Lotte Duty Free began operating the DF1 zone at Incheon International Airport on Monday, a section selling perfumes, cosmetics, liquor and tobacco. Although Shilla Duty Free had run the zone until the previous evening, Lotte completed preparations in less than half a day.
According to Lotte Duty Free, the company conducted an overnight switchover after Shilla Duty Free ended operations in the DF1 zone the previous day, then simultaneously opened all stores across Terminal 1, Terminal 2 and the concourse.
Lotte Duty Free is showcasing more than 240 brands across 15 stores spanning 4,094 square meters (about 1,240 pyeong) in the DF1 zone. The lineup includes perfumes and cosmetics such as Chanel, La Mer and Dior, along with liquor, tobacco and food brands including Ballantine's, Johnnie Walker, KT&G and Cheong Kwan Jang.
DF1 is the zone where Shilla Duty Free ended sales on the 16th after returning its operating rights. Lotte Duty Free secured the space through a rebidding process in February. As a result, Shilla operated the zone through the 16th, with Lotte taking over from the 17th.
Systems and products were swapped overnight. Shilla Duty Free began clearing merchandise from major stores in the zone starting around 3 p.m. until 10 p.m. Lotte Duty Free then stocked the shelves with products it had prepared in advance. Because duty-free shops operate by purchasing and selling merchandise directly, products must be swapped out even if the same brands are sold on the same shelves. Lotte Duty Free filled the shelves with two to three days' worth of inventory prepared in advance. Most of the sales staff, however, were transferred between operators to ensure continuous service.
Lotte Duty Free also carried out IT system replacements and signage changes. On-site workers and headquarters officials directed and inspected the transition. "Incheon Airport is a symbolic place where both domestic and international travelers form their first and last impressions of Korea," said Yang Hee-sang, head of Lotte Duty Free's sales division. "As we welcome customers again after three years, we will work closely with the airport corporation to build a duty-free shopping environment that satisfies both Koreans and foreigners."
With the change of operators at Incheon Airport, the country's largest duty-free retail space, attention is turning to whether the industry landscape will shift starting this year. As Lotte Duty Free begins operating the Incheon Airport zone previously run by Shilla Duty Free, last year's top seller by revenue, competition for the No. 1 spot between the two companies is expected to intensify. Lotte was once the unshakable revenue leader, but its scale shrank after it withdrew from the high-cost Incheon Airport business in 2023 to improve profitability. As a result, Shilla Duty Free (Hotel Shilla's TR business) overtook Lotte last year with revenue of 3.38 trillion won.
Securities analysts expect Shilla Duty Free to maintain last year's revenue level this year despite withdrawing from Incheon Airport DF1. Hanwha Investment & Securities projects Shilla Duty Free will post 3.42 trillion won in revenue this year on strong downtown duty-free sales, a figure similar to Lotte Duty Free's expected revenue for the year.
The battle for third place between Shinsegae Duty Free and Hyundai Duty Free is also expected to be fierce. Hyundai Duty Free will begin operating the Incheon Airport DF2 zone returned by Shinsegae Duty Free on the 28th of this month. Analysts forecast Hyundai Duty Free's revenue will grow to around 2.02 trillion won this year from 1.91 trillion won last year, driven by its DF2 entry. At the same time, Kyobo Securities projects Shinsegae Duty Free's revenue this year will reach 2.06 trillion won, similar to Hyundai Duty Free, as DF2 revenue declines somewhat.
Operating profits, however, are expected to improve across the industry. Shilla and Shinsegae are likely to see better profitability after exiting the high-cost Incheon Airport operations. Mirae Asset Securities projects Shinsegae Duty Free will swing to an operating profit of 5.2 billion won this year, after narrowing its operating loss to 700 million won last year.
Lotte and Hyundai each won their bids at rates 40 to 41 percent lower than previous Incheon Airport rents, easing their operational burden. "The environment raises concerns about weakening duty-free demand due to the strong dollar and high oil prices," an industry official said. "But our goal is to achieve both revenue growth and profitability through various promotions and by bringing in popular brands such as K-beauty."
Separately, Lotte Duty Free is holding a major promotion called "Opening Festa" to mark the launch of its Incheon Airport store. Benefits include Philippine airline tickets and hotel stays as prizes, an additional 30,000 won in LDF PAY exclusive to the Incheon Airport store and 250,000 won in PRE LDF PAY, and an instant 10,000 won point reward for Naver Pay payments of 100,000 won or more. For foreign customers, partnership events include an exchange rate discount coupon of up to 5 percent when using WeChat Pay, an instant 30,000 won discount on UnionPay payments of 300,000 won or more, and a coupon book offering up to $110 in discounts exclusively for guests of Paradise City in Incheon.
Lotte Internet Duty Free is also running various events, including a special sale offering up to 55 percent off on 20 popular products, first-come-first-served special coupons issued daily at 11 a.m., and a prize event for comments celebrating the Incheon Airport opening.
