Duty-Free Shops Throw in the Towel
17 July, 2021
More and more duty-free shops are closing down as the protracted coronavirus pandemic keeps the international travelers that are their sole source of income at home. Once thought of as a virtual license to print money, the business now finds itself in the deepest of doldrums.
Shinsegae has announced that its duty-free store in Gangnam, once a mecca for moneyed Chinese visitors, will close for good on Saturday just three years after it opened. Shinsegae's overall duty-free sales dropped 42.4 percent last year, resulting in losses of W42.7 billion and making the W15 billion annual rent an impossible burden (US$1=W1,141).
Shinsegae still runs duty-free shops in Myeong-dong, Busan and of course at Incheon International Airport, but the Busan store was also downsized in March.
Lotte and Shilla, which run the two biggest duty-free store chains, have each closed down a store at Incheon as the average daily number of visitors dwindled from 200,000 before the pandemic to around 3,000 in the first quarter of this year.
Lotte paid W19.3 billion a month for the floor space and Shilla W28 billion. Airport authorities temporarily slashed the rent when the pandemic broke out but the operators continued to bleed money.
But that meant that Shilla shifted to a W41.7 billion surplus in the first quarter of this year after a 127.5 billion loss last year.
The worst blow was the absence of Chinese tourists, who are the most enthusiastic duty-free shoppers and make up 90 percent of their customers. According to the Korea Duty-Free Shops Association, the number of tourists visiting duty-free shops in Korea in the first five months of this year plummeted 89.6 percent on-year to 259,453.
Source:
TAG(s):