Duty-free sales nearly double on-year on tourism boom

Sales of duty-free products nearly doubled last year’s levels due to the recovering tourism industry and continued high spending by Chinese tourists, data showed Monday.

According to data from Statistics Korea and the Korea Customs Service, duty-free sales this June were 94.1 percent higher than June last year. 

“The numbers may be a bit misleading, because sales were so low last year because of the Middle East Respiratory Syndrome shock,” said a spokesperson for a duty-free operator who asked to remain anonymous.

“Since sales nearly halved last year, a doubling in sales can be seen as the industry just going back to normal levels.”

Figures from the Korea Duty Free Association show that sales revenues for June this year were $869.7 million, which is a less dramatic increase when compared against the $773.9 million generated in October 2015 when the MERS shock wore off.

“Sales overall are increasing because there are more duty-free stores opening up and everyone is marketing pretty aggressively, but the rise is not as sharp as the numbers might suggest,” said the spokesperson.

Big players entered the duty-free market this year, including retail giant Shinsegae and Doosan, Hanwha and HDC Shilla.

These new outlets, as well as existing duty-free stores, pushed aggressively with hallyu marketing to attract Chinese tourists lured here by the explosive popularity of Korean content such as the hit drama “Descendants of the Sun.”

According to the Tourism Knowledge and Information System run by the Korea Culture and Tourism Institute, the number of Chinese tourists entering Korea last month rose 140.7 percent on-year.

Chinese tourists, who are responsible for roughly 70 percent of sales at major duty-free outlets, made up nearly half of foreign tourists coming here.

According to a report presented in July by Pan Jeong-hwa from the government-run think tank The Seoul Institute, 62.2 percent of tourists who came to Seoul to shop were from China. These tourists spent an average of 2.13 million ($1,920) won each, making them the main targets of the duty-free industry.

However, industry insiders have raised concerns about the dependence on Chinese tourists, especially the difficulty of continuously attracting them and political tensions that could potentially negatively impact the industry.

By Won Ho-jung (hjwon@heraldcorp.com)