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Building a sustainable

business in Korean Duty-Free &

Travel/Tourism

Yang Soung-Hoon

Professor

Silla University

Market Watch : South Korea

20 October 2015

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Table of Contents

1. Introduction

2. Current trends in the Korean market

3. Building a sustainable business

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I. Introduction

Duty-free shops and

tourism business SHARE…

same customers

(SHOPPLERS or Tourisumer)

and the same products

(SHOPPERtainment)*

* Shopping + entertainment

Fig. Myong-dong, one of Korea’s hottest tourism spots.

Tourist information center, overlapping with shopping centers

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II. Current trends in the Korean Market

Rush to Korea:

YOUKE (遊客), Chinese Tourist

免税店 ブルゴギ

Inbound Chinese Tourist in Korea

6.1 M No 1 (40%)

$2,094 ($1,272)

69%

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6

816

132

177

28

127

38 15 4.4

2014

2015

China Japan South Asia Europe

& US Source: Korea Travel Association

Rapid decrease of overseas tourist

reservations during the MERS outbreak

leading to BAKUKAI syndrome in

Japan

(暴買い)

July and August

Number of tourists (unit: Thousand)

*

* Comparing shopping spree to bomb, in Japanese

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To rebound from the adverse

effect of MERS: • Government commits public money,

including tourism fund

• Journalists and travel agencies were

invited to Korea

• Hosting KOREA Grand Sale tourism and

shopping festivals.

• PR & Promotion by Korean entertainers

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Why did the duty-free shop giants Shilla and

Lotte rush to partner the Chinese tour

operators?

•Evidence of strong ties with the tourism industry.

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Lotte aggressively opens duty free-shop at

the tip of 123 floor in the middle of upcoming

renewal of right to operate

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WATCH OUT!

Facial mask packs on sale

at duty free shops

Ⅲ. Building a sustainable business

• Be sure to display new items, which can

encourage your customers to stay in

your duty-free shops until the final

departure call

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Mask packs are one of the hottest items purchased

by inbound Chinese travelers in Korea

(32% of total tourism spending)

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L&P Cosmetics strategically

opened a new distribution channel,

the duty free shop

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Two:

No more duty free shop!!

Create Duty- MAX Shops to

maximize your revenue

Capitalize on your Asian customers’

culture for your business.

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# 1 - Asian tourists feel they have a

duty to commemorate their

precious time abroad

Souvenir, the evidences of intangible

travel experiences (Gordon, 1996)

ex. Japan:

お土産(Omiyage)

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#2 Duty to express your apologies to

family and friends that did not

accompany you on your trip. Also,

tangible souvenirs as a means to

express your thanks to your business

partners.

Strong collectivism and Power distance

(Hofstede, 1980)

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Three: You are not alone in the business.

Make your employee more aware of

the cultural aspect of tourism.

Be knowledgeable of the shopplers’

behavior at your stores.

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They are…under time pressure

for last minute shopping. - Suggest assorted alternatives to allow

shopplers’ to make decisions fast.

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Packaging really matters.

Shopplers tend to have trouble with their

fully packed carriers at airports. Provide

them small- sized packages with variety.

• To create synergies between the duty-free

business and tourism, we should be more

aware of each other because we are in the

same business domain.

• Korea learned expensives lesson from the

MERS outbreak, after which the sharp

decrease in tourist numbers put business

at duty free stores at risk

Summary

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-Three tips are recommended for sustainable

business between our two industries.

#1. Do not hesitate to introduce new selling

items that make tourist stay in your property.

#2. Understanding culture will guide you to

enhance sales figure.

#3. Shopper + tourist-friendly approaches

are needed in your sales strategy.

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Thank you

Yang Soung-Hoon

Professor

Silla University

Market Watch : South Korea

20 October 2015