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TFWA CHINA’S CENTURY CONFERENCE 2019

DUTYFREEMAG.COM MARCH 2019 · VOL 23 · NO 1

Ring fencing Chinese DF spending p. 14  Dufry’s foothold in Asia p. 22  Lagardère confident about China p. 30


Letter from the Editor

China in our hands I

n 2000, Chinese travelers took 10.5 million overseas trips. In 2017, China was home to four of the world’s top 20 busiest airports (Beiing Capital, Hong Kong, Shanghai Pudong and Guangzhou Baiyun) and, last year, 140 million passport holders from 200+ cities traveled to 157 countries with this figure set to jump to 180 million in 2019. But while Chinese tourists account for around 21% of global tourism spend, they are spending less on their travels and the retail sector in particular is taking a hit with just 12% of travelers including shopping on their trip tick list. For the duty free and travel retail industry, the volume-value equation is a major talking point amid Chinese government moves to boost domestic consumption, ongoing US-China trade tariff negotiations and a weakening Chinese economy. Domestic tourism is also booming with spend of US$720 billion in 2017, 4.7 billion trips made in 2018 and a 2023 forecasted increase to 6.7 billion. On the plus side, an increase in direct international flights from Tier 2 (and even Tier 3 cities) as well as the easing of visas regulations for Chinese travelers to various destinations, is supporting future growth opportunities. Given the roster of ever-popular Asian destinations to Europe, the European Travel Commission has urged EU member states to simplify the process. Inbound tourism is also seeing the good times roll with a Q4 2018 Euromonitor International report boldly stating that, by 2030, China will overtake France as the world’s top tourist destination. For the travel retail community there is clearly much work to be done. Continued adoption of mobile payment systems such as Alipay and WeChat Pay, along with exploration of groundbreaking marketing partnerships, is no longer a discountable option and the Chinese traveler expectation is that retailers are on board. The cross-border WeChat store phenomenon is a new channel that is viewed as both friend and foe, and represents the new retail reality. The answer to these and current political and economic challenges involves taking a step back to travel retail roots and the success trifecta of attractiveness, uniqueness and price. China is no new frontier, with a solid two decades of globetrotting to its credit, however its dynamic population demographic with a growing middle class, aspirational Tier 2 city dwellers and influential 18 to 39-year-old travel bracket means that opportunities are still there to be milked - we just need enquiring, innovative and open minds to develop game-changing strategies. At this month’s TFWA China’s Century Conference, homegrown travel retail giants, international operators and a phalanx of on-the-ground experts will be doing just that, no doubt encouraged by their own business success and the fact that China’s population is forecast to grow from 1.4 billion currently to 400 million by 2030 - and that’s a lot of branded skincare products, designer bags and sunglasses. Kindest Regards,

Hibah Noor Editor-in-Chief hibah@dutyfreemagazine.ca 4 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

MARCH 2019 · TFWA CHINA’S CENTURY CONFERENCE VOL 23 · NO 1

Asia Duty Free & Travel Retailing (ISSN 1360-9548) is published by Global Marketing Company Ltd. 26 Pearl Street, Mississauga Ontario L5M 1X2 Canada. It is distributed in the following countries, states, regions and territories on the Asian continent and in the Pacific Rim: Australia, Bangladesh, Bhutan, Brunei, Cambodia, China, Fiji, French Polynesia, Guam, Hawaii, Hong Kong, India, Indonesia, Japan, Macao, Malaysia, Maldives Islands, Myanmar, Nepal, New Caledonia, New Guinea, New Zealand, Philippines, Saipan, Samoa, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Tonga, Vanuatu and Vietnam. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or editor. March 2019, Vol 23, No.1. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. ©2019 Asia Duty Free & Travel Retailing.

ASIA DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemagazine.ca PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor hibah@dutyfreemagazine.ca ASSOCIATE EDITOR Jas Ryat jas@dutyfreemagazine.ca CONTRIBUTING EDITOR Mary Jane Pittilla maryjanepittilla@hotmail.com ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca CONTRIBUTORS Rebecca Byrne Elena Owyong Claire Malcolm

