SOUTH KOREA. Korea’s duty free sales declined by -40.5% year-on-year in February 2020 to KRW1,102.6 billion (US$923.4 million). Sales to foreigners (principally Chinese, and down -35% year-on-year to US$815.1 million) outperformed sales to locals (-63.8% year-on-year to US$108.3 million).
Downtown duty free stores fared better than airports, buoyed by both resellers and online sales. Sales in the downtown channel declined by -38.4% compared to February 2019, whereas sales at airports were down -52.3% for the month.
There were few positives in the data released by the Korea Duty Free Association but one stood out like a beacon. Average spend per person (ASP) by foreigners was an exception to the negative trend, with resellers proving resilient in their spending compared to normal passengers. ASP by foreigners increased +20.7% year-on-year, while ASP by locals declined -16.1%.
A prominent duty free retailer told The Moodie Davitt Report that sales in the downtown store had begun to show signs of improvement in March compared to February but airport trading was dragging overall performance. In the second week of March, sporadic orders by large-scale daigous drove improved sales.
This means the March data is likely to show that sales at airports have deteriorated further, but downtown stores are expected to show some positives. March Korea duty free sales are likely to be around -60% year-on-year.
New cases of COVID-19 in South Korea began to spike towards the end of February, with the highest number of daily increases in confirmed cases on 29 February with 813 new cases.
One industry expert said that sales at Incheon International Airport prior to the crisis were around KRW200 billion (US$163.8 million) and rent around KRW80 billion (US$65.5 million). But sales declined to approximately KRW40 billion (US$32.8 million) and continue to deteriorate. As reported, medium and large operators at the airport have received a three-month payment deferral but no other measures have been provided.
Daily passenger traffic at the airport was 60,348 on 1 March, but Incheon International Airport Corporation said that traffic fell to a new low of 9,316 on 24 March. Elsewhere, duty free stores at Gimpo, Gimhae and Jeju airports have closed, while larger downtown duty free stores have decreased their operating hours to lower costs.
