[K-Tourism's New Landscape] ③"Olda-Mu" That Rewrote the Rules of Traveling in Korea...Repeat Visits Still a Challenge

Era of 20 Million Inbound Tourists
Foreign Tourists' Spending Formula Shifts
From "Price" to "Experience"

Editor's NoteThe travel routes of foreign visitors to Korea have changed. Before the COVID-19 pandemic, the mainstream was package tours that took visitors around major tourist attractions and large-scale shopping facilities such as duty-free shops. After the shift to the endemic phase, however, there has been an overwhelming increase in small-scale family free independent travel (FIT) focused on experiencing the K-lifestyle. As the everyday lives of Koreans, spread globally through K-content such as K-pop, films, and dramas, are re-disseminated via social media (SNS), the main purpose of traveling to Korea has become to experience Korean food, cosmetics, fashion, medical services, and even unique niche services in exactly the same way. In a domestic market facing negative growth due to population decline, foreign tourists are like "rain in a drought." With the era of nearly 20 million foreign tourists a year, The Asia Business Daily is examining how foreign visitors to Korea are breathing life into the domestic market and exploring pathways for sustainable K-tourism.

On February 11, the so-called "Ol-Da-Mu" stores in Seongsu-dong, Seoul - Olive Young, Daiso, and Musinsa - were packed with foreign tourists. In front of the first-floor checkout counter at the Musinsa Standard store, tourists pulling suitcases and carrying large shopping bags were lined up in a long queue. The wait time for payment exceeded 30 minutes. Ethan Miller, a 29-year-old tourist from the United States, was holding several short-sleeve T-shirts, a ball cap, and multiple pairs of socks in his arms. He said, "These days I see Korean brands a lot on social media, and I was surprised that the prices are more reasonable than I expected," adding, "Rather than buying luxury brands, it is more fun to actually try on and experience brands that you can only buy in Korea."

The spending pattern of foreign tourists has changed. Instead of duty-free shops, which were once synonymous with shopping in Korea, visitors are now flocking to local retail channels that front K-beauty, K-fashion, and value-for-money household goods.

Tourists are shopping at a Musinsa store located in Seongsu-dong. Photo by Han Yeju

"The old rule of duty-free as the top priority has been broken"

According to the Korea Tourism Organization on February 18, road shops accounted for the largest share of main shopping locations for foreign visitors to Korea at 49.6%. In particular, Seongsu-dong recorded the highest growth rate in Seoul, with the number of foreign visitors surging 236.8% year-on-year. Analysts say this was driven by the concentration of K-beauty flagship stores, fashion select shops, and experiential stores.

This trend is also evident in the performance of individual companies. Olive Young's sales to foreign customers last year increased 53% from a year earlier, and in January this year they rose a further 59% year-on-year. At "Olive YoungN Seongsu," which has established itself as a must-visit stop for foreign tourists, foreign-customer sales in January jumped 74%. The company explains that demand to go beyond simple purchasing and directly experience K-beauty trends is translating into sales.

A foreign tourist is shopping at the Olive Young Myeong-dong store. Photo by Han Yeju

Daiso is also targeting foreign-customer districts with extra-large stores, such as its 12-story Myeong-dong location and 7-story Hongdae location. Last year, overseas card spending at stores in and around Myeong-dong and Hongdae increased 60% from a year earlier, and in January this year it was up by about 80%. A Daiso representative said, "In Myeong-dong, Hongdae, and Gangnam, K-beauty products and food items are the top sellers." Aya, a 24-year-old tourist from Japan whom we met in the store, said, "There are so many small and cute items, and the prices are low," adding, "It's fun just to look around."

Musinsa is no exception. Last year, sales to foreign customers at Musinsa Standard offline stores increased 85% year-on-year. At the globally focused Seongsu and Myeong-dong stores, sales rose 113% and 90%, respectively. As of January this year, about 50% of sales at the Musinsa Store Seongsu and 55% at the Musinsa Standard Myeong-dong store came from foreign customers. Tourist-tailored services such as unmanned currency exchange machines, suitcase storage, foreign-language brochures, and in-store instant tax refunds are seen as having extended visitors' time spent in-store.

