Duty-free sales to South Korean nationals remain soft in July but foreign shoppers drive downtown store growth : Moodie Davitt Report

Moodie Davitt Snapshots

– Total market up double digits over last year but down -5.5% over previous month

– Sales to Koreans remain very soft year-on-year

– Foreigner-dominated downtown market up +21.6%

– Inbound tourism continues to surge though department stores are prime beneficiary

SOUTH KOREA. Sales in the world’s biggest duty-free market rose +15.9% year-on-year in July (-5.5% month-on-month) to KRW1,066,631,557,280 (US$774.3 million). Shopper numbers reached 2,666,899, up +3.4% over July 2025 and +7.7% in comparision with June 2026.

The figures (which exclude inflight retail sales), courtesy of the Korea Duty Free Association, show a strong year-on-year increase in sales to foreigners on fast-rising inbound tourism.

The Republic welcomed a record 10.7 million overseas visitors in the first half, according to the Ministry of Culture, Sports and Tourism, although the prime beneficiaries in retail terms have been department stores and specialist shops (see our indicative report on Hyundai Department Store and Hyundai Duty Free here).

Foreigner shoppers were responsible for 77.3% of total sales despite representing just 48.9% share of the customer base.

Conversely, sales to Koreans fell a disappointing 13-5% year-on-year (but rose +14.6% month-on-month) to KRW241,777,543,590 (US$175.5 million) on shopper numbers down -14.2% year-on-year (+13.9% over June 2026).

**All figures courtesy of Korea Duty Free Association. Some figures rounded. Click on images to expand.**

Foreign spending up sharply over last year in downtown channel

Downtown duty-free sales (worth 73.5% of the total market) reached KRW784,485,335,889 (US$569.6 million) in July, a +21.6% increase over the same month last year on a +12.7% rise in shopper numbers to 1,100,334. Compared with June 2026, sales and customer numbers were down -7.8% and up +11.9%, respectively.

Foreign nationals (predominantly Chinese) again dominated sales in the channel, accounting for a whopping 85.2% share of revenue.

International shoppers spent KRW668,681,043,670 (US$485.5 million) in downtown duty-free stores, a +30.3% surge over July 2025 but down -11.9% month-on-month. Foreign customer numbers soared +47.6% year-on-year and +2.3% month-on-month.

Spending downtown by Korean travellers was down -12.3% year-on-year (+26% compared with June 2026) on a 513,129 shopper base, down -11.3% over July 2025 but up +25.5% month-on-month.

With traditional categories under pressure, Korean retailers are turning increasingly to local products. In July, for example, Lotte Duty Free expanded its K-food assortment with the exclusive launch of Lotte Hotel’s Premium Kimchi brand at Gimpo International Airport, ahead of a roll-out at Incheon International Airport. Developed from the long-standing recipe of Mugunghwa restaurant at Lotte Hotel Seoul, the kimchi reflects more than 40 years of culinary expertise.

Another core strategy is to focus on travel retail-exclusive (TREX) products, such as the new Hennessy Cognac X.O Spirit of Travel Seoul Edition launched exclusively by Lotte Duty Free recently at its Incheon International and Gimpo airport locations. The limited-edition offering, said the retailer, is part of a strategy to create “differentiated shopping experiences unique to Lotte Duty Free through collaborations with global brands”.

What the Korea Duty Free Association calls ‘Designated’ sales (principally offshore duty-free sales to Korean domestic travellers in Jeju) reached US$21.9 million in July. But that was down -9.6% year-on-year and -7.4% over June 2026 on customer declines of -15.5% and -4.3%, respectively, year-on-year and month-on-month. Brands and retailers are working hard to try to rejuvenate spending, as illustrated by this Ballantine’s (Pernod Ricard Global Travel Retail) collaboration with lifestyle golf brand Malbon. Pictured is a hero pop-up currently running at Jeju International Airport with JDC Duty Free.

**Duty-free exclusives are seen increasingly as a way to drive consumer interest and spending amid challenging market conditions**

On-airport Korean business remains soft

Airport (departures) duty-free sales climbed +5.2% year-on-year and +3.1% month-on-month to KRW242,760,399,503 (US$176.3 million). Customer numbers rose +21% over the same month last year and +1.7% over June 2026 to 1,216,771.

Foreign shoppers accounted for a high 63.7% of sales on 57.5% of shoppers.

Hyundai Duty Free, benefitting from surging inbound tourism and its recently opened DF2 operation at Incheon International Airport (pictured), moved into the black in H1, posting a KRW12.8 billion (US$9.3 million) year-on-year improvement to KRW9.6 billion (US$6.95 million). This was despite a -10.7% year-on-year decline in sales to KRW521.4 billion (US$379.4 million). Click here for our full story.

Sales to foreigners once again grew strongly, up +22.7% year-on-year (-1.2% month-on-month) to KRW154,600,469,961 (US$112.3 million) on customers numbers up by an almost sharp +21% over last year and +1.7% month-on-month.

For Koreans, it was a different story. Sales reached KRW88,159,929,542 (US$64 million), down -15.8% on the same month last year, though up +11.6% on June 2026. Customer numbers declined -15.3% year-on-year but rose +14.4% over the previous month to 516,572. ✈

Foreign spending up sharply over last year in downtown channel

On-airport Korean business remains soft

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