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It’s been a long day. This morning I set off from my hotel at 7.30a.m to Gimpo Airport in Seoul to take an early flight to Jeju – the holiday island off the south of the Korean peninsula.
Jeju is the home of a thriving duty free sector – both traditional duty free and also outlets serving South Korean nationals, who are able to buy up to US$400 worth of duty free goods, six times a year.
Today I visited the two players serving the South Korean sector – Jeju Tourism Organization (JTO), which operates a splendid new store downtown; and JDC, which has the duty free contract at Jeju Airport, where it runs one of the world’s biggest single travel retail stores.
But first I had to get there – not easy when Seoul was shrouded in a thick fog that would not have been out of place in Dickensian London. Trust me to choose one of the most miserable days of the year to visit one of the most beautiful spots in Asia.
Eventually, however, we got away, landing on this island of less than 500,000 people and 6.5 million tourists. It’s a wondrous, tranquil place, with a magnificent, often rugged coastline and a now extinct volcano at its centre, part of a Natural World Heritage Site.
Together with Won Kim, owner of leading agent Brandepot (which handles Inniskillin in South Korean travel retail) I drove across the island from the airport in the north to the main resort area in the south. That’s where I met up with JTO President Yung-Soo Park (below) and his team.
Mr Park is a charming man, charged with driving Jeju’s tourism industry. The opening of the specially licensed JTO store last March provided a big and crucial impetus for tourism funding. It’s a similar set-up to Okinawa in Japan where Japanese nationals on holiday can buy duty free goods before their return to the mainland.
It’s early days for the store – I was the first industry reporter to visit it – but it’s doing fine, with targeted sales of US$30 million this year. That could rise a whole lot higher if the US$400 allowance is raised – the subject of much lobbying by JTO and others. The spend per customer is particularly impressive, currently averaging US$150.
That impressive spend is reflected in the best-sellers – including Korean Red Ginseng, Ballantine’s 21yo and Johnnie Walker Blue.
I was impressed with the store, a neatly laid-out, spacious and elegant department store set-up. Mark my words, this is a player that is set to rise in importance in South Korea’s travel retail sector.
[Pictured: Joshua Lee (left) of JTO Duty Free Shop and Won Kim, Owner of Inniskillin agent Brandepot]
The long-established JDC operation back at the airport is a much bigger business. Impressively scaled at 1,782sq m, it generated remarkable sales of US$270 million in 2009, up +16% year-on-year despite the serious problems that afflicted the Korean economy. This year sales are predicted to hit US$306 million, according to Sales Department General Manager Kyong Hoon Kim (below), a sizable business in anyone’s language.
I visited the store just before my flight home and was amazed to find how crammed it was with customers – and mid-January is hardly a peak period. The perfumes & cosmetics department was packed and brands such as SK-II and Estée Lauder were generating thriving business.
Ballantine’s, a big favourite here, was also flying off the shelves in the liquor area, positioned alongside the highly popular Inniskillin Icewine.
Later this year JDC will almost double its space and it’s looking for brands to help fill the space. That’s a big development by a big and perhaps underestimated retailer. Look out for our extensive report on the Jeju market in the February issue of The Moodie Report Print Edition.
Despite the fog, both in Jeju and Seoul, I managed to get back to the mainland and into my hotel by 9p.m. But it had been well worth the effort. I plan to visit this glorious place again soon, ideally in Spring or Summer. Anyone interested in the development of South Korea’s duty free industry would be well advised to do the same.