Louis Vuitton may pull out of duty free shops in Korea

Louis Vuitton's duty free store at Incheon International Airport. Yonhap

By Kim Jae-heun

French fashion house, Louis Vuitton, one of the world's three major luxury brands along with Chanel and Hermes, is contemplating closing its duty free shops in downtown areas of Seoul, according to recent reports.

Instead, the high-end fashion brand will expand its stores in airports.

The Moodie Davitt Report, a British publisher specializing in reports on the duty free and travel retail industries, said, “French luxury house Louis Vuitton is progressively withdrawing from much of its downtown duty free business ― including its long-standing and expensive Korean presence.”

When questioned about the validity of the report, a local PR agency representing Louis Vuitton Korea said it was not in a position to comment.

Various reasons are said to have led to Louis Vuitton's decision, but its determination to retain the brand's premium image is apparently the main reason.

Many luxury brands place priority on the scarcity of their products in order to make them more valuable. There is even a popular saying that goes, “If everyone wears Louis Vuitton, it is not Louis Vuitton.”

However, the brand reputation of Louis Vuitton has been diminishing over the years as so-called “daigou” in Korean, or surrogate shoppers, have been sweeping up products in duty free shops in downtown Seoul. Daigou are paid to purchase luxury goods for customers in China.

When the government here decided to allow the deployment of a Terminal High-Altitude Area Defense anti-missile system in 2017, the Chinese government banned group tours to Korea in retaliation. China fears that the powerful radar of the THAAD system could be used to spy on its military activities. The retaliatory move forced Korean duty free shops in downtown Seoul to become more reliant on daigou buyers and this practice increased following the outbreak of the COVID-19 pandemic.

Daigou are said to be responsible for 90 percent of sales at downtown duty free shops in Seoul.

There are currently four travel retail stores run by Louis Vuitton ― one each in Seoul and Busan, and two on Jeju Island.

Local duty free retailers said the news cannot be confirmed as of now.

“Nothing has been decided as far as we are concerned. However, If Louis Vuitton has really decided to close all of its duty free shops in downtown Seoul, massive damage is inevitable,” an industry source said. “Louis Vuitton operates the biggest duty free stores here among other luxury brands and also employs the largest number of workers too. If the fashion house closes down all its shops, it will lead to a huge unemployment problem.”

The report added that the French fashion house's plan underscores its move to expand its business in China. It reported that Louis Vuitton will open six duty free stores at Chinese airports by 2023 and is already planning to open a second shop at Hong Kong International Airport.

“China has a bigger domestic market for luxury goods and its duty free business is increasing at a faster rate. Louis Vuitton may be thinking of moving its main market in Asia from Korea to China,” an industry source said.