The duty-free industry recorded the lowest monthly sales of the year in July.
According to the Korea Duty Free Shops Association, the sales amount for duty-free shops in July this year was 919.94 billion won, down 8.6% from July last year (1.06 trillion won).
During the same period, the number of purchasers increased by 9.2% to 2.58339 million. The average duty-free purchase per person decreased from 426,000 won to 356,000 won, a drop of 16.4%.
Monthly sales exceeding 1 trillion won since February registered a decline in July despite the high season and an increase in visitors.
The number of foreign visitors to duty-free shops was about 990,000, up 25.1% from last year and an increase of 2.2% from June this year. Foreign sales amounted to 640.5 billion won, a decrease of 14.2% compared to the same period last year and 22.1% from the previous month. This is the lowest figure in the first half of this year, significantly impacting the overall decline in duty-free shop sales.
The number of domestic visitors was 1.59 million, up 1.2% from last year and 1.8% compared to the previous month.
The industry analysis suggests that the shift in management focus from external growth to internal stability has spread across the industry. Domestic duty-free shops have reduced the commission paid to Chinese brokers (daigong) from a maximum of 50% to around the 30% range. Consequently, the average duty-free purchase per person, which was 2.634 million won in 2021, shrank to the 300,000 won range in July this year.
LOTTE Duty Free, which ended its transaction with daigong, recorded second-quarter sales of 668.5 billion won, a 19.3% decrease compared to the same period last year. However, its operating profit turned positive at 6.5 billion won due to not incurring rental expense, as the duty-free shop is not located in Incheon International Airport.
In contrast, sales for Shilla Duty Free and Shinsegae Duty Free in the second quarter increased by 2.1% and 22.9% respectively, recording 850.2 billion won and 805.1 billion won. During the same period, the operating losses for the two companies amounted to 11.3 billion won and 1.5 billion won, indicating a shift into deficit. Shilla and Shinsegae Duty Free, located in Incheon International Airport, are reportedly incurring monthly deficits of 6 to 7 billion won while paying around 30 billion won in rent.