[Exclusive] Duty free shop “cosmetics” sales reaches “55%” with a 3% increase from last year

▲Photo=repoter SeonHo, Kim/ Lotte DFS in Korea

 

It has been proved true that “duty free shop business is all about cosmetics sales.” In the first half of 2018 (January – June), total sales of Korean duty free shops recorded 9 trillion 199.4 billion won, and the portion of cosmetics products sales increased by 3% from last year, reaching 55% (5 trillion 64.9 billion won). While the portion of foreign products was 59% of total cosmetics sales in 2017, it slightly increased to 60% in the first half of 2018, indicating that the portion of Korean products was decreased.

If we take a look at the “2018 first half sales report for duty free items” that Korea Customs Service submitted to congressman Kim Kyung-hyup (Democratic Party of Korea, Committee of Economy and Finance), cosmetics took the largest portion of 55%, while other items were shown in this order: Bag (11%, 971.1 billion won), Watch (7%, 621.2 billion won), Jewelry (6%, 513.5 billion won), Cigarette (4%, 357.5 billion won), Perfume (3%, 295.3 billion won), clothes (3%, 239.4 billion won), Glasses (sunglasses) (2%, 210.5 billion won), Ginseng (2%, 169.4 billion won), Alcohol (2%, 167 billion won), Electronics (2%, 162.3 billion won), Shoes (1%, 104.9 billion won), Food (1%, 98.2 billion won), and Folk Art Works (0%, 2.13 billion won). Sales of other products was 20.2 billion won, marking 2%.

While reports estimate that this year’s total sales of duty free will exceed 18 trillion won, cosmetics is leading the way. An analysis of this year’s sales portion per item shows that the portion of products other than cosmetics has increased or decreased by 1%. However, the cosmetic products exclusively grew by 3%, being the duty-free sales leader.
 

▲Photo=DFN

▲Photo=DFN

The sales portion of duty free Korean and foreign products was 69 (10 trillion 46.6 billion): 31% (4.4218 trillion won) in 2017. However, in the first half of 2018, it was 68 (6.2942 trillion won): 32% (2.9052 trillion won), showing a slight increase of Korean products. However, the portion of Korean Cosmetic products slightly decreased this year to 40% from 41% last year.

A duty-free shop official said, “With the rising popularity of K-beauty, the Korean-Cosmetic sales seemed to increase, but as sales of well-known foreign cosmetic brands increased, the competition among brands has been intensified. This is partially due to distribution of “fake” Korean cosmetic products in the Chinese market.” In 2017, Whoo ranked number one and Sulwhasoo ranked two in the Korean duty-free brand ranking, but the ranks of Korean Cosmetic brands, such as Laneige, Sum, and Hera went down.

However, on July 30, Ministry of Economy and Finance reported the ‘amended tax bill,’ which included a plan that the duty-free patent commission, which used to be 0.1-1% per sales section, will change to 0.01% for small- and medium-sized businesses. By decreasing the patent commission, it aims to promote sales of products made by Korean small and medium businesses in the duty-free shops. In the future, the promotion and marketing of duty-free shops will be strengthened to increase the sales of Korean products.

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[저작권자ⓒ (주)티알앤디에프뉴스. 무단전재-재배포 금지]