The domestic duty-free industry is showing signs of recovery this year, buoyed by an increase in foreign tourists. The rise in visitors to Korea, driven by K-beauty, food, and K-pop concerts, has boosted sales. The industry views the second half of the year, extending through the summer vacation season, China's National Day holiday, and year-end travel, as a turning point for performance recovery.
According to the Korea Duty-Free Association on the 29th, foreign sales at duty-free shops in the first half of this year reached 4.9968 trillion won, an 11.2% increase compared to the second half of last year. Foreign sales accounted for 77.2% of total sales of 6.4752 trillion won, effectively driving performance. Additionally, the number of foreign visitors rose by 14.9% to 6.64 million. In contrast, domestic sales and visitor numbers fell by 12% and 11.5%, respectively, to 1.4783 trillion won and 8.41 million during the same period.
Foreign visitors exceeded 1 million per month for four consecutive months starting in March, continuing a recovery trend. The figures were 1.08 million in March, 1.19 million in April, 1.22 million in May, and 1.27 million in June.
The industry analyzed that the increase in visitors to Korea is the biggest driver of duty-free shop recovery. This is due to increased price competitiveness for shopping in Korea amid a weak won, alongside sustained popularity of K-beauty and K-food. Additionally, major K-pop events such as BTS concerts are seen as stimulating demand for visits to Korea, contributing to an increase in duty-free shop visitors.
According to Lotte Duty-Free, foreign beauty sales increased by 55% and food sales by 62% compared to the same period last year. The company explained that it expanded its customer touchpoints by increasing the number of new brand stores, leading to expanded purchases. Recently, popular beauty brands such as 'S Nature' and 'Dr. Jart+' have been added, and the company is responding to K-food demand with collaborations like BTS-coordinated food brand 'Ari', ready-to-eat meals, and traditional foods.
However, the increase in visitors did not lead to a rise in average transaction value. Based on the first half of the year, the average transaction value for foreigners was 751,900 won, down 3.2%. This means that each foreign tourist spent an average of 751,900 won at duty-free shops. The average transaction value for domestic visitors was 175,700 won, a decrease of 0.5%. Consequently, strengthening product competitiveness and shopping experiences to increase the average transaction value is identified as a key challenge for the duty-free industry.
At the same time, it is pointed out that long-term growth can be achieved by reducing dependence on foreigners and recovering domestic consumption. Lotte Duty-Free is also strengthening marketing efforts not only to attract foreign customers but also domestic ones. Until the 31st of next month, a lottery will be held for customers who spend over 300 dollars at Myeong-dong Main Store, World Tower Store, Busan Store, and Jeju Store, offering prizes such as Signiel Seoul accommodation vouchers and Ray-Ban smart sunglasses. Shin Ramyun Duty-Free is holding an event where domestic participants can enter to win invitations to a fan meeting with promotional model Lee Jun-ho.
The industry expects the recovery trend to become more pronounced in the second half. With the summer vacation season in July and August, the National Day holiday in October, and the peak shopping season at year-end, there is a high possibility of increased tourist inflow. As foreign sales in the first half approached 5 trillion won, attention is focused on whether the target of 10 trillion won for the year can be achieved if the effects of the second-half tourism peak season are added.
An industry official stated, "It is true that the recent recovery trend in duty-free shops has been driven by an increase in foreign tourists," and added, "With continued interest in K-food and K-beauty, strategies to connect this to differentiated shopping experiences and also boost domestic demand will become increasingly important."
in LIVING
