Shinsegae Department Store (on the left) and Doosan Tower (on the right)
[AJU NEWS CORP DB]
Korea’s customs agency stunned the nation over the weekend when it announced the eagerly awaited results of the contest for lucrative duty-free operating licenses in Seoul and Busan, instantly changing the landscape of the industry dominated by the country’s retail giant Lotte.
To the surprise of many, Lotte Duty Free lost its lucrative Lotte World Tower licence to newcomer Doosan Group. SK Group's Walker Hill Duty Free lost its Seoul license to Shinsegae Duty Free, which also retained its license in Busan.
Though Lotte Duty Free managed to maintain its flagship store license in Sogong-dong, which accounts for 45 per cent of the sales in Seoul’s duty-free market, the defeat at the hand of Doosan is a devastating blow to the Lotte Group which tried to make duty free a centerpiece of its newest Lotte World Tower, the huge retail and entertainment complex in Seoul's affluent Gangnam district.
The results also cast a dark shadow over the group's plan to take its hotel business public despite the government’s probe into the group’s complex ownership structure.
Regardless of Saturday’s result, Lotte Group,, the nation’s fifth-largest chabol by revenue, said it will proceed with plans to list Hotel Lotte, widely considered the de facto holding company for all of Lotte Group’s Korean business lines..
“We accept the result and will continue to make efforts to list Hotel Lotte without a hitch,” Lotte said in a statement.
Market analysts say the upcoming IPO of Hotel Lotte could be the first step to overhaul shareholder structures of the group’s affiliates. Two sons of the group’s founder Shin Kyuk-ho have been embroiled in a bitter struggle for control of the company established by their father 67 years ago.
The results of the hot contest for duty free stores meant stunning victories for winners. Shares in Doosan and Shinsegye rose sharply on Monday.
The two licenses, previously held by Lotte Duty Free and SK Networks , were up for renewal by the end of this year and will now be held by Doosan and Shinsegae for the next five years.
Doosan’s entry into duty free market is a big surprise to the Korean travel retail industry, given the chaebol's traditional focus on heavy industry.
The group will site its first duty free store in the Doosan Tower shopping mall (in front of Dongdaemoon Design Plaza), again a popular area for tourists.
By Alex Lee
reporter
Park Sae-jin
swatchsjp@ajunews.com
