to develop medical and cruise tours for visitors from the Middle East, India, Mongolia and Russia.

    North Chungcheong Province, which has Cheongju International Airport, is pushing to increase flights to Taiwan, Vietnam, Russia and Japan.

    Related to such moves to diversify, the culture ministry said Thursday it plans to hold tourism exhibitions in Vietnam and Singapore next month to promote South Korea.

    Aside from state and provincial efforts, local firms, led by duty-free operators, are rushing to diversify their customer bases to tide over current difficulties. Hanwha Galleria, the duty-free unit of Hanwha Group, recently clinched deals with two travel agencies in the Middle East to secure foreign customers.

    It also plans to work with local hospitals to offer medical treatment services for Middle Eastern visitors as part of their tour programs.

    “The purchasing power of Middle Eastern customers on average is 30 per cent higher than people from China. We see (the THAAD issue) as a chance to boost our duty-free business through focusing more on individual tourists and VIP marketing,” Hanwha Galleria said.

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  • Korean duty-free stores suffer losses

    Korean duty-free stores suffer losses

    Korean duty-free stores newly opened in Seoul are losing money as heavy marketing costs erode profits.

    A review of financial documents from the major players show heavy competition is taking its toll on all players.

    Five duty-frees stores opened new shops in the capital city after winning licenses in two bids — one in July and the other in November 2015 — in hopes of courting deep-pocketed Chinese customers, but none of them has reached the break-even point since opening.

    Shinsegae Duty Free, which opened in mid-May, posted 121.2 billion won (US$103.8 million) in sales over the past four months, but it accumulated 37.2 billion won of operating losses, its regulatory briefing showed.

    Galleria Duty Free 63, a duty-free store run by Hanwha Galleria, said it booked 193.4 billion won of sales between December 28 and September 30, but the operating deficit reached 30.5 billion won over the period.

    HDC Shilla Duty Free, a joint venture between Shilla Hotel and Hyundai Development, said it posted 228.7 billion won and 16.7 billion won in sales and operating deficit, respectively, in the January-September period.

    SM Duty Free, a unit by leading tour agency Hana Tour, said it logged 71.1 billion won in sales and 20.8 billion in operating losses from its opening on February 15 to September 30.

    Doota Duty Free, a unit by power equipment and construction conglomerate Doosan Group, logged 10.4 billion won in sales and 16 billion won in operating losses in the first half of this year. It has not yet disclosed the third quarterly report.

    Business prospects remain grim for the fledgling operators as the government is set to give out four new operating licenses in Seoul as a way to promote tourism.

    The Korea Customs Service earlier said it will pick the winners next month, but it remains unclear as a snowballing influence-peddling scandal involving the business community has prompted investigation into the companies that donated funds to two sports foundations, involving those vying for duty-free shop licenses.

  • Galleria Duty Free 63 opens in Seoul

    Galleria Duty Free 63 opens in Seoul

    Galleria Duty Free 63 has been officially opened – and it’s offering more than just duty free products.

    The new duty free store, located in Seoul’s iconic 63 Building, is operated by Hanwha Galleria, a subsidiary of Hanwha Group. Since its ‘Free Opening’ last December, the store has recorded daily average revenue of between 600 million and 700 million won, which the company expects to reach to 1 billion won (US$880,000) in the third quarter of this year.

    But what is most intriguing about the latest duty free branch is its 63 Building-based tourism content that visiting shoppers can take advantage of.

    The 63 Building, also owned by Hanwha Group, houses an observation deck overlooking the capital, and 63 Sea World, an aquarium that was recently renovated and renamed to AquaPlanet 63. Galleria Duty Free 63 has incorporated the building’s touristic elements and started operating tourism packages for its shoppers at the beginning of July.

    Hanwha Galleria also joined hands with Chinese conglomerate Wanda Group to establish a new marketing partnership. Wanda Group currently has some 120 million subscribers in China, and it will be joining Hanwha Galleria’s marketing campaigns to reshape the store into the next big tourist attraction for Chinese vacationers in Seoul.

    “Although the distribution industry has seen better times, we expect Hanwha Galleria to contribute to the Korea tourism industry with its distinctive duty free enterprise,” said Kim Seung-youn, CEO of Hanwha Group, who visited the store on Thursday.

    The new store currently features 540 brands, from luxury labels like Gucci, Coach, and Michael Kors, to brands that are exclusive to Galleria Duty Free 63, such as Stefano Ricci and Golden Goose. More brands including Chanel Cosmetics and Bottega Veneta will be joining the branch in coming months.

     

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  • Korea to allow four new duty-free shops in Seoul

    Korea to allow four new duty-free shops in Seoul

    Korea will allow four more duty-free shops to open in Seoul to meet growing demand from Chinese tourists, the government announced Friday.

    “Four new licenses will be issued for operation in Seoul, while the city of Busan and Gangwon Province will also get one each,” Lee Myung-gu, director of the Korea Customs Service, said at a press briefing in Sejong.

    The licensees will be selected by the end of this year through an open competition, the official explained, with one ticket reserved for midsized companies.

    Seoul currently has nine tax-exempt retail outlets. Friday’s decision will raise the total to 13.

    Duty-free stores are a rare bright spot in Korea’s lackluster retail sector, growing by an average 20 per cent over the past five years. Last year, they posted a combined 9.2 trillion won ($8 billion) in sales.

    Major retail giants Lotte Duty Free, part of Lotte Group, SK Networks of SK Group and Hyundai Department Store hailed the decision, vowing an all-out effort to win a license.

    For Lotte and SK, in particular, this represents a second chance after they failed to renew the license for shops that they have been running for years.

    “We will make utmost efforts to win the license back,” SK Networks said in a press statement after the announcement.

