SOUTH KOREA: MARKET DATA


Seoul stores capture 85% share of downtown duty free sales in 2019


Center 4 Duty Free is a new series of monthly reports analysing South Korea’s duty free market. TRBusiness shares a recent snapshot that outlines 2019 performance benchmarks and the impact of the coronavirus (Covid-19) on the industry’s largest market.


A


ccording to *a recent analytics report


from Center 4 Duty Free (C4D),


South Korea’s duty free market recorded a 31% rise in sales in 2019 year-on-year to reach KRW24.8 trillion/$21.3 billion. However, due to the sluggish


recovery of Chinese group tours, approximately 70% of revenue was attributed to daigou traders. South Korea’s duty free sector


grew at a CAGR of +27.3% between 2016 to 2019 and doubled in size during the same period, having netted more than $10bn in 2016. Chinese tourists have been


the driving force behind the performance, rising by 24.8% in 2019 year-on-year to around six million. A highly competitive downtown


duty free segment witnessed 37% sales growth last year to KRW21tn/$18bn and accounted for 84.6% of total Korean duty free sales. At around $15.4bn, sales from


Seoul’s downtown duty free shops accounted for a 85.5% share of total downtown duty free sales. Large corporations such as The


Shilla Duty Free, Lotte Duty Free and Shinsegae Duty Free took a 83.7% share of the $15.4bn. Lotte Duty Free Myeongdong, The


Shilla Duty Free Seoul and Shinsegae Duty Free Myeongdong stores made up around 71% of downtown duty free shop sales in Seoul and 59.5% of total Korean downtown duty free shop sales. C4D says the coronavirus


(Covid-19) had the biggest impact on Korean travel and duty free in the first quarter of 2020. Although seasonal fluctuations in December and January revenue and traditionally lower Chinese tourist volumes in January meant it was difficult to attribute the sales impact purely to Covid-19.


MAY 2020


In early February, Covid-19 began to take hold but again its impact was not fully realised with only a few downtown shops closing temporarily for disinfection before re-opening, says C4D. It wasn’t until China’s extended


its Chinese New Year holiday (26 January – 2 February) and regional travel blockades took effect that the beginning of the ‘great turmoil’ in Chinese customers began in earnest, resulting in a ‘direct impact on Korea duty free’ around this period.


Domestic revival in China? C4D states: “Total sales of duty free in Korea fell by 14.3% compared to the same period last year in the third week of January (20th - 25th). The fourth week of January fell by 23.4%, and the first week of February fell the deepest by 42%. This trend continued throughout February,


decreasing by 38.4% in the second week of February and 40.4% in the third week of February.” At the time of writing, there are


promising signs of a travel revival in the domestic china market. “Once the spread of Covid-19 in


the East Asian region is gradually ceased, it is expected that large- quantity B2B transactions of duty free goods across the countries will come back quickly,” adds C4D. «


*Report published on 30 March


Above: Center 4 Duty Free bills itself as the duty free industry’s only monthly report with an authorised database and in-depth information provided directly from the government and operators.


According to Center 4 Duty Free, Lotte Duty Free Myeongdong, The Shilla Duty Free Seoul and Shinsegae Duty Free Myeongdong collectively made up 59.5% of 2019 Korean downtown duty free shop sales.


TRBusiness TRBUSINESS 77


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