Korean Luxury Retailers See Surge In Chinese Tourist Spending

Seoul Malls Expect “Surge” Of Chinese Tourists From Sept. 30-Oct. 7

Chinese tourists continue to shell out in Korea for cosmetics, apparel and "meditel"

Hong Kong retailers may be hurting as the influx of mainland Chinese tourist-shoppers seen in recent years slows, but destinations like South Korea are poised to gain as these big-spending travelers look further afield. Angling to capture a bigger slice of the Chinese outbound tourist market from Japan, over the last year South Korean luxury retailers, cosmetics brands, department stores and tour operators have invested heavily in marketing, looking to leverage their country’s regional reputation for everything from cosmetics and cuisine to pop culture and “meditel” (medical services + hotel stays). Apparently, these efforts have paid off in 2012, as Seoul’s Lotte Department Store recorded a 180 percent rise in purchases among Chinese shoppers using UnionPay credit cards over the first seven months of the year.

In advance of the Chinese National Day holidays, running from September 30 through October 7, Lotte is further increasing its overtures to China, attempting to tug at heartstrings by running an advertisement in China’s People’s Daily newspaper celebrating the 20th anniversary of diplomatic ties between South Korea and China. Looking to buoy underwhelming total sales figures for the year, Lotte plans to offer Chinese shoppers special perks during the holiday, with discounts on around 60 brands through the end of the month.

But Lotte isn’t the only large-scale retailer attempting to lasso more outbound Chinese travelers. Galleria Department Store in southern Seoul, arguably the most popular shopping destination among Chinese tourists in that part of the city, recently opened its VIP rooms to select Chinese customers and now accepts payment in both Chinese yuan and the Hong Kong dollar. The store also beefed up its concierge services, increasing the number of Chinese-speaking staff and handing out special gift certificates to Chinese shoppers who spent at least 1 million won (US$880). Response to these efforts has apparently been positive, as the Galleria’s Luxury Hall recorded a 121 percent sales increase year-over-year between January and July. Another sprawling store, Hyundai Department Store in Seoul’s Apgujeong, itself saw a 95 percent rise in Chinese customers this year.

As they have in Paris, Singapore and Japan, Chinese tourists have also been among the most active shoppers at Duty-Free shops in Korea. Lotte Duty Free in Sogong-dong, central Seoul, saw a 33 percent total increase in sales this year, with Chinese travelers accounting for 28 percent of those purchases, a 14 percent rise over last year. This group made up an even greater proportion of customers at Shilla Duty Free Shop, 32.5 percent, where 1H 2012 sales jumped around 40 percent to 906 billion won (US$798.5 million). This growth can’t come at a better time for these retailers. As the Korea Herald noted this week, the share of domestic Korean shoppers at Shilla sank a little over five percent year-over-year.


Beauty, Market Analysis, Marketing, Retail