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Duty-free products hit domestic shelves amid pandemic-caused biz slump

Economy 10:36 June 03, 2020

By Kim Soo-yeon

SEOUL, June 3 (Yonhap) -- South Korean duty-free operators began to sell duty-free products through local retail channels Wednesday as the government has decided to temporary permit such sales to help the pandemic-hit sector.

Shinsegae International Inc. started to sell duty-free items of four luxury brands, including Balenciaga and Bottega Veneta, on its online shopping mall.

Bags, wallets and small items will be the main products and their sales price will be as much as 40 percent cheaper than tax-free prices.

It marked the first time that duty-free products have hit local shelves since the customs office decided in late April to permit domestic sales of duty-free goods that were in stock for more than six months.

Only a few customers are spotted at duty-free stores at Terminal 1 of Incheon International Airport, west of Seoul, in this photo taken May 15, 2020. (Yonhap)

The move is aimed at propping up the duty-free sector as the segment has been grappling with a sharp fall in the number of customers due to the new coronavirus outbreak.

Duty-free stores saw their combined sales fall below the 1 trillion-won (US$822 million) mark for the first time in four years in April, according to industry data.

Industry leader Lotte Department Store plans to sell foreign luxury duty-free products at its retail channels starting in late June.

The Shilla Duty Free, another major duty-free operator, said it will sell duty-free items of masstige brands at relatively affordable prices.

The country's customs office earlier estimated that local duty-free operators may be able to secure some 160 billion won in cash with the eased sales rule.

But it may be hard for duty-free operators to expect high revenues as foreign major luxury brands have been reluctant to sharply cut prices of duty-free goods.

Cosmetics, perfumes, liquors and foods will be excluded from a list of duty-free products to be sold at retail channels due mainly to shelf life.

As part of efforts to help struggling duty-free operators, the government decided this week to expand the reduction of rental fees for airport duty-free shops and other commercial facilities hit hard by the COVID-19 pandemic.

This photo, taken May 27, 2020, shows duty-free shops at Incheon International Airport, South Korea's main gateway west of Seoul, where the number of customers has sharply fallen amid the COVID-19 pandemic. (Yonhap)

sooyeon@yna.co.kr
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