Consumer Coupons and Chinese Tourists Bring Tailwinds to Domestic Demand Stocks

Livelihood Recovery Coupons Drive 6.4% Card Sales Growth for Small Businesses in Four Weeks
Foreign Tourist Arrivals Up 16% Through July
Expectations Rise for Increased Yuke Spending

In late September, the second round of livelihood recovery consumer coupons will be distributed, and visa-free entry will be permitted for group tourists from China (Yuke). These measures are expected to help overcome the prolonged domestic demand slump. On September 8, SangSangin Securities maintained its 'Overweight' recommendation for the food & beverage, cosmetics, and retail sectors, which have shown steady growth, in its report titled 'Reviving Domestic Demand.'

Yonhap News Agency

Livelihood Recovery Consumer Coupons Prove Effective in Stimulating Intended Consumption

Due to the domestic demand slump, the cumulative retail sales growth rate through July was only 1.6%. However, during the four weeks following the distribution of consumer coupons (from July 21 to August 17), card sales at 329,154 small business locations nationwide increased by an average of 6.44% year-on-year. By sector, sales at optical shops rose by 44%, fashion, clothing, accessories, toys, and games by 33%, tobacco by 31%, and cosmetics by 30%, all showing significant growth rates. With the second round of consumer coupons set to be distributed from September 22, domestic demand-related sectors are expected to benefit once again.

The use of consumer coupons was limited to stores with annual sales of less than 3 billion won, so large-scale stores did not benefit. For example, only a limited number of branches at Aliexpress Olive Young and Daiso, which are popular among young women-the main customer base for cosmetics-accepted the consumer coupons. Nevertheless, overall sales in the beauty industry expanded. Franchise-based single-brand shops or specialty stores, such as Aritaum and Innisfree, which were major cosmetics distribution channels in the past, also saw sales growth.

Foreign Tourism Boosted Japan's Domestic Demand... What About Korea?

As of the cumulative total through July, the number of foreign visitors to Korea reached 10.56 million, a 16% surge compared to the same period last year. In the second quarter, foreign visitors' domestic card spending hit a record high of 5 trillion won.

The government has decided to allow visa-free entry for group tourists from China from September 26, 2025, to June 30, 2026. After China first implemented visa-free entry for Korean tourists in November last year, Korea has announced this reciprocal measure in line with the principle of reciprocity. The focus is also on revitalizing the domestic demand through an active tourism market.

There was a period from 2014 to 2016 when the number of foreign visitors to Korea, mainly from China, increased significantly. At that time, the duty-free channel and the cosmetics sector saw remarkable growth. Kim Hyemi, an analyst at SangSangin Securities, analyzed, "Looking at the consumption patterns of inbound tourists from regions other than China, who led the recovery immediately after the endemic, urban tourism focused on eating and drinking remains popular, but the main shopping destinations have shifted to Aliexpress Olive Young, Daiso, and department stores."

It is worth referencing the case of Japan, which experienced a tourism boom before Korea. From 2023 to 2024, the Japanese department store industry enjoyed record-breaking prosperity due to an increase in foreign tourists driven by the weak yen and expanded luxury consumption among high-income groups. Tourist spending in Japan surged by 13.7%. During this period, the Japanese department store industry experienced not only an increase in visitors but also simultaneous growth in events, performances, and food & beverage sectors.