Duty free shops booming amid prolonged slump
By Lee Hyo-sik
Department stores, discount store chains and other retailers have been struggling to stay afloat amid the prolonged sluggish consumption.
But duty free shops have been an exception to this prevailing trend in the retail industry, thanks to the soaring number of Chinese, Japanese and other foreign tourists who go on spending sprees for tax-free cosmetics and other consumer items.
Shilla Duty Free, the country’s major operator in this sector, affiliated with Samsung Group, said Monday that it earned 905.9 billion won in the first six months of this year, up 39.2 percent from 650.7 billion won in the same period last year.
Its operating profit grew nearly four-fold to 60.1 billion won from 15.2 billion won over the one-year period.
Shilla said its earnings generated from Chinese and other non-Korean customers rose 75 percent, projecting that its 2012 revenue will exceed 2 trillion won for the first time if the trend continues at the current pace.
``Despite the global economic downturn, we were able to achieve record sales in the second quarter on the back of the record number of Chinese tourists,’’ said a spokesman for Shilla Duty Free. ``We also think our aggressive marketing in the mainland has helped us attract more Chinese shoppers.’’
The amount of money Chinese customers spent at Shilla Duty Free stores soared 131.3 percent in the first half, while Japanese spending jumped 46.7 percent.
The company said Chinese spending accounted for 52.6 percent of its total sales to non-Koreans, followed by Japanese at 33.6 percent and others at 13.8 percent.
In the first six months of 2011, about 40.1 percent of Shilla’s sales to foreign visitors came from Japanese, slightly higher than 39.8 percent from Chinese shoppers.
Lotte Duty Free, another major local chain, has also benefited greatly from the surging number of Chinese and other foreign tourists.
It said revenue at its Seoul store rose about 33 percent in the first six months of this year from 12 months earlier, while its Jeju store saw sales soar about 100 percent. The firm expects to post over 3 trillion won in revenue this year, up from last year’s 2.7 trillion won.
``We cannot make public the exact sales figures. But sales have increased by over 30 percent,’’ said a spokesman for Lotte Duty Free. ``Chinese visitors have become our main customer group, replacing Japanese, as those from the mainland spend more per capita.’’
He said Lotte will boost marketing activities in China, and offer Chinese shoppers more free gifts and other benefits.
According to the Korea Tourism Organization, the number of foreign visitors jumped 23.3 percent to 5.33 million in the first half of this year from the previous one when Korea attracted 1.81 million Japanese and 1.19 million Chinese tourists, up 30.2 and 29.9 percent, respectively.