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Tag: Shinsegae

  • Shinsegae and Shilla to fight out Incheon T1 duty free bids

    Shinsegae and Shilla to fight out Incheon T1 duty free bids

    Shinsegae Duty Free and The Shilla Duty Free will fight out the contest for two Incheon International Airport Terminal 1 duty free contracts on offer, despite rival Lotte Duty Free tabling the highest bids in each case.

    The tenders followed incumbent Lotte Duty Free’s resignation from both concessions in February.

    As reported, four retailers – Lotte Duty Free, The Shilla Duty Free, Shinsegae Duty Free and Doota Duty Free – bid for the two packages, DF1 and DF5.

    While Lotte Duty Free submitted the highest offers for both packages (see figures below), Incheon International Airport Corporation opted to shortlist only Shilla and Shinsegae. The two retailers must now table their business plans to Korea Customs Service and Incheon International Airport Corporation by 5 June. A winner will be selected in mid-June.

    A Shinsegae Duty Free spokesperson confirmed the shortlist to The Moodie Davitt Report. A Lotte Duty Free spokesman said the company was “despondent”, given that it had tabled the highest bid.

    Lotte’s DF1 bid was +1.6% higher than Shinsegae’s and +27.2% higher than Shilla’s. On DF5, Lotte’s offer was +13.2% better than Shinsegae’s and +38.8% above that of arch-rival Shilla.

    Some Korean duty free market sources expressed shock at the result. One veteran retailer told The Moodie Davitt Report, “Lotte must have been penalised for dropping the [former] concession in the mid-term. Yet as evaluations are based 60% on the business plan and 40% on the monetary offer, it is not easy to understand that Lotte did not qualify… especially as it had paid a KW187 billion penalty (for its premature exit).

    “There is no specific regulation or degrading for a company which gives up a government concession in the mid-term.”

    One source told The Moodie Davitt Report, “The most probable scenario is that the licence evaluation committee of Korea Customs Service will award DF1 to Shinsegae and DF5 to Shilla in order to avoid potential monopoly issues [as Shilla also holds the rest of the airport’s P&C business reserved for major retailers -Ed].”

    Not surprisingly, Shilla is known to dispute that position. Korea’s Fair Trade Commission will not have a problem with the proposed structure, sources close to the company believe. Shilla could reasonably point to many other international airports which have a single retailer for one category (or in fact for all categories), the sources contend.

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  • Shinsegae bets strong to replace Lotte’s Incheon duty free

    Shinsegae bets strong to replace Lotte’s Incheon duty free

    Shinsegae is going all out to acquire licenses to operate duty free shops at Incheon International Airport after its rival Lotte’s bid fell through.

    The bid is understood by many as Shinsegae‘s aim to expand its presence in the still lucrative and growing duty free industry.

    According to industry officials, the Incheon International Airport Corp. (IIAC) has narrowed the candidates for the licenses to Shinsegae DF and Hotel Shilla. The two filed their intent to operate duty free outlets at the DF1 bloc for cosmetics and perfumes and DF5 bloc for clothing in the airport’s Terminal 1.

    Lotte and Doosan also vied for the operating licenses, but failed to make it to the final list. The Korea Customs Service will review the bids and select the operators for each of the blocs next month.

    Lotte Duty Free previously ran those blocs, but in February it gave up its licenses citing high rent, standing at around 800 billion won (US$743.5 million) a year.

    Lotte’s move was interpreted as an attempt to lower its rent for the blocs by renegotiating the deal, as it continued to accumulate losses due largely to the high rent it agreed to pay in its previous deal. The 800 billion won rent for the blocs is nearly four times higher than the minimum guarantee the IIAC wants this time for those blocs, which is 200 billion won.

    According to sources, Lotte made the highest bid at 280 billion won for DF1 and 69 billion won for DF5 in the four-way battle.

    Following were Shinsegae with 276 billion won for DF1 and 61 billion won for DF5, Shilla with 220 billion won for DF1 and 50 billion won for DF5. Doosan’s Doota Duty Free bid 192.5 billion won for DF1 and 53 billion won for DF5.

    Despite Lotte placing the highest bid, it lost points in other criteria, such as management ability and its withdrawal from the previous duty free license deal driving the airport authority to lose faith in Lotte, industry officials said.

    As Lotte failed to make the final list, the final selection next month will bring a fundamental change to the domestic duty free industry.

    As of last year, Lotte was Korea’s largest duty free operator by sales with a 41.9 percent market share. It was followed by Shilla with a 26.8 percent share and Shinsegae with a 12.7 percent share.

