"I don't know how long we can hold on".. Incheon Airport Duty-Free Shop, to what extent [Report]

[Financial News] On the morning of the 20th, the duty-free area of Incheon International Airport's Terminal 1 was crowded with both domestic and foreign travelers dragging their suitcases with excited expressions. Despite being a weekday, there were many users, making it feel like the demand for flights had recovered to pre-COVID-19 levels. However, the duty-free shop, known as the 'flower of the airport,' was deserted. The duty-free area was merely a passage to the boarding gate, and it was hard to find anyone carrying a duty-free shopping bag.
Instead of enjoying duty-free shopping, passengers sat on waiting chairs in family or couple units, chatting or flocking only to food and beverage stores. Luxury brand stores in the duty-free area had no customers at all. There were hardly any people buying items in tobacco, liquor, and cosmetics stores. Even though 1+1 promotional signs were displayed and employees came out with product models to promote, there were no buyers for a while. The only places that attracted customers were food stores with lower prices, such as traditional liquor, K-food, and health foods.
An Incheon Airport duty-free shop official said, "The Chinese tourists who used to buy in bulk saying 'from here to there, please' have significantly decreased, and they now only buy small amounts of low-priced items like snacks or cigarettes."
According to the Korea Duty-Free Shops Association, the per capita purchase amount of foreigners visiting Korea decreased by 27.1% from 1,163,988 won in June last year to 841,171 won this year.
In the industry, there is even a situation where days with fewer departing passengers are welcomed. This is because the airport rent is applied based on the number of passengers, which only increases costs for duty-free shops, making it a 'good-for-nothing' situation. 
An Incheon Airport duty-free shop official lamented, "From the end of September, when Chinese visa-free group tourists come in, there will be more airport users, but the concern is greater than the expectation," adding, "It could become a 'rent bomb' rather than an increase in sales due to the increase in tourists."
The struggle of airport duty-free shops is also partly due to changes in foreign tourists' shopping patterns. Recently, foreigners visiting Korea prefer domestic lifestyle distribution channels such as Olive Young or Daiso over duty-free shopping. In fact, it was not difficult to see foreigners carrying Olive Young's tarpaulin bags at the airport that day.
With the allowance of online duty-free liquor sales, the demand for offline airport duty-free shops has drastically decreased. Traditionally, liquor is a category with a large sales proportion, known as the 'flower of duty-free.' According to the industry, the proportion of liquor sales at airport duty-free shops is expected to decrease from 67% in 2019 to 41% in 2024, while the proportion in online duty-free shops is expected to expand to 30% of the total market.
Generally, the rent for liquor and tobacco areas is set higher than luxury fashion stores. Duty-free shops at Incheon Airport, which pay high rent, are at a disadvantage. Moreover, the worsening exchange rate conditions due to the weak yen and strong dollar, along with rising domestic prices, continue to reduce the average spending per customer at duty-free shops.
A duty-free industry official emphasized, "As more people use online duty-free shops, the culture of going through immigration early to browse duty-free shops has largely disappeared," adding, "Efforts by businesses to normalize the market and support from Incheon Airport as a partner are needed."
Meanwhile, Shilla and Shinsegae duty-free shops at Incheon Airport are requesting a 40% rent reduction, but Incheon International Airport Corporation maintains an impossible stance, citing 'the collapse of competitive bidding order.' An industry official said, "Duty-free shops have applied for civil mediation requesting rent reduction, but the corporation is not responding to the mediation," adding, "In the worst case, existing tenants may withdraw, and Chinese duty-free companies may take over." 

localplace@fnnews.com Kim Hyunji, Jeong Sanghee Reporter