Duty-free stores bet on luxury offerings to tackle low sales

Downtown duty-free operators are preparing to open boutiques for in-demand luxury brands in the hope of restoring sales that have fallen with a drop in the number of Chinese tourists visiting Korea.

Shinsegae DF, which opened up Cartier and Fendi stores in August, is preparing to open stores for Louis Vuitton and Dior later this month.

HDC Shilla Duty Free is also preparing a Louis Vuitton boutique at its IPark branch, following a deal last year to bring in some 20 brands from the luxury group LVMH. 

Luxury brands such as Louis Vuitton, Chanel and Hermes are major attractions for high duty-free spenders. 

As the industry struggles to regain sales amid the falling number of Chinese group tourists, the introduction of such luxury boutiques may provide a breakthrough by bringing in more high-spending individual tourists.

“We are targeting our marketing at individual travelers in the case of our luxury brands,” said an official with Shinsegae DF. 

Lee Ji-yeong, an analyst with NH Investment and Securities, estimated that daily sales at Shinsegae DF may rise to up to 4 billion won ($3.5 million) with a boost from luxury brands -- similar to sales that the company saw in February before intergovernmental tensions between Korea and China caused a sharp drop in Chinese group tourists to Korea. 

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