Cosmetics sales surge as Korean duty free market rockets
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The Korean duty free market surged by 33.5% year-on-year in 2016 to KW12.2 trillion (US$10.5 billion), according to new figures from Korea Customs Service.
The results reflect a strong bounce-back from the MERS-ravaged 2015, allied to booming Chinese visitor numbers last year.
Chinese arrivals for 2016 rose +34.8% to 8,067,722, according to Korea Tourism Organization figures published today, a 46.8% share of total visitors. Japanese arrivals also rose sharply, up +25% to 2,297,893, a 13.3% share of total arrivals. Korean departures rose +15.9% in the year to 22,383,190
Duty free sales to foreigners (dominated by the Chinese followed by Japanese) rose +44.1% to KW8.8 trillion (US$7.5 billion)
Cosmetics, driven by booming sales of skincare (particularly Korean brands), accounted for 51.2% of turnover. Here are the leading categories:
Lotte Duty Free stretched its lead as the dominant force, racking up a +26% increase in sales to KW5.973 trillion (US$5.1 billion), a stunning performance given that the retailer had to close down its Lotte World Tower Duty Free store in late June.
Lotte’s nearest rival, The Shilla Duty Free, posted a +31.5% increase year-on-year to KW3.405 trillion (US$2.9 billion). Its Seoul flagship generated revenues of KW1.739 trillion (US$1.49 billion) while its Incheon International Airport stores posted sales of KW0.697 trillion (US$596.7 million)
Fast-rising Shinsegae Duty Free posted sales of KW0.9608 trillion (US$822.4 million). Its new store in Myeong-dong, Seoul, which only opened on 1 May, generated sales of KW0.349 trillion (US$298.7 million). Its downtown Busan store (relocated in March to Centum City) posted revenues of KW0.336 trillion (US$287.8 million). Dongwha Duty Free in Seoul posted sales of KW0.3547 trillion (US$306 million)
Of the recent sector newcomers HDC Shilla generated sales of KW0.3971 trillion (US$340 million); Galleria 63 Duty Free reached KW0.224 trillion (US$191.7 million), Doota Duty Dree KW0.111 trillion (US$95 million) and SM (Hana Tour) KW0.056 trillion (US$47.9 million).
Questions & Answers
Q.Which product category was the largest contributor to the overall sales turnover in the Korean duty free market?
Which product category was the largest contributor to the overall sales turnover in the Korean duty free market?
Cosmetics, particularly skincare brands, accounted for 51.2% of the market's turnover. This category was a primary driver of sales growth in the Korean duty free sector during 2016.
Q.How did Chinese visitor numbers impact the Korean duty free market's performance in 2016?
How did Chinese visitor numbers impact the Korean duty free market's performance in 2016?
Booming Chinese visitor numbers, which rose by 34.8% to over 8 million arrivals, significantly contributed to the market's surge. They represented a 46.8% share of total visitors, helping to drive duty free sales.
Q.Despite closing a store, did Lotte Duty Free maintain its lead in the market?
Despite closing a store, did Lotte Duty Free maintain its lead in the market?
Yes, Lotte Duty Free stretched its lead, increasing sales by 26% to KW5.973 trillion (US$5.1 billion). This was achieved despite the closure of its Lotte World Tower Duty Free store in late June.
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