Two Korean top duty-free retail giants face a showdown in Japan with Hotel Shilla becoming the latest to declare duty-free shop business in Tokyo after Lotte Group is due to open a duty free shop in the shopping mecca of Ginza this month.

Hotel Shilla held a press conference at the ANA InterContinental Tokyo on Wednesday to announce a plan to establish a joint venture for the duty-free business with Takashimaya Department Store and ANA Trading Corp. The three will open a duty-free shop at Takashimaya Department Store in Tokyo’s shopping district Shinjuku in the spring next year. Takashimaya Department Store would own a 60 percent stake and ANA Trading Corp. and Hotel Shilla each 20 percent.

Takashimaya Department Store will be in charge of merchandising and marketing while ANA Trading will take charge of airliner logistics. Hotel Shilla would contribute in its know-how on duty-free operation.

The three companies chose Shinjuku as an area of their first duty-free shop because Shinjuku is regarded as a district with a large tourist population. The district also has convenient transportation access with bus lines to other areas, and it is expected to draw more foreign tourists once a large bus terminal is completed soon.

Hotel Shilla joined the downtown duty-free shop business in Tokyo because of its promising prospects. According to the Japan National Tourism Organization (JNTO), the number of foreigners visiting Japan in 2015 stood at 19,740,000, sharply up 47 percent from the previous year. They spent a total of 3.48 trillion yen ($30.9 billion) during their stay, far higher than 2.03 trillion yen in 2014. The downtown duty-free shop market in Japan is still at its early stage.

South Korea`s second largest duty-free shop operator by linking up with Japanese companies would vie with Korean top player Lotte Duty Free, which opens a duty-free shop in Ginza, Tokyo, on Mar. 31. The construction of the duty-free shop is at its last stage. The duty-free shop would be situated on 8th and 9th floors over a site of 4,396 square meters in a building near Ginza Station. The shop in Ginza is Lotte Duty Free’s first downtown duty-free shop in Japan. Lotte Duty Free plans to open the second city duty-free shop in Shinjuku in 2017 to directly compete with Hotel Shilla.

Hotel Shilla would likely expand business before Lotte arrives. Takashimaya Department Store pledged to open more duty-free shops across the nation once the first business in Shinjuku succeeds. The Nihonbash branch of Takashimaya is the potential candidate if Takashimay extends its territory to Ginza. The Nihonbash branch is a 15 minute walk from a Lotte duty-free shop in Ginza.

By Hwang Hyung-gyu, Sohn Il-seon

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