CIRCULATION & SUBSCRIPTION MANAGER accounts@globalmarketingcom.ca


Letter from the Editor

中国掌握在我们手中 2000 年,中国前往海外 旅行的游客达到 1050 万 人次。2017 年,世界上 最繁华的 20 个机场中有 4 个位于中国(北京首都 机场,香港机场,上海浦 东机场和广州白云机场) 。去年,来自中国 200 多个城市的 1.4 亿护照持 有者前往 157 个国家旅 行,这个人数 2019 年将 会跃升至 1.8 亿。 但是,虽然中国游客的消 费在全球旅游消费市场中占比 21%,但人均旅行消费较少, 而且只有 12% 的旅行者在旅行中会在零售市场中购物。 随着中国政府加大力度促进国内消费,加之中美贸易关税谈 判持续、中国经济走软,这个“人流量是否带来同等价值” 的问题,也成为免税旅游零售业的一个重要的话题。 中国国内旅游业发展也很迅速,2017 年居民旅游支出为 7,200 亿美元,2018 年的旅行次数为 47 亿次,预计 2023 年将增加到 67 亿次。但也有好消息在支撑未来中国人出国 旅游的增长:二线(甚至三线城市)的直通国际航班增加, 中国游客去往各国目的地签证规定放宽,除了多个热门亚洲 目的地,欧洲旅游委员会也在敦促欧盟成员国简化签证过 程。 2018 年第 4 季度的 Euromonitor International 报告就很大 胆地预测:2030 年,中国将超过法国成为世界最大旅游目 的地。 各旅行目的地的旅游零售业显然还有很多工作要做。继续采 用支付宝和微信支付等移动支付系统,探索突破性营销合作 伙伴关系,这些都不再是可有可无的选择,而是中国游客对 零售企业的期望值之一。

6 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

有人将跨境微信支付视为重要机遇,有人也将其认为是洪水 猛兽。但不得不说这个现象代表着零售行业面临的一个新现 实。 想要回答这些问题、对当前的经济和政治挑战做出反应, 就需要我们将目光回溯到旅游业的根源所在:只有三个优 势相结合才能实现这个行业的成功:吸引力、独特性和价格 优势。中国并非近年来才走到世界浪潮的前沿,在 20 多年 前,中国人就开启走向世界的大门。此外,中国的中产阶级 人群、二线城市居民和 18 至 39 岁游客(旅行零售业的支柱 群体)出国比例增加,意味着我们未来将面临更多机会。我 们需邀以探究、创新和开放的思考方式,制定出改变游戏规 则的策略。 在免税世界协会(TWFA)本月举行的盛大的中国世纪大会中, 本土旅游零售巨头、国际运营商和现场专家团队将齐聚一 堂,共同商定这样的发展策略。毫无疑问,旅游零售业过去 确实取得了商业成功,但中国人口的增长正在放缓,有人甚 至预期 2030 年将从目前的 14 亿降到 4 亿,对于旅游零售 业而言,这将会影响无数护肤品、名牌包和太阳镜的销售情 况。 谨祝商祺,

Hibah Noor 主编 hibah@dutyfreemagazine.ca


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Contents

What’s inside Lead Stories 10 China Overview Channeling China

WeChat smart retail tie-ups, trade wars with Trump, economic wear and tear and a weakening in traveling consumer spend should be giving travel retail operators new impetus say industry experts

引领中国 业界专家称,微信智能零售合作、与 特朗普的贸易战、经济消耗以及旅游 消费支出的疲软,应该会给旅游零售 运营商带来新的推动力

16

16 Chinese Domestic Spend Ring fencing Chinese duty free spending abroad

The Hainan Island offshore duty free model has gone from strength to strength raising over a billion dollars in sales that might have gone abroad

中国海外免税品支出遭到限制 海南岛离岸免税模式不断取得成功, 销售收入超过 10 亿美元,这些收入 原本可能流向海外

24 Dufry Asia

Understanding the customer The Asia Pacific region and the Chinese customer in particular are becoming increasingly important for Dufry; the company is reaching customers in this region by a number of diverse strategies, from expansion to partnerships to a focus on digital

28 Chinese Travelers

Capturing the Chinese customer As duty free is the most important shopping channel for Chinese tourists, Asia Duty Free talks to retailers in South Korea and Australia, two popular destinations for the Chinese traveler, about how they attract these affluent shoppers

32 Lagardère Travel Retail Confident about China

Eudes Fabre, the CEO of Lagardère Travel Retail Greater China tells Asia Duty Free Magazine how its long-term presence in China helps it better understand the Chinese consumers

28 Features Dubai Duty Free at 35 HKIA looks to the future Oris China enjoys success Coccinelle’s view

36 38 40 42

FOREO makes waves Editor’s Choice Kiehl’s celebrates CNY Confectionery celebrates

44 46 48 49


 China Overview

Channeling

China 10 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019


C

hina’s economy is on a go-slow, registering its lowest growth in three decades last year at 6.6% (with the World Bank forecasting a further dip to 6.2% in 2019) and softening consumer demand, yet travel is still very much on the agenda. During the 2018 Golden Week period, official government figures revealed that tourist numbers grew 8.2% to reach 6.94 million with a spending average of RMB7,300 (US$1,089), but Ctrip research revealed that just 12% of travelers had shopping on their to-do list “Despite this, we are continuing to see positive growth in the Chinese duty free and travel retail market,” notes TFWA President, Alain Maingreaud, with operations such as China Duty Free Group’s (CDFG) Sanya International Duty Free Shopping Complex at Haitang Bay registering 2017 sales of US$920.9 million - a 29% increase on the previous year. Ctrip lists Japan, Taiwan, South Korea and Thailand as top destinations in 2018 with CITS, China’s largest travel agency, reporting a surge of demand in European destinations as US travel numbers plummet.

