What: Following Louis Vuitton’s decision to progressively close all of its downtown duty-free stores in the country by March 2023, Chanel will also exit its downtown duty-free businesses outside Seoul, closing stores at the Busan Lotte Duty Free shop and the Shilla Duty Free Jeju Fashion Boutique by the end of next month.

Why it is important: The closures follow the decline in the Chinese daigou trade (a grey market in which surrogate shoppers buy lower-priced offshore products and resell them in China). Daigou shoppers accounted for more than 90% of sales at Korean duty-free stores in the years prior to the pandemic.

China overtook South Korea as the world’s largest duty-free market in 2020, with sales valued at close to USD 7 billion. GlobalData predicts the country’s duty-free sector will experience a constant annual growth rate (CAGR) of 17.4% from 2019 through 2025, largely driven by Chinese government policies promoting domestic duty-free consumption.

Chanel pulls back from Korean duty-free