Duty-Free Shops Showing Growth After 'Worst' Period, Decline Again... October Sales 1.389 Trillion Won

On the 18th, the duty-free shop at Terminal 1 of Incheon International Airport was quiet due to the impact of the novel coronavirus (COVID-19). Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Seungjin Lee] Domestic duty-free shop sales in October recorded 1.3893 trillion KRW. Due to the influence of Chuseok and other factors, domestic sales slightly increased, but foreign sales decreased by nearly 100 billion KRW compared to the previous month.

According to the Korea Duty Free Shop Association's industry trends on the 30th, domestic duty-free shop sales in October were 1.3893 trillion KRW, about 100 billion KRW less than in September. After recording the worst performance ever in April due to the impact of COVID-19, duty-free shop sales had been rising for five consecutive months but decreased again.

In October, the amount spent by domestic customers at duty-free shops was 63.4 billion KRW, about 20 billion KRW more than September's 43.1 billion KRW. The number of domestic customers using duty-free shops during the same period increased by about 150,000 from the previous month to approximately 510,000. This is analyzed to be due to domestic sales of inventory duty-free goods and the influence of Chuseok.

On the other hand, foreign sales in October were 1.3251 trillion KRW, a decrease of 115 billion KRW compared to the previous month. The number of foreign customers using duty-free shops was about 70,000, about 4,000 more than the previous month, but sales actually decreased.

With a significant decrease in foreign customer sales, the duty-free shop industry is experiencing a growing sense of crisis.

Duty-free shop sales dropped sharply from 2.02 trillion KRW in January to 1.1 trillion KRW in February. After hitting a low of 986 billion KRW in April, sales rose for five consecutive months until September. Although still far below pre-COVID-19 sales levels, the continued upward trend provided some consolation to the duty-free industry. However, the upward trend broke in October, raising concerns about a continuing decline.

As domestic COVID-19 cases surge, the Chinese government plans to strengthen entry restrictions for travelers from Korea to China starting December 1. Travelers entering China from Korea must submit both a PCR test and a serology test certificate proving they are not infected with COVID-19. Accordingly, sales from 'Daigong (代工, Chinese peddlers),' who currently make up most foreign customers, are inevitably expected to decline.

Additionally, the 'third-party forwarding' support system will only be allowed until the end of this year. Third-party forwarding is a system that sends duty-free goods, which have completed customs declaration, to a desired location for overseas duty-free operators. Chinese peddlers can receive desired duty-free goods locally without entering the country. The duty-free industry expects foreign sales to sharply decline from next year when third-party forwarding permission ends.

Regarding this, a duty-free industry official explained, "If government measures such as indefinite extension of the third-party forwarding system and reduction of license fees do not continue, it could lead to a crisis threatening the survival of the duty-free market," adding, "The duty-free industry is doing its best in a life-or-death situation with measures like a four-day workweek and paid rotational leave, so additional government support is urgently needed."

This content was produced with the assistance of AI translation services.