    The combined sales of DF1 and DF5 blocs in 2017 stood at 900 billion won, which was approximately 6.4 percent of Korea’s total duty free sales last year.
    This means Lotte’s market share will drop to 36 percent. If Shilla wins the licenses for both blocs, its market share will go over 30 percent, or if Shinsegae wins it will reach a 20 percent market share.

    Shinsegae’s surge

    Depending on the customs service’s selection, Shinsegae will operate up to four outlets at the airport. It currently has the DF7 bloc in the first terminal and DF3 bloc in the second terminal.

    Though the duty free business does not have many chances to expand because of regulatory issues and five-year licenses, Shinsegae has expanded its presence rapidly in the domestic market, encroaching on the market shares of Lotte and Shilla.

    Shinsegae’s market share stood at 2.8 percent in 2014 but quickly rose to 12.7 percent last year, increasing by 10 percentage points during the period.

    Its surge was largely attributable to the solid numbers from its Myeong-dong branch, which brought in 1.35 trillion won in sales last year. The branch opened in May 2016 but quickly hit its stride thanks to luxury brands such as Dior, Cartier and Fendi.

    The branch is also expected to house Rolex and Chanel in the near future, casting a rosy outlook for its sales. Shinsegae’s strategy to focus on Japanese and Southeast Asian customers also served its growth well.

    While other duty free outlets were hit hard by the decline of inbound Chinese customers last year due to the diplomatic friction between Korea and China over a U.S. Terminal High Altitude Area Defense (THAAD) battery, Shinsegae managed to post high numbers thanks to their relatively low reliance on Chinese customers.

    “Shinsegae’s intent to make the airport a world famous tourist attraction seemed to earn points in IIAC’s review,” a Shinsegae official said. “Also, the company’s portfolio in Myeong-dong contributed to its shortlisting.

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  • Korean retail conglomerates eye pet business more and more

    Korean retail conglomerates eye pet business more and more

    South Korean retail conglomerates like CJ, Lotte and Shinsegae are catering more and more for pet owners as market demand grows.

    They have opened pet shops that offer products and services ranging from food and grooming services to even lodging for pets. They are also launching their own branded product lines.

    Shinsegae International’s household goods brand Jaju has launched its pet product line Jaju Pet, which plans to sell innovative pet products such as its “slow round bowl”, designed to help pets eat their food slowly, and plastic dog-waste bags that can be connected to a dog collar.

    E-Mart, Korea’s first discount retail outlet run by Shinsegae, has opened Molly’s Pet Shop with its offering of products and grooming services. It even has its own pet hotel. Since opening at the end of 2010, E-Mart now runs 35 Molly’s stores.

    Lotte Department Store opened a pet consulting service dubbed Zipsa in Gangnam in January. The store offers such services as dog-walking or pet-food delivery.

    Online shopping malls are also trying to catch some action. GS Shop has launched a “pet zone” on its mobile platform offering services that cater to various stages of a pet’s life cycle, while CJ Mall has its All Pet Club, offering food and clothing products as well as services such as lodging and funerals.

    Food companies Binggrae, Dongwon F&B Harim, KGC and Pulmuwon are also launching pet-food brands.

    Korea’s Ministry of Agriculture, Food and Rural Affairs says the pet industry has grown by more than 14 per cent on average a year since 2014. The market size was tabulated at KRW2.3 trillion (US$ 2.1 trillion) last year and is expected to surpass the KRW3 trillion won mark this year.

    The pet-loving population is estimated to be around 10 million individuals in 4.57 million households. Analysts say that as single or two-person households increase and as the aging population grows, society will see more people raising pets in the future.

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  • Department store sales benefit from holidays

    Department store sales benefit from holidays

    Department-store sales in South Korea rose this month with several family-oriented holidays and special occasions, retail industry data shows.

    Children’s Day, which falls every May 5, a substitute day off and May 8 Parents’ Day all contributed to more consumption at department stores. Plus Buddha’s Birthday, which is a national holiday and falls on a Tuesday, created a four-day break for some workers.

    In the first 20 days of this month, sales at upper-end department stores like Hyundai, Lotte and Shinsegae all rose, with some reporting close to double-digit gains compared with the year before.

    Shinsegae says its sales shot up 9.9 per cent, compared to a 1.5 per cent contraction for May last year. Sales of men’s and women’s clothing rose 16.1 and 12.6 per cent respectively, while demand for sports products rose 12.6 per cent. It said demand for designer goods soared 26 per cent.

    Hyundai says it sold 6.1 per cent more goods, with Lotte trailing with a gain of 5.3 per cent.

    Discount store chain E-Mart says sales for April and May were down slightly with the demand for both fresh and processed food falling last month.

