As the number of foreign tourists visiting Korea rises, competition among retailers to attract foreign customers is becoming more sophisticated. Beyond simple discount events or free gifts, they are rolling out tailored services that consider country-specific payment methods and shopping preferences. Department stores and duty-free shops are focusing on improving payment convenience, while convenience stores and platform corporations are also expanding services aimed at foreign consumption.
According to the industry on the 3rd, Shinsegae Duty Free recently introduced the retail industry's first installment payment service for foreign tourists. Customers holding Visa cards issued overseas can choose an installment option at checkout using their existing cards without installing a separate app or issuing a new card. Previously, most payments at domestic duty-free shops with overseas-issued cards were limited to lump-sum transactions.
Duty-free shopping tends to have a high share of purchases of high-ticket items such as cosmetics, fashion, watches, and jewelry. Shinsegae Duty Free said expanding installment options will improve shopping convenience for foreign tourists and ease the burden of purchases. The service is currently being operated at the Myeong-dong store for Vietnamese customers first, with plans to expand the applicable countries and extend the service to the Incheon Airport store.
Department stores are creating an environment where foreign customers can use the mobile payment services they use at home in Korea, allowing them to shop without currency exchange or separate card issuance. Lotte Department Store will partner with UnionPay, which has a global payment network centered on China, to introduce QR payments and NFC-based contactless easy payment services starting in September, the first in the industry.
Hyundai Department Store collaborated with UnionPay in February to introduce the mobile easy payment service "Apple Pay" for Chinese customers at department stores and outlet branches nationwide. It will also offer up to a 12% discount to Chinese customers who pay with Apple Pay through Jan. next year.
◇ Surge in sales from foreign tourists
The number of foreign tourists visiting Korea is steadily increasing. According to the Ministry of Culture, Sports and Tourism, 4.76 million foreigners visited in the first quarter this year, up 23% from the same period last year. By country, China had the most at 1.45 million, followed by Japan (940,000) and Taiwan (540,000).
Spending in Korea by foreign tourists is also increasing. According to the Korea Tourism Organization (KTO), card spending in Korea by foreigners in May this year was 2.1222 trillion won, surpassing 2 trillion won in a month for the first time. That was up 67.1% from the same period last year. Spending shares were shopping 38%, lodging 20%, and medical/wellness 15%.
The retail sector is enjoying a boom as a result. From January to May this year, foreign sales at Lotte Department Store and Shinsegae Department Store increased 110% and 137%, respectively, from a year earlier. During the same period, foreign sales at The Hyundai Seoul also rose 129%. Inside and outside the industry, there is an outlook that all three department store companies will top 1 trillion won in foreign sales this year.
A Shinsegae Department Store official said, "Luxury brands operate global pricing policies, but with the weak won making domestic prices more attractive, demand for luxury shopping among foreigners is rising," adding, "Before COVID-19, most big-spending foreigners were Chinese, but recently, there has been a clear diversification."
The official added, "Along with the exchange-rate effect, growing interest in K-culture is increasing cases where foreigners visit landmark department stores for shopping and experiences."
Convenience stores are also strengthening tailored services for foreign tourists. CU, GS25, and 7-Eleven have all introduced overseas easy payments such as Alipay and WeChat Pay at stores frequented by foreigners. They are expanding multilingual guidance and currency exchange services while placing popular snacks, ramen, character goods, and region-limited items with high tourist preference at the forefront.
Results are also emerging. From January to May this year, the amount spent using overseas payment methods at CU increased 65.7% from a year earlier. At GS25, sales from foreigner payment services such as Alipay and WeChat Pay rose 78%, and at 7-Eleven, which introduced LINE Pay targeting Taiwanese tourists, foreign sales at stores nationwide increased 1.5 times.
Platform corporations have also moved to expand shopping convenience for foreign tourists. Naver recently introduced a service that allows identity verification with only a passport issued overseas. Foreigners without a domestic mobile phone number can now make restaurant reservations, place orders, and pay on Naver Map.
With the increase in foreign visitors continuing and the strong-dollar trend overlapping, competition in the retail industry targeting foreign demand is expected to continue for some time. Due to the weak won, foreigners perceive that luxury goods purchased in Korea, as well as lodging and food and beverage expenses, are relatively inexpensive.
In fact, as domestic prices of some luxury and high jewelry products have fallen below those overseas, luxury spending by foreign tourists, especially from China, is on the rise. At the Shinsegae Department Store main branch, the foreign share of luxury sales expanded from 9.2% last year to 15.8% from January to May this year. In May, foreign luxury sales at The Hyundai Seoul increased 140.6%, and high jewelry sales rose 220.1%.