Executives and staff responsible for marketing at Lotte Duty Free will embark on a business trip to Guangzhou and Qingdao, China, this week. This is ahead of the visa-free entry for Chinese tourists starting on the 29th, aimed at attracting local group tourists.
A Lotte Duty Free representative noted, "Considering the increasing proportion of tourists from second- and third-tier cities in China, such as Chongqing, Wuhan, and Qingdao, we are focusing on attracting local tourists by collaborating with local offices and travel agencies."
Starting from the 29th until June 30 next year, visa-free domestic travel for Chinese group tourists consisting of three or more people will be allowed, prompting the duty-free and retail sectors to prepare for a special opportunity. The duty-free industry expects a recovery from the prolonged slump caused by the THAAD (Terminal High Altitude Area Defense) incident, as Chinese tourists, who account for over 70% of total sales, return.
According to the Korea Tourism Organization (KTO), the number of Chinese visitors to Korea dropped from 6.02 million in 2019 to 4.6 million last year. Consequently, the scale of the duty-free market shrank nearly 10 trillion won, from 24.8586 trillion won in 2019 to 14.2 trillion won last year.
Group tourists are evaluated to have larger consumption scales than individual tourists. The Bank of Korea estimates that an increase of 1 million Chinese group tourists would raise Korea's economic growth rate by 0.08 percentage points. The industry anticipates an increase in Chinese group tourists coinciding with the National Day holiday and APEC summit scheduled from the 1st to the 7th of next month, and is strengthening recruitment and promotions.
Lotte Duty Free will dispatch employees to China starting this week to attract group tourists. They plan to develop tailored shopping products in collaboration with local travel agencies, providing dedicated content and coupons, as well as custom programs that allow tourists to enjoy both shopping and attractions, such as beauty classes and K-content experiences.
They will also enhance products preferred by Chinese consumers. To this end, they signed a memorandum of understanding (MOU) with Kolmar Korea on the 3rd to support the global market expansion of K-beauty brands. To improve payment convenience, they will expand collaborations with simple payment services like WeChat Pay and AliPay, and from July, they will introduce Line Pay to Taiwan. Additionally, they plan to renovate the Hallyu experience space "Star Avenue" within Lotte Duty Free by the end of the year.
The Shilla Duty Free is focusing on attracting Chinese group tourists and MICE (meetings, incentives, conferences, and exhibitions) groups in collaboration with local travel agencies. Currently, The Shilla Duty Free welcomes over 20,000 high-value group customers, including MICE, monthly, providing tailored content for them.
They will also develop linked products targeting day tours and free independent travelers (FIT). In April, they appointed 'Jinyoung' from B1A4, who has high recognition in the Chinese market, as a promotional model. Going forward, they plan to select artists with multinational global fandoms as promotional models to target overseas customers.
Shinsegae Duty Free also seeks qualitative growth centered on MICE and free independent travelers. According to Shinsegae, the unit price for business purpose groups is approximately 3 to 4 times higher than that of general tourist groups, allowing for more efficient revenue expansion.
To this end, Shinsegae is offering differentiated services, such as displaying welcome messages on the media facade in Myeongdong for corporate visitor groups and business tourists. The company has set a goal to secure over 50,000 customers through incentive group programs by the end of this year, expecting to attract an additional 10,000 or more when the Chinese visa-free policy is implemented.
Some view the prolonged domestic stagnation in China and changing shopping trends as variables. Tourists who previously visited duty-free shops are now visiting street shops in major shopping districts such as Daiso and Olive Young, leading to projections that similar consumption patterns will emerge even if the number of Chinese group tourists increases.
A duty-free representative stated, "The visa-free policy for Chinese group tourists is expected to be a turning point in the recovery of the Korean tourism industry," but also noted, "Above all, consumption must recover for this to have a more meaningful effect."