Retail in Asia

Travel Retail

Korean duty free sales rise in February as ‘daigou’ business revives

Duty free sales in the world’s biggest duty free market surged almost 37 percent month-on-month from a troubled January to KRW1.09 trillion (USD838.9 million) in February 2023, according to the Korea Duty Free Shops Association.

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A big spike in spending by foreigners – up some 50 percent to KRW894.6 billion (USD688.6 million) – drove the increase.

The figures show a drop in total shopper numbers but a rise in spending volume, implying a sharp increase in sales to daigou resellers in February. Foreign shoppers numbered 209,653, down from January’s 245,313.

January sales slumped dramatically to KRW797.4 billion (USD603.6 million) in the wake of a late-2022 Korea Customs Service (KCS) warning about high commission rates being paid to travel agencies facilitating bulk daigou reselling into China.

Commenting on the February spike, sources told The Moodie Davitt Report that retailers had clearly pushed the daigou business and its related travel agency commissions hard in the month. “The question is, what happens next?” one senior industry stakeholder said. Currently, another source pointed out, there is no law regulating the commission rate; instead it is just a case of the KCS issuing guidelines.

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“There is no obligation for retailers to report to KCS about the commission rate – it’s just a gentlemen’s agreement,” he said.  It is understood that the KCS spoke again to retailer representatives last week with the commission issue tabled once more. March figures will be closely watched as a result, a source said.

South Korea resumed issuing short-term visas for Chinese visitors on 10 February, prompting a reciprocal move by Beijing, effective 18 February.