SOUTH KOREA: OVERVIEW


enforced a mandatory 14-day self- quarantine on all travellers arriving from overseas. Although South Koreans are


hoping the situation will soon improve enough to allow normal life to begin again, health agencies are warning against complacency and are urging people to maintain social distancing. This was introduced on 22 March.


Revenue hits Currently, passenger numbers at Incheon international Airport are at an all-time low with fewer than 10,000 travellers using the airport daily in early April compared with about 200,000 daily passengers in January before the Covid-19 pandemic began. The sharp reduction in foreign


visitor and outbound South Korean traveller numbers since the end of January has hit duty free operators’ first quarter downtown and airport shop revenues badly. One leading South Korean duty


free operator tells TRBusiness that the company’s Q1 revenue has fallen by 25% year on year, while its total March downtown and airport sales figure (including online purchases) was more than 60% lower than it was just one year ago. SME operators have also been hit


hard, especially as many of them rely heavily on airport shop sales. An SME operator told TRBusiness that the company’s March sales were 90% down at Incheon International Airport. With few passengers using


Incheon International Airport’s Terminal 1 concourse, Shinsegae Duty Free temporarily closed all its T1 concourse shops in April. Indeed, all other operators are


looking at reducing their airport shop opening hours until passenger numbers start to grow again. South Korea’s other airports


have also felt sharp reductions in international flights and passenger numbers. At the time of writing, The Shilla Duty Free had temporarily closed its Jeju International Airport duty free shop as only a few international flights now operate each week. It’s the same story at Gimpo


MAY 2020


Downtown duty free stores, which make up around 85% of South Korea’s duty free sales, are faring better than the airports.


International Airport, where Lotte Duty Free and The Shilla Duty Free have closed their shops temporarily until international flights resume. To reduce costs until normal recovers,


business duty free


operators have asked Incheon International Airport Corporation (IIAC) and Korea Airports Corporation (KAC), which owns South Korea’s other airports, for concession fee reductions to help them through these troubled times. The South Korean duty free


industry’s current predicament is in total contrast to this same period last year, which ended with another year of record sales. The country’s total duty free sales


rose by 24.4% to KRW25 trillion/ $21.44 billion in 2019, according to industry figures.


Total monthly duty free sales averaged an estimated KRW2.1tn in 2019, which at the average 2019 exchanges rate (US$1.00 = KRW 1,166) is about $1.8bn per month. Downtown duty free store sales


reached $18.26bn, up 25% from the previous year, and accounted for 85% of South Korea’s total airport and downtown duty free sales, which do not include South Korea’s inflight duty free business. Airport duty free sales reached


$3.18bn in 2019, accounting for 15% of total duty free revenue. «


The country’s total duty free sales rose by 24.4% to KRW25 trillion/$21.44 billion in 2019, according to industry figures.


TRBusiness


It is likely that South Korea will see a consolidation of its smaller operators, such as SM Duty Free. TRBUSINESS 51


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