Lotte and Shilla, two major players in the Korean duty-free landscape, are closing their stores in February at Incheon Airport’s Terminal 1. The leases for both retailers expired in August but were extended for six months.

The coronavirus pandemic has had a crushing effect on the duty-free shopping business. McKinsey reported the travel retail channel’s share of total global beauty sales decreased from 8% in 2019 to 4% in 2020.

Both Lotte Duty Free and Shilla Duty Free’s leases expired in August but were extended for an additional six months after new bidders backed out before signing contracts, as the worsening coronavirus pandemic threatened prospects for duty-free shopping businesses.

“Duty-free sales are tipped to further increase in the third quarter, compared with three months earlier, on the back of the government’s eased restrictions on sales channels of duty-free goods,” The Korea Times quoted Na Eun Chae, an analyst at Korea Investment Securities Co., as saying in the last quarter of 2020.

One official at Incheon International Airport Corp. (IIAC) said, “We are considering passenger demand, COVID-19 vaccines’ approval, and other issues related to the pandemic to make a decision on the timetable and terms for the rental bidding process.”

In January 2020 IIAC began the bidding process for new duty-free store operators, offering lower rents in an attempt to keep shopping at the airport alive, but the efforts proved insufficient to fend off the uncertainty in the duty-free shopping channel.