Following our most comprehensive review of the world’s biggest duty free market in South Korea, TRBusiness estimates its total worth at $6.5bn last year.

 

Most of all the significant duty free operators interviewed in Seoul during the first quarter of 2014 also report a promising start to 2014, after total additional sales worth around US$650m were recorded in the nation’s downtown and airport duty free shops last year.

 

Once again, rising Chinese visitor numbers continued to drive duty free revenue growth in 2013 and seem set to do the same again this year. In fact, the growth in Chinese duty free spending has been large enough to offset the fall in Japanese visitor numbers and lower Japanese spending last year and still boost overall revenue growth in South Korea’s duty free shops at a double-digit pace.

 

Duty free spending by South Korean travellers, meanwhile, has remained largely unchanged for more than a year, held back by the slowdown in the domestic economic climate and South Korea’s $400 duty free allowance limit.

 

Lotte Duty Free at Incheon Airport.

 

LOTTE AND SHILLA ACCOUNTED FOR $5.2BN

Based on hard numbers provided to TRBusiness by retailers in Seoul, we estimate that total duty free revenue in South Korea reached the dollar equivalent of around US$5.9bn last year, registering a 12.1% increase over duty free sales worth $5.26bn [Korea Customs Service figures] in 2012.

 

This total includes sales in all airport, seaport and downtown shops, including internet sales, but not inflight sales or ‘domestic duty free’ sales on Jeju Island.

 

When ‘domestic duty free sales’ are included as well, total duty free revenue in South Korea reached an estimated $6.24bn in 2013. If inflight sales are also included for Korean Air, Asiana Airlines and smaller low cost carriers, then South Korea’s total duty free sales, from these and all other sources were worth a massive estimated $6.5bn in 2013, up almost 10% compared with the previous year.

 

Lotte Duty Free and Shilla Duty Free continue to dominate the South Korean duty free industry with combined sales of $5.2bn, accounting for 88% of South Korea’s total estimated downtown and airport shop sales (not including ‘domestic duty free’ sales).

 

[A full analysis of duty free sales by operator and location – including Incheon Airport and the country’s other smaller airports – can be found in the May issue of TRBusiness, which is out now-Ed].