Gamsahamnida South Korea, Annyeongi kyeseyo

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Martin Moodie
Martin Moodie is the Founder & Chairman of The Moodie Report.

I’ve reached my final stop of a tough but enthralling fortnight on the road before heading home from South Korea to London early tomorrow morn.

From my tenth floor room at the Grand Hyatt Incheon. I’ve got a superb view of Incheon International Airport, home to one of the world’s great travel retail operations (its food & beverage is pretty good too).

p1170925After arriving at my hotel, I popped over the road to see my old friend Incheon International Airport Corporation (IIAC) Deputy Executive Director, Commercial Marketing Group Bum-ho Kim, not at his office but by a football pitch. The occasion was a sport’s day involving seven of the airport’s retail partners, held right in front of IIAC headquarters.

A football match involving more players on the field at any one time than I have ever witnessed ensued. I had no idea what was going on other than it involved Lotte Duty Free v the rest of the retailers combined, symbolic I suppose of the retailer’s dominance of the market. Much as I was tempted to get out there with them, the lack of an oval ball dissuaded me – and the fact that, anyway, Korean duty free moves way too fast.

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Incheon International Airport Corporation’s Bum-ho Kim bends it like Beckham
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Catching up with Kang Hoon Lee (left), in charge of Entas Duty Free at Incheon International Airport and Bum-ho Kim of Incheon International Airport Corporation
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Pitchside with Lotte Duty Free Managing Director Incheon Airport Jong Hwan Lee
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With Young-shin Kim, a key member of Incheon International Airport’s dynamic food & beverage team

football-2 football-pan Since my last Blog, I’ve visited Lotte Duty Free’s impressively expanded downtown flagship; walked Shinsegae Duty Free’s vibrant new Seoul store; and toured The Shilla Duty Free’s thriving though space-constrained shop in Jung-gu.

Everywhere I have gone the challenges have been the same – financial pressures caused by the dangerous proliferation of retailers (incredibly, four more Seoul licences are about to be awarded); real concerns over lack of government understanding of the complexities and value of the duty free business; the cost of entry (both downtown due to heavy tour commission and marketing costs, accentuated by intensified competition; and almost ruinous airport concession fees); and fears of a Chinese crackdown on group tours to Korea.

Those are the negatives. The positives include booming Chinese visitor numbers; spending on Korean cosmetics that almost defies belief; a social media brilliance that leaves the rest of the global travel retail industry in its wake; and a hugely innovative approach to new product areas that again contrasts sharply with the industry norm.

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My week was highlighted by meeting Lotte Duty Free CEO Sunwook Jang, his first interview with the international press. Look out for it in coming weeks.
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Overlooking Lotte Duty Free’s spectacular new beauty floor in downtown Seoul
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Is there an installation to match this in the whole travel retail industry worldwide? The stunning 7.5m wide, 4.5m tall swing ride, called Mirror Carousel, takes centre stage on the main beauty floor at Shinsegae Duty Free in downtown Seoul.
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Shinsegae Department Store in downtown Seoul is one of the capital’s most famous landmarks. It now houses one of the city’s most vibrant duty free stores.

The most telling ‘take-out’ though for me this week was the extent of the dramatic shift towards Korean skincare versus international brands. At one major store I went to, you could have sent a bowling ball down any aisle of the international beauty brand zone without the likelihood of hitting a consumer. Yet just meters away, the counters of Korean brands such as Whoo, Sulwhasoo and Laneige were crammed with expectant Chinese shoppers.

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Lining up for Laneige at Shilla iPark duty free
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Making a beeline for Giorgio Armani at The Shilla Duty Free in Seoul

p1170773 p1170774Elsewhere (arguably with the exception of Lotte Duty Free, which seemed to be generating good business for just about every brand, Korean or otherwise) the picture was similar, if less extreme. Brands such as Hera, SU:M37, Innisfree, Dr. Jart+ and many, many others (often unknown in the west but certainly discovered by the Chinese) were consistently drawing huge numbers of mobile phone-bearing, list-carrying Chinese consumers; while the counters of some of their more renowned international competitors were often worryingly empty.

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Expectant shoppers crowd the Sulwhasoo area at Lotte Duty Free in downtown Seoul
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Mobile phones to the fore at SU:M37’s counter at Shinsegae Duty Free

There were plenty of exceptions of course – Yves St Laurent (pictured below at Lotte Duty Free) is going gangbusters on lipstick; Giorgio Armani on make-up; the likes of Chanel and Estée Lauder still more than holding their own. But if it was a heavyweight boxing contest (and I suppose in a commercial sense it is), the Koreans would be way ahead on points.

pqueue-2-yslThe Korean retailers are so smart in spotting trends and then exploiting them that any student of the travel retail industry – indeed any international duty free retailer – should spend a week or two here. They would learn much. Just as I did this week and as I have on each of my many visits to this fascinating nation since I first came here in 1989. As always the retailers and airport executives have given generously of their time, helping my insight into a fascinating, complex and ever-changing market immensely.

Gamsahamnida (‘Thank you’) Korea. I learn so much from your country, your culture, your people and your duty free industry each time I come here. Annyeongi kyeseyo (‘farewell’).

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Making our mark on Korean Air’s brilliant Sky Shop magazine (produced every month in a triumph of multi-lingual publishing). Time to update our logo though.

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