Korean duty-free sales plummet -40% year-on-year amid structural changes

SOUTH KOREA. Total duty-free retail sales (excluding inflight) fell -24.1% month-on-month and -40.0% year-on-year in January to KRW954,391,737,967 (US$652.9 million), according to latest Korea Duty Free Association statistics.

The numbers were heavily impacted by Lotte Duty Free’s decision to stop MG (bulk) daigou sales from January, which had driven a late 2024 spurt in December.

Customer numbers were down just -0.4% month-on-month and actually up +1.5% year-on-year to 2,288,160, underlining the softness of the market.

Sales to foreigners slumped -31.7% month-on-month and -47.8% year-on-year to KRW693,256,949,761 (US$474.3 million). Yet customer numbers only declined -1.5% month-on-month and rose almost +18.0% year-on-year to 743,517.

Duty-free sales to Korean travellers fared better, rising +7.5% month-on-month and easing just -0.4% year-on-year to KRW261,134,788,206 (US$178.6 million). Korean customer numbers were flat month-on-month at 1,544,634 but down -4.9% year-on-year.

The impact of the decreased foreign spend was starkly reflected in sales by channel. Downtown duty-free revenues (84.2% generated by foreigners) decreased -31.5% month-on-month and by a startling -48.6% year-on-year to KRW697,813,146,698 (US$477.4 million).

On-airport departures duty-free sales rose +9.4% month-on-month and an encouraging +18.3% year-on-year to KRW212,840,293,821(US$145.6 million). Sales were evenly split between Koreans (50.8%) and foreigners (49.2%).

As reported, both The Shilla Duty Free (KRW43.9 billion/US$30.7 million) and Shinsegae Duty Free (KRW35.9 billion/US$24.7 million) posted heavy Q4 2024 losses.

As an unlisted company, Lotte Duty Free’s latest numbers won’t be available until the end of this month but are expected to be alarming, driven by a combination of redundancy costs and unprofitable late 2024 reseller business.