Duty-free shops at Incheon International Airport eager to lure boutiques

Duty-free shops at Incheon International Airport, South Korea’s main gateway, are fiercely competing to lure luxury brand boutiques to their outlets to take advantage of the return of tourists in the post-pandemic era.

Korea’s three major duty-free shop operators – Lotte, Shilla, and Hyundai Department – are even willing to accept demanding conditions set by some globally renowned premium brands to secure them at their branches at the airport, which promotes itself as the hub of Northeast Asia.

According to industry sources on Thursday, Hyundai Department Duty Free has begun construction work for a Gucci boutique at Incheon International Airport Terminal 2.

Located in the central area of Terminal 2, Hyundai Department Store Duty Free will open the Gucci outlet opposite the existing Gucci store after the Italian luxury fashion house’s contract with Lotte Duty Free ends in June.

Hyundai is set to open the 290 square-meter Gucci boutique in July to sell ready-to-wear clothes, handbags, shoes and jewelry.

Under the contract, the outlet's interior will be designed by Gucci’s famous creative director Alessandro Michele.

ENHANCING BRAND AWARENESS

Analysts said growing competition among duty-free shops to attract premium boutiques will enhance their brand awareness with the increasing number of travelers at the airport post-pandemic.

Competition is also fierce as all three Korean duty-free shop operators are now allowed to operate luxury boutiques at the airport following a reshuffle of duty-free zones there last July.

Hyundai is slated to open a Fendi outlet at Terminal 1 and Yves Saint Laurent and Valentino boutiques at Terminal 2 in the second half of this year.

Shinsegae DF Inc. opened Tory Burch and Hermès stores at Incheon International Airport earlier this month.

Hermès withdrew from the airport last June after its contract with Shinsegae expired, but decided to reopen it at the Korean retail giant’s request.

As duty-free shops strive to entice global boutiques to their outlets, some brands are said to be requesting preconditions such as designing the store’s interior to their taste or being positioned near other specific luxury brand stores.

NEGOTIATING POWER

Operating a globally renowned brand boutique at the airport, which saw 28.1 million people depart from Korea last year, is significant to duty-free shop owners as they can leverage such boutiques’ presence in negotiations with other brands to open boutiques at the duty-free shops.

Having famous boutiques at the airport also helps duty-free shops open similar boutiques in downtown Seoul.

Hyundai Department Store Duty Free Shop is known to be planning to introduce the same luxury brand boutiques at its Incheon Airport outlets to its Trade Center branch in southern Seoul later this year.

Shinsegae and Hyundai – latecomers to the duty-free industry – are also actively seeking to lure global boutiques to better compete with bigger rivals, analysts said.

Write to Young Chan Song at 0full@hankyung.com

In-Soo Nam edited this article.