Return of Tourists... Duty-Free Shop Foreign Visitors Recover to 400,000 After 3 Years

After 3 Years Since February 2020 Hit by COVID-19
Decrease in Chinese Bottegashang Expected to Be Offset by Foreign Tourists

The number of foreign tourists using domestic duty-free shops exceeded 400,000 per month for the first time in three years since COVID-19. Attention is focused on how much the increase in overseas tourists from various countries, following the full-scale onset of the endemic (periodic outbreak of infectious diseases), will offset the decline in Chinese peddlers (Daigou).

On the 22nd, when the number of daily users at Incheon Airport exceeded 120,000 for the first time since the COVID-19 pandemic, the duty-free area of Terminal 1 at Incheon Airport was crowded with travelers.
Yeongjongdo - Photo by Kang Jinhyung aymsdream@

According to the Korea Duty Free Shop Association on the 7th, the number of foreign customers using domestic duty-free shops in April reached 439,457, marking the highest since February 2020 (710,662). The number of foreign visitors to duty-free shops slightly decreased from 245,313 in January to 209,653 in February, then increased to 314,699 in March and 439,457 in April.

Since the industry normalized the Daigou commission fees in January, the sharply declined domestic duty-free shop sales have also shown signs of improvement due to the recovery of foreign tourists. Domestic duty-free shop sales in April amounted to 1.1748 trillion KRW, a 47.33% increase compared to the beginning of the year (January, 797.4 billion KRW). As domestic overseas travel surged with the endemic, domestic sales have maintained around 200 billion KRW since early this year. However, foreign sales halved to 596.4 billion KRW in January compared to the previous month due to the decrease in Daigou sales caused by reduced commission fees. During the COVID-19 period, with air routes closed, competition to secure Daigou at domestic duty-free shops overheated, and they accounted for more than 95% of total sales. However, this year, the industry-wide policy to reduce excessive commission fees to normalize them led to a sharp decline in Daigou sales.

This decline has been partially offset by foreign tourists from around the world returning as air routes reopen. Foreign sales in April recovered to nearly 1 trillion KRW (965.4 billion KRW).

Demand from Chinese tourists is also increasing. According to the Korea Tourism Organization, 105,967 Chinese visited Korea in April, about ten times more than 10,230 in the same period last year. It is also more than four times the 24,946 visitors in January. However, considering that before COVID-19 in 2019, 400,000 Chinese tourists visited Korea monthly, the recovery rate is about 24%. The industry expects that if conditions improve, such as China including Korea in the list of countries permitted for group tours, the recovery of duty-free shop sales due to an increase in tourists will accelerate.