Duty-Free Industry Ponders Marketing to Domestic Customers Following Approval of 'No-Stop International Tourist Flights'
Top Preferred Items Among Domestic Customers Are 'Cosmetics and Perfume'
With the government's promotion of 'non-stop international sightseeing flights,' domestic tourists are now able to purchase duty-free goods, raising sales expectations in the duty-free industry on the 21st. The photo shows employees making final preparations to start operations at the duty-free shop in the arrival hall of Terminal 2 at Incheon International Airport on May 28. Photo by Yonhap News.
[Asia Economy Reporter Cha Min-young] With the government's promotion of 'non-landing international sightseeing flights,' domestic tourists are now able to purchase duty-free goods, raising sales expectations within the duty-free industry. As the government's regulatory easing continues, monthly sales recorded the highest level since the outbreak of COVID-19 in September.
According to the duty-free industry on the 21st, the three major duty-free operators (Lotte, Shilla, Shinsegae) are discussing plans to strengthen related marketing strategies in line with the government's introduction of non-landing international sightseeing flights. An industry official stated, "Since detailed guidelines have not yet been announced, we will monitor future trends and respond to domestic customers accordingly," adding, "The government's regulatory easing policy will be a great help to the industry."
Earlier, on the 19th, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki announced at the 20th Emergency Economic Central Countermeasures Headquarters meeting and the 5th Korean New Deal Ministerial Meeting that the introduction of non-landing international sightseeing flights will be promoted on a one-year temporary basis. Duty-free benefits remain the same as regular international flights, with a basic allowance of $600, one bottle of alcohol (1ℓ, within $400), 200 cigarettes, and perfume (60ml). Among airlines, six companies including Korean Air, Asiana Airlines, Jeju Air, Jin Air, T'way Air, and Air Busan are preparing special tourism products, limited to departures from Incheon International Airport.
Passengers can freely purchase duty-free goods onboard, at duty-free shops in airport arrival and departure halls, and at downtown duty-free stores. Especially this year, due to COVID-19 travel restrictions, some customers who previously purchased items online but could not collect them are expected to retrieve their goods through sightseeing flights. According to the three major duty-free operators, in 2019, the most preferred items among domestic customers were cosmetics and perfumes. The second most popular category was luxury fashion and leather goods, followed by alcoholic beverages and tobacco. At Duty-Free Shop A, sales of cosmetics and perfumes are 1.5 times and 2.5 times higher than those of fashion/leather goods and alcoholic/tobacco products, respectively. Lightweight accessories such as sunglasses are also quite popular.
An industry insider said, "Marketing targeting domestic tourists, such as luxury brand discount sales, has been steadily conducted since the outbreak of COVID-19," adding, "While cosmetics and perfumes were the main purchase items before, it remains to be seen whether this will change."
Riding on the government's regulatory easing, the duty-free industry has continued its recovery since the severe downturn in April due to COVID-19, recording sales of 1.484 trillion won in September, the highest since the pandemic began. The number of domestic visitors was counted at 358,000. Although this is a 33.8% decrease compared to last year, the ongoing recovery trend is positive. Flexible government policies such as third-party overseas delivery, domestic sales of long-term duty-free luxury inventory, and rent reductions at Incheon Airport have laid the foundation for this recovery.
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