World of WeChat

WeChat smart retail tie-ups, trade wars with Trump, economic wear and tear and a weakening in traveling consumer spend should be giving travel retail operators new impetus say industry experts by CLAIRE MALCOLM

The multipurpose app with over one billion active monthly users, travel retail tie-ups with WeChat are becoming a prerequisite to supporting Chinese traveler marketing strategy with the likes of DFS partnering up on destination focused mini programs. The cross-border WeChat shops give travel operators new ways to promote goods and engage with travelers. Ivy Shen, Managing Director of International Business for Shenzhen based e-retail consultancy Azoya Group, says: “The US consumer only needs to come across a brand four times before they make a purchase, but it’s more like eight times for Chinese consumers. “In traditional travel retail environments there is a very limited timeframe for consumers to get to know and trust a new brand. Stores are often crowded, and people don’t want to wait, so the cross-border WeChat store model effectively provides another purchase channel and is especially relevant for smaller emerging brands.” According to the group’s 2018 Customers Come First report for Japan, Chinese consumers tend to spend on personal care, P&C, health and nutrition, and additional data from 100ec.cn reports that import cross-border e-commerce sales have grown fourfold since 2013 to touch US$277 billion in 2017. A Bain & Co. study points out that by 2025, 100% of Chinese consumers will look for online inspiration before making an offline purchase, which makes a solid omnichannel strategy an industry imperative. Shen also puts a different spin on it. “From a customs clearance perspective, consumers can also end up paying up to 60% tax on something like a Chanel bag if they purchase the traditional way.” Switching sides, concerns that while this new channel increases post-travel sales opportunities bricks and mortar spend may not fare quite as well in the future, are addressed by Maingreaud, who says: “This is a challenge that is not unique to China, but something that the entire industry is confronting. Potential shoppers are increasingly aware of the many opportunities to purchase elsewhere, notably online.

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China Overview

demands of the shopper rather than basing strategic decisions on previous consumption patterns,” remarks TFWA’s Maingreaud. China’s population demographic is ripe for innovation given the growing spending power and influence of 18 to 30-year old consumers and potential of the aspirational Tier 2 city traveler. “Tier 1 consumers are already used to the idea of buying luxury products, while in Tier 2 cities they aspire to owning certain brands,” says Shen, noting that Tier 2 city travelers from Fuzhou, Hangzhou, and Wuhan increased year-on-year spending by 70%, 50%, and 31%, respectively, against 2017 Golden Week sales. She suggests that travel retailers also look at diversifying their merchandising approach, offering SKUs that travelers can’t get at home or aren’t widely available. Ivy Shen, Managing Director of International Business for Shenzhen based e-retail consultancy Azoya Group

“Price transparency is an issue that our industry must address. We have to make airport shopping convenient and attractive in China, as elsewhere.”

Daigou in decline

China’s new e-commerce law, which came into force on January 1, is directly targeting the daigou grey market, but its long-term effect on travel retail sales is yet to be seen. The decline of the daigou is an area where Azoya Group sees a shifting dynamic. “The upside for the duty free industry is that travel retailers now have more direct access to genuine Chinese customers. Previously, with so many daigou coming through the stores, market trends were being manipulated. It’s also a golden opportunity for the industry to adapt local infrastructure with payment channel improvements or the establishment of other direct sales channels specifically for Chinese consumers,” notes Shen. She believes that some daigou may go the affiliate marketer route, selling through larger licensed organizations, but says that “with active WeChat groups and a strong trust factor, a lot of people regard daigou as having a personal [retail] assistant, so it’s hard for them to scale up but still retain a close consumer relationship.” But a drop in daigou business has mixed blessings, as Maingreaud explains: “We expect that further government restrictions on daigou traders will create further challenges for retailers. “It’s worth remembering that these purchasers often receive substantial discounts for buying in bulk, and therefore while daigou sales have helped notch up some impressive figures in terms of volume, profitability may not have been so healthy. And many brands that are conscious of their image may welcome the restrictions.”

