China's and Japan's golden week holidays overlap. Just in time, Hyundai Duty Free and Lotte Duty Free, which newly secured space at Incheon Airport, are set for their first showdown. Shinsegae Duty Free is also regrouping and rolling out various events. In Japan, substitute holidays continue from Showa Day on Apr. 29 through the 6th for Constitution Memorial Day. In China, the Labor Day holiday runs from the 1st through the 5th. The Ministry of Culture, Sports and Tourism expects about 200,000 tourists from China and Japan to visit Korea during the early May golden week.
According to the retail industry on the 3rd, Hyundai, Lotte and Shinsegae Duty Free are launching events in various ways to attract foreign tourists. In particular, Lotte Duty Free and Hyundai Duty Free, which have returned to Incheon Airport this time, are stepping up their offensives. It will effectively be their first report card since returning to Incheon Airport.
Lotte Duty Free began operating the DF1 (cosmetics, perfume, liquor, tobacco) zone on the 17th of last month. It is a return after about three years away from Incheon Airport. This year's sales target for the Incheon Airport branch is at least 600 billion won. Hyundai Duty Free began operating the DF2 (same categories as DF1) zone on the 28th of last month. Combined with the existing DF5 and DF7 (luxury, fashion, accessories), it has risen to the largest operator, running three of the six duty-free zones at Incheon Airport. It is targeting annual sales of more than 1 trillion won at the Incheon Airport stores.
Duty-free strategies have become more diverse than in the past. Previously, they expanded discounts based on purchase amount; now they have evolved to bundle everything from flight bookings to lodging, purchases and content.
To attract Chinese tourists, Lotte Duty Free signed a memorandum of understanding (MOU) with the integrated resort Paradise City and began cooperation. Lotte Duty Free is giving Paradise City guest-only coupon books that include a discount coupon of up to $121 and a gold-tier membership upgrade. Paradise City will provide premium lodging services to Lotte Duty Free customers. The strategy is to have tourists visiting Korea stay at Paradise City and visit Lotte Duty Free at the same time.
Content was also strengthened. For Japanese tourists, it introduced an "omiyage" package inspired by Japan's gift-giving culture. It is a customized souvenir set arranged to be suitable for Japanese tourists visiting Korea to give to acquaintances or colleagues. It consists of K-content products that reinterpret Korea's traditional aesthetics in a modern way, such as mother-of-pearl perfume inspired by lacquerware inlaid with mother-of-pearl and traditional yakgwa.
Shinsegae Duty Free teamed up with Marriott Hotels, Cathay Pacific and Singapore Airlines to offer mileage accrual and lodging discounts. Marking its 10th anniversary during this golden week, it is also holding a special sale. Through the 10th, shoppers can purchase products at up to half off at the online mall and the Myeong-dong branch.
It also added experiential elements to purchase benefits. Those who spend $300 or more receive a "lucky package" consisting of beauty brand products from Shinsegae International. Customers can experience a variety of products, including Yeonjak, Sweet Perfection and VIDIVICI.
It also strengthened stay-and-experience-type spaces. At the Myeong-dong branch, it created "Taste of Shinsegae," which showcases Korean traditional foods and desserts, and the "K-Wave Zone," which combines K-pop goods and media experiences. As it has been determined that those immersed in K-content are visiting Korea, the decision was made to bundle duty-free shopping with experiences of Korean content.
Hyundai Duty Free also revamped product displays. A key feature is increasing the share of high-priced items by bundling everything from luxury and fashion to cosmetics (beauty) and liquor. The aim is to raise the average transaction value. It also strengthened limited-edition products and placed the "K-Cosmetic Zone," which brings together about 40 K-beauty brands, at the forefront. A duty-free industry official said, "Hyundai Duty Free is taking a different approach to product assortments if they are not limited editions."
This golden week is considered a key period to gauge duty-free sales in the second quarter. In the first quarter, results varied depending on how well foreign tourists who visited the BTS concert in Gwanghwamun were captured. According to the Korea Duty Free Shops Association, the number of duty-free shoppers in March was 2.45 million, up 8.2% from a year earlier. The number of foreign shoppers rose 28.7% to 1.08 million, leading the recovery. Sales increased 12.5% from the previous month to 1.0825 trillion won, recovering the 1 trillion-won level.
A duty-free industry official said, "Because first-quarter sales rose exceptionally on the back of the BTS effect, there is pressure to live up to that in the second quarter," adding, "Distributors that operate both duty-free stores and department stores are actively jumping into the competition to retain foreign tourists."