SEOUL, October 30 (AJP) - Another of South Korea’s leading duty-free operators is retreating from Incheon International Airport, as mounting rental costs and sluggish traveler spending continue to erode profits in what was once one of the world’s most lucrative retail hubs.
Following Shilla Duty Free’s withdrawal last month, Shinsegae Duty Free said Thursday it will return part of its concession rights at the Incheon airport, citing heavy financial losses and an increasingly unpredictable business environment.
According to a filing with the Financial Supervisory Service, the company’s board approved a plan to end operations in the DF2 zone, which includes shops selling cosmetics, perfumes, liquor and tobacco. Operations there are set to cease on April 28 of next year, after a mandatory six-month transition period stipulated in its contract with the airport.
“The duty-free market faces continued uncertainty — including high exchange rates, a slowing economy, and changes in traveler spending,” Shinsegae Duty Free said in a statement. “Losses have reached a level that makes ongoing operation unsustainable.”
The move underscores deep structural challenges facing South Korea’s duty-free industry, which has struggled to recover from the pandemic-era collapse in international tourism and the more recent decline in Chinese traveler spending — once the backbone of airport retail sales.
Shinsegae Duty Free secured its Incheon lease in 2023 under a formula based on average customer spending, but falling sales and a weaker won inflated rent payments, pushing operations into the red.
The company follows Shilla Duty Free, which last month gave up its DF1 concession, also citing unsustainable losses. Shilla reportedly incurred a penalty of around 190 billion won ($137 million) for the early termination.
Shinsegae said it will now focus on improving profitability at its flagship Myeongdong store and continue operating in the DF4 zone, which sells fashion and accessories, at the airport.
* This article, published by Economic Daily, was translated by AI and edited by AJP.
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