South Korea’s duty-free industry posted its weakest monthly performance of the year in July, with total sales slipping below the 1 trillion won mark amid softening spending trends.
According to the Korea Duty Free Shops Association, duty-free sales fell to 919.94 billion won in July, down 8.6% from the same month last year, when sales reached 1.06 trillion won. Despite the summer high season and a rise in visitors, sales retreated after maintaining monthly figures above 1 trillion won since February.
The number of purchasers rose 9.2% year-on-year to 2.58 million, but average spending per person dropped sharply by 16.4% to 356,000 won, compared to 426,000 won a year earlier. Foreign visitor numbers climbed 25.1% to around 990,000, with sales reaching 640.5 billion won—a 14.2% decline year-on-year and 22.1% down from June, marking the lowest level so far this year. Domestic visitors also edged up 1.2% to 1.59 million, but their spending was insufficient to offset the broader slowdown.
Industry experts attribute the contraction to reduced reliance on Chinese brokers, or daigong. Duty-free operators have lowered broker commissions from as high as 50% to around 30%, leading to a steep fall in average purchases per person from 2.63 million won in 2021 to the 300,000 won range this July.
Among major players, LOTTE Duty Free, which ended its transactions with daigong, reported a 19.3% year-on-year sales decline to 668.5 billion won in the second quarter. However, the company swung to an operating profit of 6.5 billion won, helped by the absence of rent payments as it does not operate in Incheon International Airport. In contrast, Shilla Duty Free and Shinsegae Duty Free saw sales grow 2.1% and 22.9% to 850.2 billion won and 805.1 billion won, respectively. Yet both slipped into losses, recording operating deficits of 11.3 billion won and 1.5 billion won as heavy rent burdens at Incheon International Airport continue to weigh on profitability.
