What: The sales of Lotte, Shilla, and Shinsegae duty-free stores in Korea have experienced a significant decline due to changing shopping patterns among Chinese tourists.

Why it is important: It is important to understand the decline in sales of Lotte, Shilla, and Shinsegae duty-free stores due to changing shopping patterns among Chinese tourists to adapt and strategize accordingly in the tourism and retail sectors.

Data and analysts indicate that fewer tourists are shopping at traditional duty-free stores, opting instead for local retail channels and regular retail stores. While the number of customers for Korea's duty-free stores increased by 307% from the previous year, combined sales of major duty-free stores dropped by 28%. Foreign tourists' spending at traditional duty-free shopping channels also decreased by 37%.

Market analysts suggest that duty-free stores have failed to appeal to foreign tourists who prefer experiencing the latest products and trends in Korean culture. The decline of Chinese resellers is another reason for the fall in sales. Lotte Duty Free reported a sales decline of 38.6% in the first half, while Shilla Duty Free Shop and Shinsegae Duty Free saw sales declines of 33.6% and 37.2%, respectively.

The stock prices of duty-free operators also experienced a sharp decline. However, there is a possibility of a duty-free stock rebound in the future, as the Chinese government recently lifted a ban on group tours to Korea.

Lotte, Shilla, Shinsegae hit by drastic sales fall despite Chinese tourists' return