"The Joy Is Gone for Koreans, While Foreign Tourists Seize the Opportunity"

Exchange Rate Nears 1,500 Won: "The Fun of Duty-Free Shopping Disappears"

Domestic Shoppers Leave, Foreign Tourists Flock: Contrasting Consumption Patterns

Middle East Risks Drive Exchange Rate Rebound, Duty-Free Industry Faces Profit Crisis

"The duty-free shop used to be one of the joys of travel..."

On the afternoon of April 8, at a downtown duty-free shop in Jung-gu, Seoul, Jinna Yeon (31), a bride-to-be, was trying on a pair of famous brand sunglasses she had had her eye on. She stopped to pull out her smartphone calculator. The duty-free price was 215 dollars. Applying the day's exchange rate, the price nearly reached 320,000 won. Yeon said, "At the department store I visited earlier, the price dropped to around 270,000 won with a partnership card discount. I don't see any reason to bother bringing my passport and going all the way to the airport pick-up counter," she said, leaving the store with a disappointed expression.

On the afternoon of the 8th, foreign customers were organizing passports and receipts laid out on the floor in front of a cosmetics store at a downtown duty-free shop in Jung-gu, Seoul. The duty-free shop was crowded as international tourists continued to visit. Photo by Hosoo Park

The days when filling up your online duty-free shopping cart before an overseas trip was a must-have part of travel are now a thing of the past. With the high exchange rate era continuing as the won-dollar rate threatens to break the 1,500 won mark, price reversals have become routine.

On April 13, the won-dollar exchange rate opened at 1,479.80 won in the Seoul foreign exchange market. On March 31, as tensions between the United States and Israel and Iran reached an extreme high, the rate soared to 1,536.9 won during trading, hitting the highest level in 17 years. However, following news of a ceasefire agreement, it briefly retreated to the mid-1,400 won range. Still, with rising geopolitical uncertainty—such as Israel's attack on Lebanon and Iran's blockade of the Strait of Hormuz—the exchange rate rebounded sharply once again.

The perception that duty-free prices are higher than regular prices is spreading. Song Geoni (35), who has been working for five years, said, "Duty-free shopping used to be one of the pleasures of travel, but now I rarely check it," adding, "The exchange rate burden is so high that there's hardly any reason to even buy cigarettes at duty-free shops."

Due to the continued rise in the exchange rate since last year, the performance of related industries has already deteriorated significantly. Last year, total nationwide duty-free shop sales amounted to 12.534 trillion won, nearly half the 24.9 trillion won recorded in 2019. Shilla Duty Free recorded sales of 3.4039 trillion won last year but posted an operating loss of 53.1 billion won. Shinsegae Duty Free also recorded an operating loss of 7.4 billion won. Lotte Duty Free returned to profit with 51.8 billion won in operating profit, but sales still fell 13.8% compared to the previous year, prompting the company to downsize through workforce efficiency improvements.

In contrast, the void left by domestic travelers is being filled by international tourists. On the same day, the area in front of the duty-free shop's cosmetics store was crowded with tourists laying out passports and bundles of flight tickets on the department store floor as they prepared for payment. For them, this is now the best opportunity to scoop up Korean goods at the lowest prices. Kyle Walker (48), an American tourist visiting Myeong-dong with his family, said, "We were planning a family trip to one of several Asian countries, and ultimately chose Korea as our final destination. Thanks to the exchange rate, we were able to bring much thicker stacks of won bills than usual, so we can enjoy spending more freely."

On the afternoon of the 8th, a sign displaying 1,471 won per US dollar was shown at a currency exchange booth in Jung-gu, Seoul, as a foreign tourist passed by. Recently, with the won-dollar exchange rate fluctuating around 1,500 won, high exchange rate trends continue, increasing volatility in the foreign exchange market. Photo by Hosoo Park

Experts believe that the current external environment, where high exchange rates and high oil prices overlap, will act as a variable in travel consumption sentiment. Lee Hongjoo, professor of Consumer Economics at Sookmyung Women's University, analyzed, "As the high exchange rate continues, the perception that duty-free shops are expensive has become ingrained in consumers, fundamentally weakening their price competitiveness. For now, external factors such as rising fuel surcharges are dampening travel sentiment, but if high oil prices persist for more than two to three months, this could lead to an actual decline in travelers, which is expected to negatively impact the duty-free industry’s efforts to strengthen its fundamentals."

This content was produced with the assistance of AI translation services.