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  • Duty-free operators to get licenses for a decade

    Duty-free operators to get licenses for a decade

    Retail giants like Lotte and Shinsegae don’t have to worry about getting their duty-free licenses renewed every five years anymore.

    A task force on improving duty-free regulations decided on Wednesday to propose the government extend duty-free licenses for conglomerates to a maximum 10 years. Additionally, duty-free stores managed by small and medium-sized companies will be allowed to have their licenses renewed two times.

    Under the current law, conglomerate have to bid for duty-free licenses from scratch every five years. Small and medium-sized duty-free operators are allowed to renew their licenses once.

    If the government and lawmakers accept the proposal, it will undo the regulation changes made by the previous Park Geun-hye administration in November 2013, which cut the contract terms from 10 years to five.

    According to Yoo Chang-jo, a business professor at Dongguk University who is leading the task force, the goal is to make the changes effective from Jan. 1.

    “Currently, those with duty-free licenses have until next year or three years from today before their licenses expire,” Yoo said on Wednesday. If the revised regulation passes the National Assembly, “they will be allowed to renew their licenses once” for another five years.

    There have been complaints in the industry that extending licenses to a maximum 10 years is still too short and harms the duty-free operators’ competitiveness by limiting investment and contributing to uncertainty.

    The task force claimed that it limited the maximum to 10 years for a reason.

    “If the license is renewed after 15 or 20 years, there will be criticism that [the government] is favoring existing operators, which will not be accepted by the public,” Yoo said.

    He said the possibility is high for duty-free operators that are competitive to be picked again.

    The task force was formed last July after the Board of Audit and Inspection of Korea came to the conclusion that license reviews by the Park government lacked transparency and fairness.

    Park was accused of influencing the government to strip the duty-free license held by Lotte Group in 2015.

    Lotte regained its license in a revaluation the following year after allegedly complying to several demands from the Blue House.

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  • Korea department store sales benefit from holidays

    Korea department store sales benefit from holidays

    Department store sales rose this month on the strength of several family-oriented holidays and special occasions, retail industry data showed Tuesday.

    Numbers provided by major Korean retailers showed Children’s Day, which falls on May 5 every year, a substitute day off, and May 8 Parents’ Day all contributed to more consumption at department stores.

    In addition, Buddha’s Birthday, which is a national holiday that fell on Tuesday, created a long four-day break for some workers, giving them more time to spend.

    In the first 20 days of this month, sales at upper-end department stores like Shinsegae, Lotte and Hyundai all rose, with some reporting close to double-digit gains compared to the year before.

    Shinsegae said its sales shot up 9.9 percent on-year, which is an improvement on the 1.5 percent contraction reported for May 2017.

    The store said sales of men’s and women’s clothing rose 16.1 percent and 12.6 percent, respectively, while demand for sports products moved up 12.6 percent. It said demand for expensive designer goods soared 26 percent.

    The increase in sales was also reported by Hyundai and Lotte department stores during the same period. Hyundai said it sold 6.1 percent more goods, with Lotte trailing with a gain of 5.3 vis-a-vis the year before.

    Clothing, cosmetics, sports and imports generated growth for the stores with demand for consumer electronics and home fashion items contributing to the overall good showing.

    “Holidays and special occasions requiring gift buying played a part in better sales numbers this year,” a Lotte Department Store representative said.

    He said sales ahead of Children’s Day and Parents’ Day were good.

    On the other hand, less demand for fresh produce that make up a large part of hypermarket sales caused a drop in numbers for such retailers.

    Emart, the country’s largest discount store chain, said sales for April and May were off slightly compared with the year before. It said demand for both fresh and processed food fell last month and coming into May.

    The company said sales of TVs, refrigerators and washers did rise, although not enough to offset the dip in demand in other areas.

    This trend was repeated at Lotte Mart, which said sales were off 1.8 percent so far in May, affected in part by negative growth in fresh produce.

    An industry expert said sluggish economic conditions were having an effect, with department stores that tailor to the more wealthy less vulnerable than hypermarkets.

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  • Lotte Group plans US$2.8 billion e-commerce spend

    Lotte Group plans US$2.8 billion e-commerce spend

    Korea’s Lotte Group plans to invest KRW3 trillion (US$2.8 billion) into its e-commerce business.

    Lotte Shopping CEO Kang Hee-tae says a comprehensive online shopping platform will integrate all eight of its online stores by 2020. Lotte Group will form a business department in August dedicated to developing its e-commerce business. Its various retail businesses, including its discount chain Lotte Mart and electronics outlet Hi-Mart, each run separate online shopping platforms.

