Chanel Shutters Duty-Free Stores In South Korea

Chanel has become the latest brand to exit its duty-free business in South Korea. Other major global luxury brands to the market include Louis Vuitton and Rolex.

The French luxury brand plans to close its duty-free stores at the Busan Lotte Duty-Free shop and the Shilla Duty-Free Jeju Fashion Boutique by March this year.

Louis Vuitton, meanwhile, plans to close its duty-free stores by March 2023. The two brands’ decision to pull out of the duty-free segment in South Korea follows Rolex, which closed seven stores in the market last year, leaving just three at the Seoul, Jeju and Incheon airports.

The exodus from the South Korean market has come as a result of the decline in business, especially from Chinese Daigong traders, who now account for more than 90% of sales, up from 50% before the pandemic.

Daigong sellers buy luxury products in bulk from duty-free stores in South Korea and then resell them through eCommerce sites such as TaoBao. While the sales are profitable for duty-free stores, they make it harder for luxury brands to control their product distribution and price policies, according to The Korea Herald.

Luxury brands such as Louis Vuitton are thus focusing on boosting sales at department stores and airport duty-free stores, especially in China, which overtook South Korea as the largest duty-free market in 2020. Louis Vuitton, for one, plans to open six new duty-free stores by 2023, in addition to a second outlet at the Hong Kong International Airport as it seeks to win the business of Chinese customers.

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Originally published at https://retailbum.com on February 10, 2022.