Tourist shoppers flock to brick-and-mortar stores as duty-free purchases decline

Olive Young, Musinsa, and Daiso have emerged as must-visit tourist shopping destinations, marking a shift from when they flocked to duty-free shops.

Foreign shoppers buy products at Olive Young [OLIVE YOUNG]

Olive Young, Musinsa, and Daiso have emerged as must-visit tourist shopping destinations, marking a shift from when they flocked to duty-free shops.

Many of the visitors — often young Japanese, Chinese and American customers — lean towards retailers with a strong brick-and-mortar presence on the street thanks to their relatively low prices and quick reflection of local trends.

Purchases of clothing by foreign customers from Korea’s largest online fashion platform, Musinsa, have increased significantly.

Of all the customers, foreign customers at the Musinsa Standard Myeong-dong store climbed to 45 percent in May from 30.7 percent in March, when Musinsa opened its Myeong-dong store.

Sales generated by foreigners at the Hongdae store from January to May increased by 50 percent compared to the same period last year. As of May, foreigners accounted for around 30 percent of the sales.

The Seongsu store also saw a steady rise in foreigners’ sales to 28.8 percent in May, up from 20.3 percent in March and 11.1 percent in January.

As of May, the top five countries in terms of purchases at the shop were China at 18.4 percent, Taiwan at 15.7 percent, the United States at 12.4 percent, Singapore at 12 percent, and lastly, Japan at 9.4 percent, collectively amounting for 67.8 percent.

CJ Olive Young said its first-quarter sales from foreign customers surged by 263 percent on year. Sales from Chinese customers rose by 673 percent, followed by Japan at 285 percent, the United States at 230 percent and Taiwan at 229 percent on year.

The performance of stores in Myeong-dong and Hongdae, known as prime tourist spots in Seoul, is particularly noteworthy.

Combined sales at all five stores in Myeong-dong increased by 101 percent in the first quarter, while sales at all six stores in Hongdae rose by 48 percent.

The popular dollar-shop chain Daiso has become an up-and-coming shopping place for foreigners. Between January and March this year, its overall overseas card sales and transactions increased by 76 percent and 61 percent on year, respectively.

The most popular items were cosmetics and food products.

Daiso attributed its uptick in foreigners’ purchases to its cost-effective offerings, which led to frequent visits and purchases with the help of the rising influence of Korean beauty and food, according to the company’s spokesman.

According to the Korea Culture and Tourism Institute's "2024 First Quarter Preliminary Report on Foreign Tourists," 48.4 percent of foreign tourists chose Korea’s road shops as their top choice for shopping, followed by department stores at 35.9 percent, large shopping malls at 35.6 percent and duty-free shops at 30.1 percent, between January to March this year.

Road shops refer to independent and franchise stores run by retailers.

Before the Covid-19 pandemic in 2019, duty-free shops at the airport were the second most popular shopping destination at 33.5 percent, but they were excluded from this year's survey.

Additionally, 50.2 percent of foreign tourists chose road shops in March, up 5.4 percent from the same period last year. The preference for road shop shopping surpassed 50 percent for the first time on a monthly basis.

The most purchased items were perfumes and cosmetics at 67.7 percent, followed by food products at 58 percent, clothing at 48.8 percent, footwear at 14.3 percent and bags at 11.6 percent.

The increasing interest in Korean fashion and beauty brands among foreign tourists can also be attributed to the relatively low prices of the retailers compared to duty-free shops and department stores.

"Foreigners who experience cheap and high-quality products in Korea are likely to continue purchasing K-brand products through cost-friendly retailers,” an industry insider said.

BY CHOI HAE-JIN [choi.haejin@joongang.co.kr]