SOUTH KOREA: OVERVIEW
South Korea’s $21bn duty free market scrambles to recover
Following another record year of duty free sales for the industry’s largest market in 2019, South Korea is now reeling from devastating impacts to its business as a result of the global coronavirus pandemic. David Hayes reports from South Korea.
by a dramatic increase in domestic coronavirus cases. After news broke on 20 February
about the likely mass spread of the Covid-19 virus among Shincheonji Church members – signifying a startling increase in cases reported in Daegu and North Gyeonggi – the country faced a devastating domino effect of trip cancellations from all foreign visitors. Many outbound travellers were
also then forced to cancel their travel plans, as foreign countries enforced entry restrictions on those arriving from South Korea. TRBusiness gathers that more
Above: The empty streets of Seoul. South Korea’s tourism industry has taken a battering in 2020.
A
s South Korea’s duty free industry faces up to a large sales decline in 2020 due
to the impacts of the coronavirus (Covid-19), it is likely that the country will also experience a consolidation of its small and medium-sized enterprises (SME), who were facing huge pressure before the outbreak of the virus. In the first quarter of 2020, South
Korea’s leading duty free operators had to reduce their downtown and airport store opening hours due to a lack of customers. As reported by TRBusiness, the
number of foreign visitors and outbound South Korean travellers
One leading South Korean duty free operator tells TRBusiness that the company’s Q1 revenue has fallen by 25% yoy, while its total March downtown and airport sales figure, (including online purchases) was more than 60% lower than it was just one year ago.
TRBusiness 50 TRBUSINESS
has taken a nosedive since January, causing duty free shop sales to fall dramatically week by week through February, March and into April. Chinese visitor arrivals in
particular dropped off sharply from mid-January after Beijing banned outbound group tour departures, which led to an immediate decrease in sales. Mainland free independent
traveller (FIT) visitors and daigou traders also began cancelling their travel plans due to the worsening Covid-19 crisis in Wuhan and other parts of China.
South Korea curbs spread According to South Korea’s Ministry of Economy and Finance, by the last two weeks of February the number of arriving Chinese visitors had fallen by about 80% compared with the same period last year. Already suffering from the
disappearance of high spending Chinese customers to their stores, the woes of South Korean duty free operators were compounded
than 170 countries and territories have imposed entry restrictions on visitors from South Korea, the major exception being the US. However, the direction of travel
between the US and South Korea is mostly inbound to South Korea, as many Koreans living in the US are deciding to return home as it is now deemed safer than the US. Although a large number of
countries have imposed entry restrictions on travellers from South Korea, the country has enjoyed a high level of success in preventing the spread of Covid-19 by deploying rigourous testing among those exhibiting Covid-19 symptoms. According to the Korea Centers
for Disease Control and Prevention, Korea’s daily new cases reached a peak of 909 confirmed cases on 29 February. Since then, the country has managed to flatten the curve of new infections. At the time of writing, the
European Centre for Disease Prevention and Control reports more than 10,700 cases of Covid-19 and 240 deaths. To better contain cases arriving from abroad, the government has
MAY 2020
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