Domestic duty-free stores enhance domestic product price competitiveness through exchange rate adjustments

In order to reflect the current high exchange rate situation, major domestic duty-free stores have recently increased the benchmark exchange rate for domestic brand products. This move aims to ensure price competitiveness of domestic products and reduce the purchasing burden on tourists and local consumers.

Lotte, Shilla, Shinsegae, and Hyundai Duty-Free, among others, have decided to raise the benchmark exchange rate from the original 1,400 KRW to 1,450 KRW starting from the 23rd. This is the first adjustment in about four months since the rate was last increased from 1,350 KRW to 1,400 KRW at the end of last year. An increase in the benchmark exchange rate will lower the dollar-denominated prices, resulting in a price reduction from the consumer’s perspective.

For example, a product originally priced at $100 will now be approximately $96.5 after this adjustment. This is seen as a strategy to ease the direct burden on consumers and enhance the attractiveness of domestic products.

This decision is a strategic response by the duty-free industry to the ongoing rise in exchange rates caused by instability in the Middle East region. Industry insiders expect that adjusting the benchmark exchange rate will help alleviate consumer burdens and boost sales of domestic brands.

Such measures are likely to have a positive impact on the sales strategies of the duty-free industry in the future. Especially in the international tourist market, which is sensitive to exchange rate fluctuations, this could become an opportunity to improve the price competitiveness of domestic brands.