Shinsegae Duty Free Myeongdong Branch Temporarily Closes 25 Brands Including Baby, Food, Electronics, and Liquor
Over 30 Small Brands Withdraw, Fundamental Measures Needed
[Asia Economy Reporter Lim Hye-seon] Following airports, some downtown duty-free shops are also temporarily closing. This is due to the difficulty in operating stores caused by the decrease in travelers amid the global pandemic of the novel coronavirus infection (COVID-19).
According to the duty-free industry on the 26th, Shinsegae Duty Free Myeongdong branch has temporarily closed 25 brand stores including those for infants and children, food, electronics, and liquor since the 18th. Brand stores such as Apple, Bang & Olufsen, Fuji, Sony, and Pororo operated until the 17th. This temporary closure was made at the request of the brands. A Shinsegae Duty Free representative explained, "There have been continuous requests from brands to temporarily close starting from March," adding, "It was an unavoidable decision as there are more employees than visitors." Most of the infant, children, and food brands deciding to close this time are small and medium-sized enterprises (SMEs) or mid-sized companies. The reopening date has not yet been determined. A duty-free shop official said, "We believe the stores can reopen once the air routes open again and the number of foreign visitors to Korea increases."
As the COVID-19 situation prolongs, the number of brands leaving duty-free shops is also increasing. Especially, SME and mid-sized company brands are packing up one after another, saying "there is not even money to pay employees' salaries." Among the brands in Shinsegae Duty Free Myeongdong, more than 30 brands, including Louis Quatorze and Hwang Poong Jeong, left in April and May. Most of these are operated by SMEs or mid-sized companies. The situation is similar for SME and mid-sized company brands in Lotte and Shilla Duty Free shops. At Lotte Duty Free, about ten SME and mid-sized brands have closed. Some brands at the main store have started placing some employees on unpaid leave from June.
According to the Korea Duty Free Association, duty-free sales in April were 986.7 billion won, a 51% sharp decline compared to 2.0247 trillion won in January, just before the COVID-19 situation intensified. This is the first time since March 2016 (979.9 billion won) that domestic duty-free sales fell below one trillion won. The actual number of visitors also decreased by 40% to about 354,000 in April from about 587,000 in March. Sales were somewhat maintained as daigou (Chinese personal shoppers) purchased duty-free goods in bulk on a corporate scale.
A duty-free industry official said, "It is difficult even for SMEs and mid-sized companies to endure," adding, "Since airport duty-free shop closures require consultation with airport corporations, we are currently reflecting the requests of brands located in downtown duty-free shops first."
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