Industry shows mixed reactions to arrival duty-free shops

By Kim Da-sol
  • Published : Aug 14, 2018 - 15:50
  • Updated : Aug 14, 2018 - 15:50

South Korean duty-free store operators are divided over President Moon Jae-in’s remarks on the possibility of opening duty-free shops at arrival airport terminals to alleviate the inconvenience of having to travel with duty-free goods. 

Passengers ready for departure at Incheon Airport. (Yonhap)

On Monday, President Moon ordered a long-debated review of opening duty-free stores at arrival terminals during a meeting with his secretaries, saying that arrival duty-free shops could boost domestic spending by both Korean and foreign travelers. 

Such stores could increase convenience for travelers, Moon said, adding that “(related) measures should be considered since many small and midsized duty-free operators could benefit from it,” according to Cheong Wa Dae. 

South Korea’s duty-free stores at Incheon Airport and Gimpo Airport are currently available only to those departing the country. 

Neighboring countries like China and Japan operate duty-free stores in arrival halls. About 137 airports in 73 countries already operate or will operate arrival duty-free shops. 

Since 2003, the introduction of arrival duty-free shops has been discussed and debated among the ministry, airport corporation and customs authorities. And views remain mixed. 

Big-name duty-free shop operators like Lotte, Shilla and Shinsegae as well as airliners that operate in-flight duty-free services worry that the competitive market may cause a decline in their sales. 

Shinsegae’s duty-free store in downtown Gangnam. (Shinsegae)

“The fierce duty-free store market will become more competitive, and especially with a fall in in-bound foreign travelers, we are afraid that sales will be influenced by new duty-free operators,” said an industry official who declined to be named.

“The opening of another domestic duty-free store is not practically related to encouraging domestic spending,” he added. 

According to government data, South Korean’s spending outside the country recorded 8.4 trillion won ($7.4 billion), an about 18.9 percent increase on-year. Domestic spending in the same period only went up by 2.4 percent. 

Others said the opening of arrival duty-free stores would be solely intended for medium-sized duty-free shop operators like Entas and City Plus, as the chance to win the operating license would likely be given to them. 

For fashion and cosmetics brands, it is welcome news as well, as they would be able to have a new sales channel, an official from a broker agency that connects brands to duty-free operators told The Korea Herald. 

“In the long-term, however, the sales of duty-free operators will not dramatically rise, since it is dividing up the small pie,” she said, adding that the authorities should instead raise the ceiling of limits on duty-free items -- $600. 

A majority of citizens are in favor of the opening of arrival duty free stores, a survey showed.

According to the survey conducted by Incheon Airport from 2002 to 2017, about 84 percent of 20,000 airport visitors said they would like to see duty-free stores in arrival halls for increased convenience.