Shilla Duty Free ready to boost sales at Changi Airport

HDC Shilla Duty Free Ltd., the operator of The Shilla Duty Free Shop, said on Tuesday it has extended the contract to run cosmetics and perfume stores within Singapore Changi Airport for four years to reinvigorate its post-pandemic business.

Under the agreement, those stores' operations, scheduled to end in March, will be extended to March 31, 2028.

During the extended period, the Shilla Duty Free will operate 22 stores at Singapore Changi Airport’s Terminal 4 in areas measuring 7,700 square meters.

The unit of Hotel Shilla Co. will introduce 20 new brands in addition to the existing 130 beauty brands available at those stores in one of Asia's three largest airports.

It hopes Changi Airport to serve as a bridgehead for its entry into other parts of Southeast Asia.

The Shilla Duty Free opened the duty-free industry's first duplex store at Singapore Changi Airport in 2015. The first floor is packed with cosmetics and perfume stores and the second floor is used as a space where shoppers can experience cosmetics and relax.

The Shilla Duty Free expects the renewed contract with Changi Airport to boost its sales from the second half of this year, supported by the post-pandemic travel boom.

In 2022, its revenue reached 2.8 trillion won ($2.1 billion), slightly half its 2019 sales of 5.2 trillion won.

The number of passengers at Changi Airport in August this year increased by 55% to 5.15 million, compared to the same period last year.

In 2019, before COVID-19 broke out, the number of passengers at the airport was 68.30 million, similar to the 71.17 million users of Incheon International Airport (71.17 million) the same year.

However, a recovery in Korean duty-free stores' sales depends heavily on how much Chinese tourists will spend, industry watchers said.

China lifted its ban on group tourists’ travel to South Korea, Japan and the US last August after a six-year hiatus. But the industry has yet to feel any significant improvement in their sales.

According to the Korea Duty-Free Shop Association, domestic duty-free store sales in August amounted to 1.14 trillion won, a 27.6% decrease compared to the same month last year.

In March this year, the Shilla Duty Free was named the winner of the 2022 One Changi App Awards hosted by Singapore's Changi Airport Group.

Write to Mi-Kyoung Lee at capital@hankyung.com
 

Yeonhee Kim edited this article