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By Lee Hyo-sik
Lotte and Shilla ― Korea's two largest duty free shop operators ― are set to clash on the nation's southern resort island of Jeju, which has become a popular destination for consumption-driven Chinese tourists.
So far, the two companies have been avoiding direct head-on competition on the island, as Shilla operates a duty-free shop in Jeju city in the north, while Lotte runs a shop in Seogwipo city in the south. But with Lotte about to open a store in Jeju city as early as June, the two will likely engage in fierce competition to lure Chinese visitors.
According to Lotte Duty Free, Monday, the company will relocate its duty free shop from Lotte Hotel in Seogwipo city to the Lotte City Hotel in Jeju city.
"We do not know exactly when we will open the new store, which will be twice as large as the current one," a Lotte Duty Free spokesman said. "It takes quite a long time for shops to do interior work. So we think the store could open in June at the earliest. But it may take longer, possibly sometime in September."
The spokesman said the planned duty free shop will be located on the first, second and third floors of the Lotte City Hotel.
"It is definitely a sound decision to open a store near Jeju International Airport and Jeju Port. The shop will be able to attract more Chinese tourists and help improve the overall shopping infrastructure on the island," he said.
More than 3.3 million Chinese tourists visited Jeju in 2014, up threefold from 780,000 in 2010. More are expected to visit this year and beyond, meaning that duty free shops on the island will see their sales soar.
The spokesman said Lotte will market goods produced by small and medium-sized enterprises (SMEs), stressing that the company will grow together with its small business partners and local communities.
Lotte has been lagging behind Shilla on Jeju as its duty free shop is located an hour's drive from the airport and the seaport, while Shilla has been operating the shop in Jeju city since 1989.
In 2014, Shilla's Jeju store earned 400 billion won in sales, twice as much as that of Lotte.
However, the status quo may change when Lotte opens its new shop, which will be only 500 meters from Shilla's.
"We will do what we have always been doing, regardless of what our competitors do," a Shilla Hotel spokesman said. "We will buy and promote more high-quality goods made by domestic small businesses. We will also offer more Jeju specialties and have more global fashion brands set up shopping space at our Jeju store."
Hermes and Channel are reportedly considering opening shops at Shilla's Jeju store.