APR's Medicube Seongsu has also emerged as a "hot place." As of January, foreign visitors accounted for 60% of all visitors, underscoring its popularity. Although it only opened in December, it is already drawing an average of 500 visitors a day, spreading by word of mouth. Lin Yuqing, a 23-year-old tourist from Taiwan, said, "I saw it on the internet and came here while exploring Seongsu," adding, "It is extremely famous in Taiwan, so I came to buy the Booster Pro." Yuka, a 37-year-old visitor from Japan, said, "I first came across APR on Qoo10," adding, "I came to buy the Red Mask."

Tourists are browsing the APR Medicube Seongsu store in Seongsu-dong. Han Yeju, Reporter

The change is not in the 'wallet' but in the 'time'

This shift in spending is not limited to changes in what people buy. It also means that travel routes and stay patterns themselves have changed. The key is the shift in "time share" for foreign tourists. Within a limited travel schedule, they now spend most of their time in local commercial districts such as Seongsu and Myeong-dong, which reduces the likelihood of visiting duty-free shops that once epitomized K-shopping. Instead of buying large quantities of high-end cosmetics and luxury goods at duty-free stores, their spending has been dispersed across mid- to low-priced K-beauty, fashion, and household items.

Japanese tourists are browsing the beauty corner at the Daiso Myeongdong branch. Han Yeju, Reporter

Some high-end brands are also seeing more customers choosing department stores over duty-free shops due to the weak won. Observers say the appeal of the duty-free model, which was centered on "price arbitrage," has relatively weakened. This structural shift has translated directly into earnings pressure for the duty-free industry.

The four major duty-free operators - Lotte, Shilla, Shinsegae, and Hyundai - have carried out voluntary retirement programs for a second consecutive year and continue to reduce sales floor space and withdraw stores. Some operators have returned their business licenses, citing the heavy burden of high rents at Incheon International Airport. Although expectations had been raised by the visa-free policy for Chinese group tourists, this has not led directly to improved earnings. According to the Korea Duty Free Shops Association, total sales at duty-free shops nationwide last year (excluding in-flight sales) came to 12.534 trillion won, down 11.9% from the previous year. This is the lowest level since 2016, before the full impact of the THAAD deployment was felt.

Duty-free area at Incheon International Airport Terminal 2. Yonhap News

The duty-free industry rolled out aggressive marketing for this year's Lunar New Year holiday, including large-scale discounts and bonus points. However, many see this more as a defensive strategy to retain existing customers than as an effort to generate new demand. Given that a recovery in the number of foreign tourists does not immediately translate into a rebound in duty-free sales, analysts say the industry is in the midst of a structural transition.

"Now it's a competition in the 'qualitative productivity' of tourism"

Industry players and experts view this as a structural shift rather than a temporary phenomenon. One industry insider said, "In the past, the competitiveness of duty-free shops lay in 'price arbitrage,' but now foreign spending is shifting toward 'content and experience,'" adding, "Duty-free shops inevitably need to move beyond simple discount competition and revise their strategies, such as by strengthening experiential stores and expanding curation of K-brands."

Another distribution expert also noted, "The examples of Olive Young and Musinsa show a structure in which global online awareness is converted into offline tourism consumption," and cautioned, "If duty-free shops do not transform themselves from simple sales channels into platforms where visitors can experience Korean brands, their competitiveness may weaken."

Policy responses are also needed. There are calls to move away from a quantitative growth strategy that focuses solely on increasing tourist numbers and instead shift policy indicators toward boosting length of stay, spending per visitor, and revisit rates. Yanolja Research Center said, "We need strategies to raise the 'qualitative productivity of tourism,' meaning how deeply each visitor experiences Korea and how much of that experience translates into spending," adding, "An ecosystem-based approach is needed that organically connects content, commercial districts, transportation, and payment infrastructure."