Shinsegae Duty Free closes downtown stores for one day per month amid crisis

SOUTH KOREA. Shinsegae Duty Free closed its two downtown stores for 24 hours today and will close them for one day each month until the COVID-19 situation improves.

The company released the following statement: “Preemptive measures were taken to ensure the safety of our employees with the World Health Organization declaring COVID-19 a pandemic. Shinsegae’s Myeong-dong and Gangnam downtown duty free stores in Seoul will close on 16 March.”

Shinsegae had already cut back operating hours at its downtown stores in February. These are now open from 11am to 6pm daily, having previously opened from 9am to 8:30pm.

Shinsegae Duty Free in Gangnam: Closed today for the first time since July 2018, with restricted operating hours already in place

The latest restrictions to store operations, which under normal circumstances open 365 days a year, underline the impact the coronavirus is having on the travel retail industry in Korea. The store closure today is a first for Shinsegae’s downtown duty free business since the retailer opened in May 2016 (Myeong-dong) and July 2018 (Gangnam).

Daily sales before the outbreak reached were around KRW5 billion (US$4.1 million) in Myeong-dong and KRW1.5 to 2.0 billion (USD$1.2 to US$1.6 million) in Gangnam.

Daigou revival underway?

Korean duty free market sales fell by around -40% year-on-year in February, though this is still less than the slump in passenger traffic. Resellers are slowy returning to the market, according to Moodie Davitt Report sources. New cases of COVID-19 in Korea have fallen sharply as testing has been stepped up and the spread of the outbreak is gradually stabilised.

Duty free industry representatives reveal that there are now around 40-50 resellers standing in line each morning at major downtown duty free stores. While this is much lower than before the outbreak it remains an improvement on the numbers from several weeks ago.

Down, down, down. The sharp decline in confirmed new cases, allied to a notable easing of the crisis in Mainland China has travel retail stakeholders increasingly confident of a revival of the all-important daigou business. Source: Korea Centers for Disease Control and Prevention (Click to enlarge)
Daigou business underway but restrictions apply

The resellers showing up in Korea are from China, mostly from areas that don’t have travel restrictions upon their arrival back home, writes The Moodie Davitt Report Senior Retail and Commercial Analyst Min Yong Jung (a Korean national).

There is also an increase in resellers exiting to Hong Kong. We don’t know if the resellers are based locally, the information input is based on scheduled flight and passport not their visa.

Importantly, Chinese are not quarantined in Korea, they are only quarantined upon their arrival in China

Passengers who meet one or more of the following criteria will not be permitted to enter Korea:

  • Travelling on a People’s Republic of China passport that lists Hubei province as the place of issue.
  • Travelling on any type of visa issued by the Korean Consulate in Wuhan.
  • Have visited Hubei province in the past 14 days.

Jeju

Suspension of the Visa Waiver programme for passengers travelling to Jeju on a People’s Republic of China passport.

Any Korean visa issued by the Korean Consulate in Wuhan, Hubei Province will be invalidated immediately.

China

Anyone who has traveled from/transited in South Korea will be quarantined for 14 days upon arrival. The restrictions applies in Beijing, Shanghai, Xiamen, Guangzhou but varies by province and city.

Source: Moodie Davitt Business Intelligence Unit

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