Partnering with French luxury house, Chanel, South Korean travel retailer, Shilla Duty Free, has just opened its first two-level boutique in the travel retail channel in South Korea—at Incheon International Airport which serves Seoul, the capital. And Shilla is also set to introduce a Dior boutique in the first half of next year.
Just as passenger growth is surging again at the Korean Air hub—numbers topped 70 million last year, up 27%—the retailer has unveiled the double-height, eye-catching structure, which is almost three times larger than the previous store.
Situated in Terminal 2, the boutique is well located for the high-spending passengers using the facility. T2 serves long-haul international flights to North America, Europe and Oceania, and premium regional routes within Asia, especially those operated by the SkyTeam alliance of which Korean Air is a member.
T2 is already a haven for luxury. Hyundai Duty Free operates a Gucci store featuring ready-to-wear, handbags, shoes, and jewelry; Hermès was reopened by Shinsegae Duty Free after a brief exit; and Shilla operates several other luxury flagship stores including Omega and Tiffany.
The new Chanel store has been designed by celebrated New York-based architect Peter Marino, whose bold monochrome Modernist design can be seen at a number of Chanel boutiques around the world, including downtown Seoul and at the first watches and jewelry boutique in the U.S. on Fifth Avenue in New York.
Inside the Incheon boutique there are dedicated areas for Chanel ready-to-wear apparel, handbags, shoes, watches, and fine jewelry, a category that is currently seeing supercharged growth at rival Lotte Duty Free, in its downtown stores.
The T2 store also features contemporary artwork in keeping with Chanel’s founder Gabrielle Chanel’s involvement in art patronage. The ground floor walls are lined with ceiling-height cabinets that showcase some of Chanel’s more iconic bags as well as the latest new-season offerings.
Great expectations for oversized Chanel unit
“We expect this duplex boutique to be a landmark at Incheon, in terms of size, interior design, the range of products it offers, and its differentiated customer service,” said a Shilla Duty Free spokesperson. Shilla’s most recent financial performance also shows that its airport duty-free business has performed much better than downtown. In the second quarter, airport revenue increased by 6.4% while downtown decreased by 3.2%.
Chanel will have high expectations—and hopes. Last year, the company saw its sales decline by 4.3% to just under $19 billion and operating profit crash by 30% to $4.48 billion, both year-over-year. At the same time, the brand made record investments and prioritized real-estate acquisition.
“While increasing investment by over 40% to $1.8 billion, maintaining high levels of brand support activities at more than $2.4 billion, and investing continuously in our people had a direct impact on profitability, at Chanel we take a long-term view in everything we do,” said Philippe Blondiaux, global chief financial officer in May.
In 2024, Chanel expanded its global footprint with new boutique openings in prime locations, including Fifth Avenue in New York, Nanjing, Chengdu, and Tokyo. This year and beyond, the company is maintaining that momentum, including investment in the travel retail channel, and Incheon is possible the best example of that.
Blondiaux said there will be further expansion in markets such as India and Mexico, as well as new boutiques in Mainland China, Japan and Canada. Much will also rest on Matthieu Blazy who has been appointed artistic director, which CEO Leena Nair said was “a new chapter for the House of Chanel.”