SOUTH KOREA. “We are seeing positive growth in downtown duty free store sales this week and the improvements are from daigou and online.” The words from one of South Korea’s leading travel retailers will hearten everyone who tracks the Korean travel retail channel – the world’s biggest.
In particular the market has been buoyed by signs of resellers returning to the scene, prompting a sharp and encouraging month-on-month uplift in week three of March with one retailer. Earlier, the Ministry of Justice reported that total duty free sales in Korea declined by -48% year-on-year in the third week of February.
Observers are watching intently to see if the spike was driven by a large order from a major group reseller or indicative of a longer-term trend.
Still constrained by travel and quarantine restrictions, daigou resellers are turning increasingly to online purchasing. The increase in online orders has seen ecommerce’s share of sales at The Shilla Duty Free soar from 30% in the fourth quarter of 2019 to 50% this quarter to date.
Investors have welcomed the hint of a daigou renaissance by buying duty free-related stocks in Korea. Although the country’s benchmark KOSPI index declined by -2.5% today, shares of Hotel Shilla (+4.8%), Shinsegae (+8.7%) and Hyundai Department Store (+3.1%) all increased.
Daigou diversion of a different kind: Resellers, encouraged by an unsated appetite for product in China are heading online to fulfil demand.
