Weak won pushes duty-free prices above regular store levels

Chinese tourists enter a Lotte Duty Free store in downtown Seoul, Thursday. Yonhap

The weakening of the won against the U.S. dollar at an accelerating pace is leading to higher prices for luxury goods at duty-free stores compared to regular stores, according to industry officials Monday.

As items at duty-free stores are priced in dollars, they are becoming more expensive when converted to the won. The Korean currency is persistently remaining at the 1,400-won range per dollar, a worrisome threshold.

The won closed at 1,477.1 won per dollar during daytime trading Monday, weakening by 1.5 won and renewing its seven-month low, a level it reached on Friday.

As a result, a Louis Vuitton Capucines bag priced at $7,500 was sold for 1.11 million won more at a duty-free store than at a nearby department store in downtown Seoul, after applying the exchange rate of 1,468 won per dollar.

Similarly, a Dior Caro bag, priced at $4,200 at a duty-free store, was 270,000 won more expensive than at a department store.

The cost also rises for items that exceed the duty-free allowance of $800, which are subject to additional taxes.

For example, a Chanel Classic Flap bag, priced at $11,350, would incur a tax of 6.82 million won when the exchange rate of 1,463.09 won per dollar is applied. This results in a total cost of 23.48 million won, which is 41 percent more expensive than at a department store.

A sales clerk at a local department store, speaking on condition of anonymity, said, “More shoppers are choosing to visit and make their purchases here rather than at duty-free stores, as our items are cheaper and don’t require complex customs procedures.”

Shoppers were seen waiting in line for more than 10 minutes before entering the luxury goods section of the department store, while customers were able to enter immediately at the duty-free shop in the same building.