Latest South Korean duty-free numbers show sharp drop in sales to foreign customers for first two months

SOUTH KOREA. Total duty-free retail sales (excluding inflight) rose +4.8% month-on-month to KRW1,000,597,038,063 (US$680.2 million), according to latest Korea Duty Free Association statistics. That was despite a -8.4% fall in customer numbers to 2,099,095.

Year-on-year sales were up +9.3% on a -1.7% drop in customers.

However, sales year-to-date were down almost -22% year-on-year on flat customer numbers.

Sales to foreigners in February grew +10.1% month-on-month to KRW763,539,380,744 (US$519.1 million) despite an -11.9% decline in customer numbers to 654,777. Year-on-year sales were up +15.1% on a +5.5% pick-up in customers.

For the first two months, a sharp drop in sales to foreigners (-26.9% year-on-year) on an +11.8% increase in customer volume, was reflected in the total market performance mentioned earlier.

Sales to Koreans fell -9.2% from January to KRW237,057,657,289 (US$161.2 million) on a -6.7% easing in customers numbers to 1,444,318. Year-on-year the changes were -5.9% and -4.7%, respectively.

For the first two months, sales to Koreans were -3.1% down on -4.7% fewer visitors.

Downtown duty-free sales rose +9.7% over January to KRW765,427,752,150 (US$520.4 million) despite a sharp -16.3% fall in customer numbers to 794,405. Channel sales rose +10.2% year-on-year on a +12.9% rise in customers.

Foreigners made up 86.6% of those sales on just 36% of customer numbers, reflecting the still significant diagou reseller component within Korean downtown duty free.

The downtown sector continues to face extreme economic challenges, as evidenced by Hyundai Duty Free’s decision to close its Dongdaemun, Seoul store, effective 31 July.

Several big luxury brands have recently exited or plan to exit Korean downtown duty-free stores. Gucci closed its store at The Shilla Duty Free in Seoul this week, while it is reliably understood that Cartier, Tiffany, Gucci and Louis Vuitton have all served notice to close their Lotte World Duty Free boutiques in Jamsil, Seoul, by mid-year.

On-airport departures duty-free sales, evenly split between Koreans and foreigners, declined almost -7% month-on-month to KRW197,977,383,464 (US$134.6 million), a +16.9% year-on-year increase. Customer numbers fell -10.4% over January and -3.8% year-on-year.

Koreans made up 62.4% of customer numbers, underlining a much heavier spend by foreigners.