    “Lotte plans to dedicate KRW500 billion to developing the online and mobile service platform,” says Kang. “It will invest KRW1 trillion in systematising distribution and logistics and KRW1.5 trillion for marketing.”

    Lotte Shopping and Lotte Group will each invest KRW1.5 trillion in the project.

    Meanwhile, Lotte Shopping, which runs Lotte Mart, Lotte Department Store and Lotte Cinema, has already announced it will merge with Lotte.com, the retail giant’s first online shopping platform, which sells goods from the department store.

    Lotte.com, which was the first e-commerce site from a Korean conglomerate when it launched in 2000, has fallen behind industry rival Shinsegae’s SSG.com, which offers products from its discount chain Emart and Shinsegae Department Store.

    Lotte’s plan follows a January announcement by Shinsegae that it would invest more than KRW1 trillion in a company to oversee Shinsegae’s entire e-commerce business.

    Lotte is banking on its large number of registered customers and offline stores to strengthen its e-commerce business. It has 11,000 retail outlets in Korea, and also has data on more than 38 million registered customers across its online and offline stores.

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  • More stagnant E-mart store to be closed

    More stagnant E-mart store to be closed

    Shinsegae Group’s discount chain E-mart has decided to shut several more stagnant stores this year to improve the company’s efficiency.

    Shinsegae says it has also sold its Deoki-dong branch in Ilsan, Gyeonggi Province. The outlet had initially been a Walmart store in 1996, but became an E-mart in 2006 after Shinsegae acquired the US-based discount chain’s Korean affiliate.

    “We realised we needed to reform our stores for continuous growth,” says an E-mart official, “so we began closing down our stores that showed sluggish sales.”

    The company sold its store in Hakseong in Ulsan, the store in Bupyeong in Incheon and the store in Siji in Daegu last year. It also sold land in Hanam and Pyeongtaek, Gyeonggi Province.

    Following the closure of an SSG Food Market Mokdong store in Seoul in January, E-mart plans to shut down the Bupyeong and Siji branches in the first half of this year. The restructuring is regarded as a move to offset the retailer’s sluggish growth rate over the past few years.

    E-mart posted KW566.9 billion (US$524.3 million) in operating profits last year, down 0.3 per cent from the previous year.

    Disposing of its stores showing losses, the company is considering opening a couple of new stores this year, as reported.

    E-mart left the Chinese market last year because of lingering losses in the world’s most populous country. After launching E-mart store there in 1997, at one time it had 30 outlets. However, the Chinese affiliate posted KW21.6 billion in losses in 2016, and its accumulated deficit between 2013 and 2016 reached KW150 billion.

    Meanwhile, E-mart will begin building its second store in Ho Chi Minh City in May. The company is using its Vietnamese affiliate as a base for its expansion in other Southeast Asian countries, such as Cambodia, Laos and Myanmar.

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  • Shinsegae to sell Scotland’s Glenmuir clothing

    Shinsegae to sell Scotland’s Glenmuir clothing

    Scottish golfwear brand Glenmuir has opened its first Korea pop-up store in Gangnam.

    Located in Shinsegae Department Store, the short-term store offers the company’s Spring/Summer 2018 collection.

    Glenmuir plans to open a permanent shop inside Shinsegae Department Store in the near future.

    “We are excited to bring Glenmuir to customers in Korea through our pop-up store in Shinsegae Gangnam,” said Seonghun Park, of Glenmuir Korea.

    The pop-up will close on March 29.

    Glenmuir items are currently sold at SK Pinx golf club on Jeju Island, and on Shinsegae’s online store.

    Founded in 1891 in Lanark, the brand is sold in luxury golf resorts in more than 30 countries, including Australia, Belgium, France, Germany, Japan, Sweden, Switzerland, and Russia.

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  • Reiss North Korea makes debut

    Reiss North Korea makes debut

    British fashion brand Reiss has launched in South Korea, at Shinsegae Department Store in Kangnam.

    Introduced by Shinsegae International, the brand plans to open 12 stores in both Shinsegae and Lotte department stores across the country by the end of this year.

    Reiss says it expects high sales with its offering of trending items priced to compete with local and international brands.

    Founded in 1971, Reiss offers designs inspired by classic movies and artworks. Its international expansion has also taken it to the US, Canada and Australia.

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  • Korea’s PK Market to enter the US market

    Korea’s PK Market to enter the US market

    Shinsegae’s discount chain E-mart plans to enter the US by opening its premium food outlet PK Market.

    While mostly high-end products will be sold at the South Korean group’s outlet, some of its low-tier private brands such as No Brand and Peacock will also be offered.

