Profiling the world’s top travel retailers

The Shilla Duty Free


2018 turnover

€5,477 million

2017 rank




The Shilla Duty Free enjoyed a stellar year in 2018 with gross revenue recording KRW6,995.1 billion (€5,477 million). Sales (which in our ranking includes total Korea including the HDC-Shilla JV, plus overseas business) leapt by 40.7%. [Note: The figures also take into account new accounting methodology at Shilla, so the figure for 2017 has been revised to KRW4,972.5 billion from KRW4,370.5 billion -Ed].

The strong performance dissipated concerns raised the previous year which saw the THAAD dispute negatively impact the business. The performance of The Shilla Duty Free far outpaced the total growth of the Korean duty free market, which grew by 31%. Its market share improved from 24% to 25%.

A strong performance from Shilla’s concessions in Singapore (pictured) and Hong Kong (below right) ensured overseas sales hit KRW1 trillion for the first time

Sales in Korea reached KRW5,803.8 billion (including HDC-Shilla sales of KRW1,087.7 billion) growing 35.5% year-on-year while overseas sales broke the KRW1 trillion level for the first time to record KRW1,190.5 billion. The strong performance of concessions in Singapore and Hong Kong meant the overseas business (up 72%) recorded the fastest growth rate among different businesses operated by Hotel Shilla.

Hanwha Galleria Timeworld’s decision to exit the duty free business in April 2019 and Hotel Shilla’s strong performance exemplifies how the market consolidated in favour of larger companies in 2018. Data released by the Korea Customs Service shows that the market share of the largest corporations increased from 89.7% in 2017 to 92% in 2018.

Those larger companies benefited from their ability to source popular products at competitive prices and attract large-scale daigou who increased their order volumes to match growing demand in China.

Beauty&You: The Shilla Duty Free retail concept for Hong Kong Airport is now one year old

Hotel Shilla’s downtown shops, where the majority of daigou re-sellers source goods, grew 31% year-on year, higher than the 25% year-on year growth in airport concessions turnover. The solid sales growth rate of airport concessions (up 13.9% year-on year) was aided by new store openings in Jeju Island and Incheon Terminal 2.

Despite the success of the travel retail business with both top line and operating profit recording new highs, much of the year was spent discussing the sustainability of the business after the Chinese government announced the new ecommerce law in August 2018.

The law, which took effect on January 2019, was intended to eliminate daigou activity by requiring registration and taxation of resellers on ecommerce platforms in China.

News of crackdowns in airports and re-sellers abandoning their goods spread and dampened the mood at the end of what was an otherwise successful year for Hotel Shilla. However, our research suggests that re-sellers are fast adapting to the changes that were implemented. Indeed, Hotel Shilla’s first quarter 2019 results offer solid evidence of this.

Fuelled by daigou-related sales, The Shilla Duty Free outpaced the total growth of the Korean duty free market in 2018

Hotel Shilla’s Q1 2019 consolidated travel retail revenues (South Korea and offshore) rose 21% year-on-year to KW1,225.2 billion and operating profit for the travel retail business surged by 73% to KW82.2 billion.

Shilla’s Singapore Changi Airport concession – its first big step overseas – is an investment that paves the way for the retailer to establish a global presence.

The good news was that 2018 witnessed a big improvement at Changi, with losses narrowing to around half of what they were in the previous year. Shilla also opened the Hong Kong International Airport beauty & fashion accessories concession in June 2018, meaning that it operates across Asia’s three major international airports (Incheon, Singapore and Hong Kong), offering the retailer an estimated 200 million-strong passenger base and access to the vital Chinese traveller market.

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The Moodie Davitt eZine

Issue 264 | 16 July 2019

The Moodie Davitt eZine is published by The Moodie Davitt Report (Moodie International Ltd) every month.

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