South Korean duty-free store sales are sluggish despite an increase in the number of foreign tourists

Recently, although the number of foreign tourists visiting South Korea has gradually increased, the sales of South Korean duty-free stores still remain in a sluggish state.

According to Yonhap News Agency on August 19, the South Korean Duty-Free Store Association and the industry revealed that in the first half of this year, the sales of South Korean duty-free stores were approximately 7.4 trillion won, an increase of nearly 13.8% compared to 6.5 trillion won in the same period last year. However, during the same period, the number of tourists increased significantly from 9.497 million in 2023 to 13.825 million, an increase of about 45.6%. The growth in sales and the number of customers is clearly out of sync.

The Korea Daily pointed out that in the past, foreign tourists mostly visited duty-free stores in groups and purchased a large number of high-end products. But now, with the development of social media, individual travel has become a trend. Individual travelers are more inclined to travel by subway and bus, explore small street shops and local brands, and shop at low prices rather than going to duty-free stores. The Korea Economic Daily ***yzed that Generation MZ is gradually becoming the core of tourists visiting South Korea. They like to obtain information through social media, experience the lives of locals and follow local consumption, resulting in the decline in consumption at duty-free stores.

At the same time, according to the Korea Daily, in the second quarter, the overseas credit card sales and settlement numbers of South Korea's large grocery store Daiso increased by 48% and 42% respectively compared to the previous year. Among them, the overseas credit card sales of the Myeongdong Station store and the Myeongdong main store increased by 67% and 64%.

In addition, the continuous appreciation of the South Korean won against the US dollar has made the price advantage of duty-free stores not obvious, making it difficult to stimulate tourists' shopping desires. Coupled with the increased burden of labor costs, airport rental fees, marketing expenses, etc., the earnings of many duty-free stores are sluggish. South Korea's Lotte Duty Free announced in June that it has entered an emergency operating state, started strict structural adjustments to reduce costs, and launched a voluntary retirement plan to streamline the workforce. Other duty-free stores are also implementing cost-cutting measures such as reorganizing business departments and streamlining organizational structures.