South Korea's duty-free industry saw sales decline in February despite the overlap of the Korean Lunar New Year holiday and the Chinese Spring Festival. Visitor numbers increased, but weaker spending by foreign shoppers dragged down overall results.
Total duty-free sales in February 2026 came to 962.4 billion won ($641 million), according to data from the Korea Duty Free Shops Association released on the 31st. That marked a 10.1% drop from January's 1.0708 trillion won and a 3.8% decline from 1.0005 trillion won in the same month a year earlier. Monthly sales, which had hovered around 1 trillion won over the past year, fell back below that threshold.
Visitor numbers, by contrast, rose. Total buyers in February reached 2.36 million, up year-on-year but down from 2.57 million in January. Foreign visitors in particular surged to 910,000 from a year earlier, yet their spending totaled 704.7 billion won, a 10.4% decline from the previous month. The increase in visits did not translate into higher consumption, analysts said.
Conditions for domestic buyers were little different. Spending by Korean nationals in February came to 257.6 billion won, up year-on-year but down from January. The number of domestic buyers held roughly flat from a year ago yet slipped from January, indicating a slowdown in consumption.
The drop in foreign spending is largely attributed to falling per-customer transaction values. Although visitor numbers grew, average spending per person declined, pulling down aggregate revenue. Industry officials pointed to reduced commission payments to daigou purchasing agents — part of broader efforts to lessen dependence on the channel — and lower-than-expected inflows of group tourists as key factors.
Exchange-rate volatility added further pressure. The won-dollar rate climbed as high as 1,470 won during intraday trading in February before breaching 1,500 won in March. The weaker won dampened domestic buying sentiment while also eroding duty-free operators' price competitiveness.
Duty-free operators responded by adjusting their benchmark exchange rates. Major players recently raised the rate from 1,400 won to 1,450 won per dollar. The benchmark is applied when converting won-denominated prices into dollars; a higher figure effectively lowers the dollar-denominated selling price.
Whether the measure will translate into improved performance remains uncertain, however. While lower prices could stimulate demand, the broader slowdown in consumption means margin compression cannot be ruled out.
A cautious outlook prevails across the industry for the time being. With spending failing to keep pace with the recovery in visitor traffic, observers said a clear rebound in March is unlikely.