Record Number of Foreign Tourists Spend 5.9 Trillion Won, Department Stores Anticipate Unprecedented Boom

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Both the Number and Spending of Foreign Tourists on the Rise
Department Store Shares Climb on Double Boost from Domestic Sales and Foreign Demand

Yonhap News Agency

As the number of foreign tourists visiting South Korea is reaching record highs, the domestic retail industry is expected to see improved performance. Analysts say this is effectively increasing the so-called "economic population" within the domestic consumer market.

On June 18, Daishin Securities recommended an increased weighting of the retail sector on this basis. The number of foreign visitors to South Korea from January to April this year reached 6.77 million, a 21% increase compared to the same period last year. In both March and April, more than 2 million people entered the country each month, setting new monthly records. At this pace, achieving the government’s target of 23 million foreign visitors this year is expected to be well within reach.

By nationality, tourists from China and Japan increased by 31% and 20%, respectively. Visitors from the United States and Europe also rose by 12% and 19%, respectively. While the share of Chinese and Japanese tourists remains high, it is notable that the proportion of visitors from the United States, Europe, and other regions has been steadily increasing compared to the past.

Spending by foreign tourists is also rising rapidly. According to the Korea Tourism Organization, total spending by foreigners on tourism in South Korea through April this year reached approximately 5.9 trillion won, a 41% surge compared to the same period last year. The total amount spent by foreign visitors using credit cards alone was 6.1 trillion won, equivalent to 2.6% of the domestic retail market.

This has led to an analysis that South Korea is experiencing an increase in its so-called "economic population." As of last year, the average amount spent by a foreign tourist during a visit to South Korea was about 1.64 million won, which is approximately 7% of the 23.87 million won annual per capita consumption by Korean nationals. Thus, each additional foreign tourist equates to an increase of 0.07 in the consumer population. Yoo Jeonghyeon, an analyst at Daishin Securities, projected, "If the government’s goal of attracting 23 million foreign visitors this year becomes reality, it will have the effect of increasing the consumer population by approximately 1.61 million."

The most direct beneficiary is the department store sector, which is enjoying an unprecedented boom due to soaring sales to foreign customers. Department store sales to foreigners surged by more than 90% in the first quarter, with even higher growth rates being recorded in the second quarter.

With the recovery of domestic consumption combined with increased sales to foreigners, mega-stores in major retail districts of Seoul, the capital region, and Busan are seeing sales growth rates ranging from at least 20% to as high as over 70%.

Yoo commented, "The current situation for Korean department stores is similar to the growth story of Japanese department stores in 2023 and 2024. At that time, Japanese department stores saw a dramatic surge in duty-free sales due to increased foreign tourist spending, leading to a revaluation and resulting in stock prices rising by about 400–500%," he explained.

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