    SK’s only duty-free outlet inside the Walkerhill Hotel in eastern Seoul faces closure in May with the expiry of its license.

    Lotte, which runs the top duty-free store by sales in Seoul, has to shut its Lotte World Tower outlet in southern Seoul by the end of June. The Lotte World Tower shop ranked third by sales in 2014.

    Hyundai Department Store said it wants to open a tax-free retail outlet at Coex in the southern shopping district of Gangnam.

    The government last year changed its policy on duty-free shops, holding an open competition for operational licenses for the first time. HDC Shilla Duty Free, Hanwha Galleria and SM Duty Free grabbed new licenses to open outlets in Seoul, while Doosan and Shinsegae beat Lotte and SK to win theirs.

    The government, however, has changed its stance again this year, extending the operational licenses of local duty-free stores to 10 years from the current five. Also, the licenses will be automatically renewed to help the companies run their businesses in a more sustainable way.

    The decision to open the field wider for competition is a move in line with the government’s efforts to grow tourism and revive the sluggish domestic economy and create jobs, the KCS explained in a press statement. It expects the new licenses to spur domestic investment of 1 trillion won and 5,000 new jobs.

    Korea is the world’s largest duty-free market, accounting for more than 10 per cent of global revenues from duty-free shops.

    In 2014, it saw foreign tourist arrivals rising to a record 14.2 million, greatly helped by a surge in visitors from neighbouring China.

     

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  • Hanwha Galleria to open Seoul downtown duty-free store next week

    Hanwha Galleria to open Seoul downtown duty-free store next week

    Korean department retailer Hanwha Galleria is to partially open its first duty-free store at the 63 City Building in downtown Seoul next week, Hanwha Galleria Duty Free merchandising division representative Ji Su Kim told DFNIonline.

    Kim, was unable to reveal further details, but a YonHap News Agency report indicated Hanwha Galleria plans to open 60% of the proposed space in the gold-tinted skyscraper, one of Seoul’s best known landmarks in Yeouido on December 28. Hanwha Galleria and HDC Shilla Duty Free, a joint-venture between Hotel Shilla and Hyundai Development Co were awarded the main downtown duty-free licences in Seoul by the Korea Customs Service in July following a hotly contested tender.

    The report said the pre-opening would showcase 369 brands, including cosmetics, watches and jewellery with nearly half of them Korean brands. The new duty-free shopping space will be located in the first lower level floor of the main 63 building and floors one to three of the annex building. With a total floor area of 10,072sq m, shoppers will have a  one-stop experience in a modern and comfortable space, according to the company.

    Once the entire store is complete, it is hoped the luxury boutiques and cosmetics stores in the first lower level floor and the watches and jewellery section of the first floor will feature global luxury brands.  The second floor will be filled with Korean cosmetics brands showcasing the best of “K-beauty”. This floor will also feature sections for fashion, accessories, tobacco and liquor. The third floor will be home to “K-Special Hall”, an exclusive concept to Galleria Duty Free. This unites more than 100 of Korea’s top brands and small and medium-sized enterprises.

    Shoppers looking to take a break from shopping can enjoy views of the Han River at “Studio Rue”, a media complex café located on the fourth floor, and browse a selection of Hallyu content products and purchase refreshments.

    Meanwhile, Hanwha Galleria, whose Hanwha Timeworld subsidiary runs the duty-free concession at Jeju International airport, is believed to have made little progress in terms of attracting global luxury brands.

    Hanwha Galleria CEO Hwang Yong-deuk said during a briefing. “Although we want to have luxury brands in the stores they are not yet considering opening new shops, thinking they have enough shops in South Korea.”

    The company added it would continue negotiations to house global brands when the Lotte World Tower store closes this month after the Korean powerhouse lost its licence to travel-retail newcomer Doosan Group.

    It also vowed to continue expanding its duty-free business and revealed it is targeting sales of $429.6m million in the new store next year.

    Stay close to DFNIonline and future editions of DFNI for more on the Hanwha Galleria duty-free expansion project.

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  • S.Korea picks Hotel Shilla JV, Hanwha to operate new Seoul duty-free stores

    S.Korea picks Hotel Shilla JV, Hanwha to operate new Seoul duty-free stores

    South Korean retail giants HDC Shilla Duty Free and Hanwha Galleria Timeworld on Friday clinched a high-profile bid to operate duty-free stores in downtown Seoul in what is seen as a golden ticket to bolstering their footing in a retail industry struggling from anemic consumer spending.

    Seven companies had vied for the license, the first of its kind open to large corporations in 15 years. Lotte Duty Free, HDC Shilla Duty Free, a joint venture between Hotel Shilla and Hyundai Development Co., and SK Networks were aiming to increase their market share, while E-land, Hanwha Galleria Timeworld, Hyundai DF and Shinsegae DF were trying to make a fresh entrance into the duty-free sector.

    Currently, four companies run seven duty-free stores in Seoul, whose main customers are foreign tourists, especially those from China. Their insatiable appetite for shopping has been a rare bright spot in the local retail sector grappling with sagging sales amid a weak economy.

    Buoyed by their spending, the duty-free market has been posting double-digit growth in the past five years, compared with crawling sales growth at department stores and hypermarkets.

    In 2014, duty-free stores in Seoul posted a combined sales of 4.4 trillion won (US$3.9 billion), which accounts for more than half of the country’s 8.3 trillion won duty-free market.

    Meanwhile, the customs agency also announced two smaller retailers who will be operating duty-free stores in Seoul and Jeju, South Korea’s southernmost resort island, respectively.

    The new licenses will be valid for five years under a revised customs regulation that shortened the contract period from 10 years. The winning bidders are required to open their stores within six months.