Korean duty-free retailers compete for Chinese customers

Customers visit Shinsegae Duty Free's Myeong-dong branch in Seoul on Feb. 11. (Shinsegae Duty Free)

Korea’s duty-free store operators — Lotte Duty Free, Shilla Duty Free, Shinsegae Duty Free and Hyundai Duty Free — launched marketing campaigns to attract Chinese tourists visiting Korea during the Lunar New Year holiday.

According to market analysis firm China Trading Desk last week, between 230,000 and 250,000 Chinese tourists were expected to visit Korea between Feb. 15 and Feb. 23, up about 52 percent from the same holiday season last year. Industry watchers forecast some $330 million in spending by Chinese visitors during this period.

The duty-free operators have placed strong emphasis on offering more incentives and boosting convenience for Chinese shoppers.

According to Lotte, a group of 2,300 Chinese tourists visited its Myeong-dong duty-free store earlier this month after disembarking at Incheon Port. The group was composed of local merchant associations. Another group of 4,000 Chinese tourists on a cruise ship was scheduled to visit Lotte Duty Free stores in Busan and Jeju during the holiday season.

Lotte Duty Free began offering a prepaid shopping incentive, PRE LDF PAY, of up to 90,000 won ($62), and another shopping incentive of up to 1.23 million won for those who use LDF PAY, its self-developed payment system. It is also offering a maximum discount of 300,000 won for those who pay through Alipay, a payment application popular in China.

Passengers disembark at Incheon Port on Feb. 6. (Lotte Duty Free)

Shilla Duty Free is giving out prepaid cards worth up to 1.23 million won, depending on the purchase amount, at its Seoul and Jeju sites. On top of that, it is offering an immediate discount coupon of 40 yuan to customers who make a purchases of over 1,200 yuan via WeChat, another ubiquitous Chinese payment application, at its offline stores. For Alipay users, it is offering a 45 yuan discount coupon after a purchase of 1,500 yuan or more. Shilla Duty Free’s online store is providing a 30 yuan coupon for purchases of at least 1,000 yuan.

Shilla Duty Free’s Jeju store has been handing out different vouchers that can be used at its partner cafes and restaurants on the island, based on purchase amount.

Shinsegae Duty Free has teamed up with Alipay+ to offer discount coupons through a lucky draw for Chinese customers until Feb. 25. Shinsegae is providing a tax-free incentive of up to 300,000 won for customers at its Myeong-dong store who use cards issued by China UnionPay.

Shinsegae Duty Free increased the lineups of premium whisky, wines and champagnes at its stores at Incheon Airport. It also collaborated with air carriers and hotels, including Cathay Pacific and Marriott Bonvoy, enabling customers to accumulate membership points.

Hyundai Duty Free has launched Hyun’s Day promotions, offering discounts of up to 80 percent on luxury brands at its Trade Center branch at Coex in Gangnam and discounts of up to 50 percent on sunglasses, shoes and jewelry at its Incheon Airport store.

“The inflow of Chinese tourists during the Lunar New Year holiday is a crucial opportunity for duty-free operators, as we expect a surge in the number of visitors throughout this period,” said an official working at a duty-free shop.

“How much each duty-free store garners during this time will be a major factor not only in first-quarter earnings but also in overall yearly performance.”