[Asia Economy Reporter Jeon Jinyoung] The duty-free shop industry has launched sales to manage inventory. This is because products such as cosmetics and bags purchased by duty-free shops were not fully sold due to the impact of COVID-19.
According to the industry on the 31st, Shinsegae Duty Free is conducting the "2022 Clearance Sale" until today. This event offers discounts ranging from 40% to up to 70% on products such as cosmetics and perfumes nearing their expiration dates. MAC Powder Kiss Lipstick can be purchased for $13.5, a 50% discount from $27, and products from Est?e Lauder and Dr. Ci:Labo are also discounted by 50-60%, allowing purchases at less than half the original price.
Lotte Duty Free is also selling duty-free goods through its own online mall "Lux Mall" and its affiliate e-commerce platform Lotte ON. In particular, Lotte ON is holding a "Duty-Free Week" until today, selling luxury summer sandals and jewelry at discounts of up to 84%. Hyundai Department Store Duty Free is also running sales with 30-40% discounts on clothing and cosmetics.
Duty-free shops mostly purchase items such as cosmetics and clothing directly. Because of this, products that are out of fashion or nearing expiration among the inventory inevitably result in losses. According to the Financial Supervisory Service, last year Shinsegae Duty Free held inventory assets worth 341.6 billion KRW, Hotel Shilla, which operates Shilla Duty Free, held 625.8 billion KRW, and Hyundai Department Store, which operates Hyundai Department Store Duty Free, held 365 billion KRW in inventory assets. Lotte Duty Free had the largest inventory assets at approximately 730 billion KRW as of March this year. However, an industry insider stated, "Inventory assets generally need to be maintained above a certain level, so having a large amount of inventory assets does not necessarily lead to losses."
For this reason, duty-free shops have recently opened reverse direct purchase malls to explore new sales channels. Earlier, in March, the Korea Customs Service allowed foreigners who have not visited Korea to purchase domestic products from downtown duty-free shops online.
Shinsegae and Shilla Duty Free have opened reverse direct purchase malls targeting the Greater China region. Shinsegae Duty Free is known for having the largest number of duty-free items, showcasing about 3,000 Korean brand items. Shilla Duty Free signed a business agreement with Cainiao, a subsidiary of Alibaba, to handle logistics and product delivery processes. Lotte Duty Free operates reverse direct purchase malls targeting consumers in nine countries including China, Japan, the United States, Singapore, and Thailand. Hyundai Department Store Duty Free is also aiming to open a reverse direct purchase mall in the second half of the year.
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