    E-mart is eyeing cities with significant Asian communities, such as Los Angeles and San Francisco. It may also acquire a food factory in Portland, Oregon, for producing its Peacock products for the US.

    E-mart has also joined hands with US shopping mall giant Taubman, which helped establish Starfield shopping malls in Korea.

    The Korean company has been trying to diversify its global reach, particularly after closing down stores in China over the THAAD row. Its accumulated operating loss in China has reached more than KW150 billion (US$141 million) since 2013, according to industry sources. E-mart finally exited the Chinese market last month.

    Meanwhile, the company plans to open its second outlet in Ho Chi Minh City in May.

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  • Kit Kat Flagship Store to Open Its First Location in Korea

    Kit Kat Flagship Store to Open Its First Location in Korea

    A KitKat flagship store has been launched in Shinsegae’s Gangnam department store in South Korea.

    It has been opened by Swiss food giant Nestle’s Japanese unit, which has developed special flavours for the chocolate wafer snack in collaboration with chef Yasumasa Takagi, who has just rolled out a special ruby version. As well as the original KitKats, the new Seoul store offers such exotic variations as cherry blossom and wasabi.

    “Nestle decided to open the first flagship store to reflect Korean customers’ needs for new and trendy premium chocolate,” says Nestle Korea CEO Erwan Vilfeu.

    Nestle Japan is looking into taking its special flavours to other Asian countries with similar flagship stores.

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  • Shinsegae to ramp up e-grocery business with $940 million from private equity

    Shinsegae to ramp up e-grocery business with $940 million from private equity

    South Korean retail heavyweight Shinsegae has drawn a US$938 million investment to help it build a major e-commerce business.

    Shinsegae has signed an initial funding agreement with BRV Capital and private equity company Affinity Equity Partners as it strives to make the most of a rapidly expanding Korean online shopping market.

    Shinsegae says it will carve off the online business divisions of Shinsegae Department Store and its discount store chain operator E-Mart and merge them to establish a separate affiliate dedicated to the group’s e-commerce business.

    “Our goal is to launch the new affiliate within this year,” Choi Woo-jung, head of the group’s e-commerce business, said in a press release. “Further details, including the name of the company and its structure, will be decided down the road.”

    Shinsegae plans to carry out new business projects, including mergers and acquisitions, through the spun-off company and raise it as the business group’s key distribution channel with an annual revenue of 10 trillion won by 2023.

    Shinsegae’s e-commerce business has been posting double-digit growth since the launch of an integrated online mall for its subsidiaries, SSG.com, in 2014, it said. The online platform logged 1.5 trillion won (nearly $1.4 billion) in sales in the first nine months of 2017.

    The retailer’s move to expand its e-commerce business comes in line with a steep rise of purchases made over the Internet in South Korea as the use of smartphones has fully caught on with local consumers.

    Transactions made with personal computers and other mobile devices reached 7.55 trillion won November last year, up a solid 21.7 per cent from a year earlier, according to data from Statistics Korea.

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  • Shinsegae to buy local furniture company for $168 mln

    Shinsegae to buy local furniture company for $168 mln

    South Korean retail giant Shinsegae will buy a local furniture company Casamia for KW180 billion (US$167.8 million) in a bid to tap into the country’s home-furnishing industry.

    Shinsegae Department Store will sign a contract with the company’s founder “and others” to buy a 92 per cent stake in the company, as reported.

    Launched as a small furnishing shop in Seoul in 1982, Casamia now has multiple brands, ranging from home decor to office furniture. Sales reached KW121.9 billion in 2016.

    Shinsegae has declined to comment on the acquisition, and Korea Exchange has asked that it confirm media reports in a regulatory filing.

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  • EMart’s M-Lounge to sell electric mini-vehicles

    EMart’s M-Lounge to sell electric mini-vehicles

    South Korea’s discount store E-Mart, a unit of retail conglomerate Shinsegae Group, has started selling electric mini-vehicles.

    E-Mart says it has expanded its M Lounge network to seven shops across Korea to sell electric bicycles and EVs.

    Introduced at its Yeongdeungpo store last March to introduce its e-mobility lineup, M Lounge now sells E-Mart’s private-brand e-bike Pedelec and other brands such as Mando Footloose and Maskali, as well as Air Wheel (electric wheel) and iBoat (electric kickboard). It has also started taking orders for the Zhi Dou two-seater electric car from China, which can run up to 150㎞ on a single charge.

    Cleared by regulatory authorities last month, the vehicle is expected to be priced at KW13 to 14 million (US$13,000).

    E-Mart aims to install M Lounge at up to 20 key stores across the country.

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