"Chinese Tourists Don't Spend Money".. Duty-Free Shops Struggle to Maintain Customer Spending [Report]

[Financial News] "Recently, there has been an increase in Chinese tourists, but they don't buy luxury items like Louis Vuitton as they used to."
On the morning of the 22nd, an employee named A at a downtown duty-free shop in Seoul sighed as they responded to a question about recent duty-free shop trends. Before COVID-19, Chinese group tourists (Yuke) visited duty-free shops to purchase luxury and high-priced items, but recently, everyday consumer goods such as food, cosmetics, and tobacco have become the main focus.
Despite the anticipation of the lifting of the Korean travel ban and the implementation of a visa-free policy for Chinese group tourists, leading to a rapid recovery in foreign tourist demand centered around Yuke, the increase in duty-free shop sales has not kept pace. This is because foreign tourists, who previously focused on luxury consumption, have shifted their purchasing patterns to relatively lower-priced items such as tobacco and food.
According to the Korea Duty-Free Shops Association, the number of foreign tourists visiting domestic city duty-free shops in May this year was 406,607, an increase of about 31.5% compared to 309,235 in January. However, during this period, sales only increased by 10.9%, from 587.4 billion won to 651.6 billion won. Although the overall appearance is recovering, the average spending per customer, a representative sales indicator, has significantly decreased from 1.9 million won to 1.6 million won.
To address the decline in average spending per customer, the duty-free industry is strengthening product lines tailored to the changed trends, focusing on easily accessible city duty-free shops, and exploring new strategies such as reconfiguring duty-free shops as 'spaces where people can stay.'

In response to this trend, Shinsegae Duty-Free Shop opened 'Taste of Shinsegae,' which brings together K-desserts and local specialties, on the 11th floor of the Myeongdong branch on the 18th. The visitors that day were mainly Chinese tourists traveling with family, and they flocked to the snack and food sections. In contrast, the fashion section was relatively quiet.
In the first half of this year, the food category sales at Shinsegae Duty-Free Shop increased by more than 40% compared to the previous year. As a result, they have completely reconfigured the space into a K-culture complex shopping area, focusing on desserts and food, and including fashion and K-pop products on one floor. In particular, they have placed the 'SPACE OF BTS' store, which curates items according to the activities of each BTS member. A Shinsegae Duty-Free Shop representative explained, "We induced the 'lock-in effect,' where fandom tourists naturally lead to consumption by browsing lifestyle consumer goods and fashion products."
Located in Yongsan, Seoul, Shilla I'Park Duty-Free Shop is leveraging its geographical advantage of being located near emerging tourist attractions such as 'Yongridan-gil' to strengthen its connection with the local commercial area. Targeting individual MZ generation tourists, they have created a 'K-lifestyle course' linked with nearby local businesses and are operating half-day tour programs in collaboration with Seven Luck Casino and I'Park Mall. As a result, the average stay time at Shilla I'Park Duty-Free Shop on weekends has increased by more than 20% compared to the previous year.
A Shilla I'Park Duty-Free Shop representative stated, "In the first half of this year, Shilla I'Park Duty-Free Shop's sales increased by more than 50% compared to the same period last year," adding, "Although the base effect played a role, being prepared for the resumption of Chinese group tourism with the largest tourist bus parking infrastructure among city duty-free shops was also significant."
Lotte Duty-Free Shop is also accelerating its changes. The Myeongdong branch of Lotte Department Store recently opened a K-fashion specialty store 'Kinetic Ground' on the 9th floor, directly connected to the duty-free shop passage, aiming to attract MZ generation foreign tourists.
Professor Jeong Ransu of Hanyang University's Department of Tourism stated, "The average spending per customer of existing Chinese tourists was significantly higher than that of other foreign tourists because many visits were for the single purpose of 'shopping,' such as clothing wholesale," adding, "Recently, as tourism for experiencing K-content such as Hallyu has increased among relatively younger generations, it can be seen as a kind of normalization process where their spending becomes similar to that of tourists from other countries."

localplace@fnnews.com Kim Hyunji