In a decision announced Saturday by the Korea Customs Service, Shinsegae won the license to open a new duty-free shop at its main department store in Myeong-dong, which will become the firm’s first tax-free outlet in Seoul.

Doosan was granted permission to open its first duty-free store in the heart of Dongdaemun, a major shopping district for fashion items and a popular tourist location in Seoul.

Doosan’s entry into the duty-free business signals its return to the retail sector in search of new growth opportunities. The conglomerate was a leading retailer of consumer products until the early 2000s when it transformed into a heavy industry giant, selling off its retail units.

Lotte Group, the nation’s top duty-free operator, retained the operating rights to its main store in central Seoul, while failing to renew the license to another outlet in Lotte World Tower in the affluent Gangnam region.

The recently renovated World Tower branch, though posting weaker sales than Lotte’s main duty-free shop in Myeong-dong, is the third-most profitable duty-free store in the country after Lotte’s main store and Shilla’s duty-free arm in Seoul.

The loss of Lotte’s duty-free store in southern Seoul combined with fresh competition from Shinsegae and Doosan are expected to take a significant toll on the nation’s No. 1 retail giant, which accounts for more than 50 percent of the domestic duty-free market.

SK Networks, a subsidiary of SK Group, will close its duty-free store in the Sheraton Grand Walkerhill Hotel after 23 years of operation.

It marks the first time that an existing duty-free operator has lost its license in an open competition held every five years by the customs authorities in accordance with a new law that went into effect in 2013.

Industry watchers expect the results of the duty-free bid to significantly change the face of Seoul’s lucrative duty-free industry.

Beyond Seoul, Shinsegae retained its tax-free outlet in the southern city of Busan.

By Sohn Ji-young (jys@heraldcorp.com)