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| Hotel Shilla President Lee Boo-jin, left, and Shinsegae Department Store President Chung Yoo-kyung. / Korea Times file |
Shilla, Shinsegae may benefit from Lotte's hardship
By Park Jae-hyuk
Hotel Shilla President Lee Boo-jin and Shinsegae Department Store President Chung Yoo-kyung will begin a competition this week to see who gets to operate a duty free store at Incheon International Airport's new passenger terminal.
The two female CEOs are cousins who have the same grandfather, Samsung Group founder Lee Byung-chul.
Since they vied in 2015 for licenses to run new duty free shops in Seoul, the businesswomen have maintained their rivalry. Chung defeated Lee in a bid for new downtown duty free store licenses in 2016, but Lee won against Chung last year in a bid for a license to run a duty free shop at Jeju International Airport.
They strive to defeat each other as well at the airline hub's second terminal that will open Thursday.
Lee, who has led long-term powerhouse Shilla Duty Free, has focused on highly profitable cosmetics and perfume stores.
Despite a diplomatic conflict between Korea and China last year, Hotel Shilla's duty free business division showed gains in every quarter. The division posted 949.2 billion won ($890 million) in sales and 23.5 billion won in operating profits in the third quarter last year. The figures respectively rose 14 percent and 27 percent from a year earlier.
The company has also expanded its overseas presences based on cosmetics and perfume shops.
Shilla has duty free stores at Singapore Changi Airport, Macau International Airport and Hong Kong International Airport.
As it will open its duty free shop at Incheon International Airport's second terminal this week, the retailer will be the only company having cosmetics and perfume stores at Asia's three largest hub airports.
Shilla Duty Free recorded 500 billion won in overseas sales last year, and the number is expected to reach 1 trillion won this year because it opened a new shop at the fourth passenger terminal of Singapore Changi Airport last November.
Shinsegae has specialized in luxury fashion brands, and plans to introduce about 170 fashion brands if it wins the new store.
As Chung succeeded in opening a Louis Vuitton shop at Shinsegae Duty Free's Myeong-dong branch and supplying Chanel products at Incheon's new passenger terminal, Shinsegae will be able to sell products of the top three international luxury brands _ Louis Vuitton, Chanel and Hermes.
Although Lee opened a Louis Vuitton shop at the first terminal in 2010, Chung has a Hermes shop at the old terminal. Also, the latter opened shops for Fendi, Cartier and Christian Dior's products at the Myeong-dong store.
Observers expect the cousins will seek to take advantage of Lotte's plunging sales resulting from the Chinese consumer boycott after the conglomerate offered its golf resort as a site for the deployment of a U.S. anti-missile defense system here.
According to Rep. Yun Ho-jung of the ruling Democratic Party of Korea, Lotte Duty Free had a record-low 41.8 percent market share between January and November last year.
Lotte's market share was 52.3 percent in 2013, 50.8 percent in 2014, 51.5 percent in 2015 and 48.7 percent in 2016.
On the contrary, Shinsegae's market share jumped to 12.6 percent last year from 2.3 percent in 2013. Its market share was 3.1 percent in 2014, 3.8 percent in 2015 and 7.8 percent in 2016.
Shilla has maintained the level of its market share _ showing 29.6 percent last year, 27.7 percent in 2016, 28.2 percent in 2015, 30.5 percent in 2014 and 30.6 percent in 2013.
Given that Lotte is considering withdrawing from the first terminal of Incheon International Airport next month over the accumulating losses and burdensome rents, its market share may drop further.
If Lotte exits the old terminal, it will lose 1 trillion won in annual sales and its share in the fiercely competitive duty free market. If so, Shilla may surpass Lotte in market share.
