South Korean duty-free retailers revamp loyalty programme strategies post-pandemic

Brands are moving away from a one-size-fits-all approach.

South Korean duty-free retailers are responding to post-pandemic changes by launching targeted loyalty programs that offer more personalized benefits, Euromonitor International.

The report said brands are moving away from a one-size-fits-all approach aims to better meet diverse consumer needs.

The global recovery in duty-free shopping largely depends on Asia Pacific, with China leading the way. Travel is rebounding, and duty-free spending is expected to reach $73b in 2024, with about $31b from Asia Pacific, especially China. 

However, many Chinese consumers are spending domestically, impacting South Korea’s duty-free sector, which is struggling to return to pre-pandemic levels.

South Korean duty-free retailers are adapting to changes in traveler preferences, such as a rise in independent trips over group tours. For instance, Hyundai Duty Free saw 32% of its Q1 2024 sales from independent travelers, up 15 percentage points from the previous year. 

In Asia Pacific, one in four consumers is more willing to invest in loyalty programs for better rewards, surpassing the global average.

South Korean retailers are leading with innovative approaches to meet these demands. Hyundai Department Store introduced H Point Global, an app-based loyalty program in February 2024, aimed at foreign travelers. This offers benefits such as restaurant reservations, tax refund assistance, and translation services, integrating Hyundai’s retail brands and contributing to a 15% increase in duty-free sales. 

Meanwhile, Lotte Duty Free launched the Young Travel Club, a paid 3-month membership in May 2023, targeting Koreans in their 20s and 30s. The third edition of this program, introduced in July 2024, includes benefits like niche skincare gifts and cash vouchers via LDF Pay, with one-third of new members in early 2024 being in their 20s.

Similarly, Shilla Duty Free has responded to growing interest in whiskey by launching Shilla & Cheers, a paid six-month membership designed for whiskey enthusiasts. This offers up to 20% discounts and exclusive experiences such as whiskey tastings and pairing dinners at Shilla Hotel’s "The Distillers Library," catering specifically to Korean passport holders.