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Lunch with Jeong-Ho (‘Jason’) Cha is always an enjoyable and enlightening experience. As Senior Executive Vice President and Head of The Shilla Duty Free, Mr Cha is one of the most influential figures in Korean travel retail, with a keen insight not only into this sector but business in general, born out of his 35 years with Shilla parent company, Samsung Corporation.
Business appeared brisk enough today in-store with young Chinese women flocked around the Korean cosmetics counters, in particular. But Mr Cha assured me that compared with this time last year, business is very slow. Slow by Korean standards is, of course, probably very good by international ones, such has been the boom in Chinese spending here over recent years, putting incredible pressure on Shilla’s limited space.
But South Korean tourism and travel retail were smashed in June and July by the outbreak of the MERS virus, which devastated both sectors. “The worst day we were down -90% [year-on-year] here and -50% at Incheon,” Mr Cha told me.
With the crisis officially declared over (by the Korean government though not the World Health Organization), things are getting back to normal. Gradually. Jason Cha believes it won’t be until October before business is running at 2014 levels. Occupancy rates at the upscale Shilla Hotel are running at around 70%, significantly higher than many city competitors which stand at around 50-60% after falling as low as 20-30% during July.
Despite MERS, Shilla has plenty to feel good about. In particular it recently won a hotly contested tender for one of the three new Seoul duty free licences, in partnership with Hyundai Development Company. If space is a problem at the existing Seoul store, it won’t be at the Yongsan I’Park Mall, where one of the world’s biggest duty free stores will be opened by the partnership in December. It’s going to be a game changer in Seoul’s ever-evolving duty free channel.
It was interesting to see where the consumer action was today. The luxury areas, particularly high-end watches, were very quiet; the Korean cosmetics and accessories sections buzzing. So were mid-priced brands (Swarovski, right at the front of the shop, particularly so).
After the tour, we dined at the superb Ariake restaurant at The Shilla Hotel. At this restaurant, and particularly at the hotel’s Korean restaurant, you will get some of the best food in Seoul and today was no exception. Quite how with my limited food capacity I’m going to be ready for a dinner with one of Seoul’s leading duty free agents tonight, I don’t know, but I’m not complaining given the quality on offer.
As our lunch came to an end, Jason Cha reflected on his eight years with The Shilla Duty Free. They have been outstandingly successful ones. When he entered the business, Shilla generated sales of around US$300 million. Last year they were close to US$3 billion, a ten-fold increase.
Mr Cha’s notable recent successes include the company’s high-profile victory in the Singapore Changi Airport perfume & cosmetics tender (a business that, after a rocky beginning, is beginning to turn the corner); the securing of what looks like a financially prudent new tenure at Incheon International Airport; and most pleasingly for him, the Seoul downtown licence gain. This great leader of Shilla, Samsung and Korean duty free is truly a man to be admired.
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