[Edaily Reporter KYUNG GYEYOUNG ] Three major South Korean department store chains—Lotte, Shinsegae Co.,Ltd., and HYUNDAIDEPARTMENTSTORECO.,LTD.—have set a new record for foreign sales in the first half of this year. With the number of foreign tourists visiting South Korea expected to exceed 20 million this year, combined with the effects of a weaker won, all three department store chains are projected to surpass 1 trillion won in foreign sales for the first time.

Foreign Luxury Goods Spending at Department Stores Up 130%

According to reports from each company on the 13th, Lotte Department Store recorded a record-high foreign sales figure of 640 billion won in the first half of the year, a 125% increase from the same period last year. If the current trend continues, it is expected to surpass last year’s total foreign sales of 734.8 billion won within this month.

#Shinsegae Co.,Ltd reported foreign sales of 580 billion won in the first half of the year, a 120% increase from the same period last year. A Shinsegae Co.,Ltd official emphasized, “Unlike other companies, this is significant because it represents sales performance from our flagship department stores alone, without outlets or shopping malls.”

HYUNDAIDEPARTMENTSTORECO.,LTD(069960)Do’s foreign sales for the first half were tentatively estimated at around 500 billion won.

In particular, the flagship stores of Lotte and Shinsegae Co.,Ltd., located near Myeongdong—a popular destination for foreign tourists—had the highest proportion of sales from foreign customers. At the Lotte Department Store flagship, sales from foreign customers accounted for around 30% of total sales. Sales to foreign customers in the first half surged 140% compared to the same period last year. The “Lotte Tourist Membership,” a membership program exclusively for foreign tourists launched at the main store late last year, reached 130,000 members within seven months of its launch. Shinsegae Co.,Ltd’s main store also recorded a 29.8% share of sales from foreign tourists.

The growth rate of foreign sales at department stores in the Busan area was also remarkable, driven by an increase in foreign tourists visiting every corner of the country. Shinsegae Co.,Ltd.’s Centum City branch and Lotte Department Store’s Busan Main Store saw foreign sales growth rates of 230% and 150%, respectively.

The rise in foreign visitors to Korea is behind the record-breaking foreign sales figures posted by the three major department store chains in the first half of the year. As K-culture gains popularity, the number of foreign tourists visiting Korea surpassed 10 million last month. The shift in spending patterns—from duty-free shops to department stores, supermarkets, and convenience stores—was also driven by the growing number of foreign tourists visiting Korea independently rather than through group (package) tours.

The weak won made the prices of Korean products, denominated in won, relatively lower, encouraging foreign tourists to spend more. According to the Korea Tourism Organization, foreign tourists’ domestic card spending in May alone reached 2.1222 trillion won, surpassing the 2 trillion won mark for the first time on a monthly basis. Foreign tourists visiting department stores primarily purchased high-end goods, driving sales growth. Both Lotte and Shinsegae Co.,Ltd reported a 130% year-over-year increase in luxury goods sales to foreign customers.

Foreign tourists are becoming more diverse not only in terms of nationality but also in their spending categories. According to Shinsegae Co.,Ltd, sales increased not only in luxury goods but also in △men’s fashion (110%) △women’s fashion (89%) △cosmetics (87%) △food and beverage (F&F, 63%).

In terms of nationality, while Chinese customers accounted for 77.5% of the total in 2019, that figure dropped to 48.5% in the first half of this year, diversifying to include the U.S. at 19.1% and other Asian countries (excluding China and Japan) at 14.9%.

Three Department Store Chains Project First-Ever 3 Trillion Won in Foreign Sales

The

three department store chains

expect their

foreign sales

to each exceed 1 trillion won this year. In fact, forecasts indicate that the number of foreign tourists visiting South Korea this year will exceed 20 million for the first time. Lotte Department Store predicts it will be the first in the industry to surpass 1 trillion won in the third quarter.

These department stores plan to roll out a series of shopping convenience services in the second half of the year to attract foreign tourists.

Lotte Department Store has expanded its “Lotte Tourist Membership” program from its main store to its Jamsil and Busan main stores. Following last year’s industry-first introduction of the LINE Pay payment system for Taiwanese customers, the company plans to collaborate with UnionPay in September to introduce QR code payments and NFC QuickPass payments—a first for the department store industry.

Shinsegae Co.,Ltd. plans to strengthen tourism marketing targeting new markets such as the Americas, Europe, and Taiwan, and to attract global customers through collaboration with major organizations, including the Korea Tourism Organization. It intends to enhance payment convenience and shopping benefits by partnering with global payment platforms such as UnionPay, Alipay, LINE Pay, and JCB.

HYUNDAIDEPARTMENTSTORECO.,LTD is enhancing the shopping experience by adding real-time translation for customer conversations to its artificial intelligence (AI) shopping assistant, “Heydi Global,” last month, and expanding language support to include Spanish and French starting this month. It also plans to expand its VIP partnerships to China and Europe, following existing partnerships with Thailand’s Siam Piwat Group, Japan’s Hankyu Department Store, and Singapore’s Marina Bay Sands.