Record Arrivals, Weak Won Fuel Rebound in High-End Retail
South Korean department stores are experiencing a resurgence, driven by a surge in foreign tourist spending that is offsetting a prolonged slump in domestic retail.
Industry experts attribute this rebound to the ongoing global popularity of Korean culture, coupled with a favorable exchange rate due to a weaker Korean won, which is attracting a wave of international visitors. The Korea Tourism Organization reported nearly 19 million foreign visitors to South Korea in 2025, marking a new annual record.
The impact of this influx is particularly evident in Myeongdong, a bustling tourist district in Seoul, where flagship department stores like Lotte and Shinsegae dominate the shopping landscape.
In the fourth quarter, foreign shoppers accounted for 19% of sales at Lotte Department Store’s Myeongdong branch, a 4% increase year-over-year. The store has seen foreign spending grow by approximately 40% annually over the last three years.
Lotte Shopping reported that foreign sales reached a record 700 billion won ($480 million USD) for the full year 2025. The company’s department store division posted sales of 3.21 trillion won and an operating profit of 491 billion won, up 22.5% from the previous year.
Shinsegae Department Store’s Myeongdong flagship also witnessed a significant rise in foreign customer sales, jumping from about 7% in 2023 to 18.5% last year. Spending by international customers reached the mid-600 billion won range for the year, roughly 3.5 times the figure from 2023.
Notably, foreign spending on luxury goods at Shinsegae increased by 67% in the second half of last year, outpacing the overall luxury sales growth of less than 20%.
“Unlike in the past, when tourists primarily shopped at duty-free stores, the weaker won now makes prices at department stores appear more attractive,” an industry source explained. “Retailers are also implementing strategies to attract tourists, such as exclusive memberships, discounts, and multilingual services.”
Lotte launched a tourist-exclusive membership card in December, offering shopping discounts and transit functionalities. Within two months, over 25,000 cards were issued. The retailer has also installed approximately 400 instant tax refund kiosks at its Myeongdong store, enabling immediate tax refunds after purchases.
“Lotte aims to strengthen its position as Korea’s premier shopping destination by expanding services that combine shopping with experiences of Korean culture,” a company representative stated.
In addition to membership benefits and tax refund options, Shinsegae plans to attract more Chinese tourists through partnerships with payment platforms like WeChat Pay and Alipay.
Hyundai has launched transit tour programs designed for layover passengers, allowing them to shop and dine during brief stays. At The Hyundai Seoul, Hyundai Department Store’s prominent mall in Yeouido, foreign shoppers accounted for an estimated 20% of sales last year, up from 3.3% in 2022 and about 15% in 2024.
Industry analysts anticipate continued growth in department store earnings, driven by a combination of recovering domestic consumption, increasing asset prices, and strong foreign tourist spending.
Yanolja Research projects that foreign tourist arrivals to South Korea will reach 20.36 million this year, led by visitors from China, Japan, Taiwan, and the United States. “Escalating tensions between China and Japan could further divert Chinese tourists towards Korea,” a senior researcher at Yanolja noted.
