Shinsegae's Mega Duty-Free Shop Opens in Heart of Seoul

Shoppers wait in line for Shinesegae's newly-opened duty-free shop in downtown Seoul on Wednesday.

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Shinsegae Department Store opened a vast duty-free shop at its main store in downtown Seoul on Monday, intensifying competition for the mighty Chinese tourist dollar.

Lotte Department Store has long had a lucrative duty-free palace just a stone's throw from Shinsegae. Last year, Shinsegae and Doosan finally won licenses to run duty-free stores in the capital, but Lotte's own license was also renewed for five years.

The Myeong-dong and Namdaemun shopping districts in downtown Seoul drew a staggering 9.27 million foreign visitors in 2014 alone, but since 1980 Lotte had the only duty-free shop in the area.

The new Shinsegae emporium spans five floors and houses more than 600 luxury brands, but it failed to attract top brands Chanel, Louis Vuitton and Hermes.

Son Yung-sik, vice president of Shinsegae's duty-free operations, said, "We expect to have at least two of them set up stores at our duty-free shop by the second half of next year".

To make up for the gap, the shop is fully stocked with domestic cosmetics brands because they are hugely popular among Chinese. It houses more than 200 cosmetics brands, the most in the country.

Not to be outdone, Lotte plans to expand its main space, enlarging the restaurant level on the 12th floor to accommodate more shoppers and giving more room to bestselling cosmetics brands like Sulwhasoo and Whoo.

Shinsegae sits in a great location straddling the Myeong-dong and Namdaemun shopping districts, but it remains to be seen how many Chinese visitors will stop by, said Yeo Young-sang, an analyst at Korea Investment and Securities.