Follow the (opinion) leader

For Shen, Chinese influencers hold more weight than in established western markets due to low brand loyalty and the fact that consumers are often overwhelmed by product choice, thus turning to key opinion leaders for advice. “In Japan we work with leading department store Matsuya. We’ve taken major Chinese influencers to their locations and live streamed their journeys on social media, twinned with promotions and discounts, which adds a unique personal touch that is especially important when providing a premium customer experience. The conversion rate is double the norm and this is something that could also work in some travel retail locations,” she says. Adds Maingreaud: “Chinese celebrity influencers or ‘Wang Hong’ as they are known, can bring considerable kudos to duty free and travel retail brands and open up new possibilities for brands to engage with younger, social media-savvy shoppers. We have seen Korean travel retailers, in particular, harness the power of celebrity endorsements.”

Domestic advantage

Growth in the Chinese domestic luxury market and the accompanying shrinking luxury goods price gap is a clear clarion call for a travel retail strategic rethink. “A fall in confidence among Chinese consumers has meant that luxury brands may well come under increasing pressure. It is therefore imperative to have real understanding of the shifting 12 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

TFWA President, Alain Maingreaud


TAKE A GENEROUS TOUR AROUND SCOTLAND

YOU CAN NEVER BE TOO GENEROUS


China Overview

Ivy Shen, Managing Director of International Business for Shenzhen based e-retail consultancy Azoya Group

TFWA President, Alain Maingreaud

引领中国 业界专家称,微信智能零售合 作、与特朗普的贸易战、经济 消耗以及旅游消费支出的疲 软,应该会给旅游零售运营商 带来新的推动力 14 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019


中国经济增长放缓,去年增长率为 6.6%(世界银行预测 2019 年将进一步 降至 6.2%),为三十年来最低增长水 平,消费需求也在放缓,但旅游仍然是 议事日程上的重头戏。

贝恩咨询公司 (Bain & Co.) 的一项研 究指出,到 2025 年,100% 中国消费 者在线下购物之前会先在网上寻找灵 感,所以,可靠的全渠道战略才是行业 的当务之急。

政府官方数据显示,2018 年黄金周 期间,游客数量增长 8.2%,达到 694 万人,平均消费人民币 7,300 元(合 1,089 美元),但携程网研究显示, 只有 12% 的游客按任务清单进行了购 物。

Azoya 国际业务总经理 Ivy Shen 则对 此抱有不同的看法。“从清关的角度 来看,如果消费者通过传统方式购买 香奈儿包等,他们最终可能要支付高达 60% 的税款。”

世界免税品协会 (TFWA) 董事长 Alain Maingreaud 指出,“尽管如此,我 们仍看到中国免税品和旅游零售市场的 正增长”。2017 年,中国国际免税集 团有限公司(中免集团)三亚海棠湾国 际免税购物中心的销售额达到 9.209 亿 美元,比上一年增长了 29%。 携程网将日本、台湾、韩国和泰国列为 2018 年最热门的旅游目的地;中国最 大的旅行社中国国际旅行社(国旅)报 告称,随着前往美国的游客数量骤降, 以欧洲目的地的需求将激增。

微信世界 微信是一款多用途应用程序,每月活跃 用户超过 10 亿。旅游零售商与微信合 作,正在成为支持中国游客营销战略的 先决条件,DFS 等公司目前正联手推出 以目的地为重点的迷你项目。微信跨境 商店为旅游运营商提供推销商品和吸引 游客的新方法。 深圳电子零售咨询公司 Azoya Group 的国际业务总经理 Shen 表示:“美国 消费者在购买一个品牌之前只需见过该 品牌四次,但对中国消费者来说,差不 多要八次。” “传统旅游零售环境中,消费者了解和 信任一个新品牌的时间非常有限。”他 说,“商店常常人满为患,人们急不可 耐,所以微信跨境商店模式有效提供了 另一种购物渠道,尤其对于小型新兴品 牌而言意义重大。” 根据该集团 2018 年对日本的“客户至 上”报告,中国消费者的消费倾向于个 人护理、香水和化妆品 (P&C)、健康 和营养方面;而 100ec.cn 报告中的额 外数据表明,自 2013 年以来,进口跨 境电商销售额增长了 4 倍,2017 年达 到 2,770 亿美元。

另一方面,Maingreaud 表示,人们 关心的是,虽然这一新渠道增加了旅游 后的销售机会,但未来的实际消费销 售情况可能不容乐观。他说:“这不 是中国独有的挑战,而是整个行业都面 临的挑战。潜在消费者渐渐了解到在其 他地方购物的许多机会,尤其是在网 上购物。 “价格透明度是我们的行业必须解决的 问题。我们必须让中国的机场购物像其 他任何地方一样,变得更方便和更具吸 引力。”

代购业务逐渐没落 中国 1 月 1 日开始实施的新电子商务 法,直接针对代购灰色市场,但该法对 旅游零售销售的长期影响还有待观察。 代购业务领域逐渐没落,Azoya Group 从中看到不断变化的趋势。“ 免税行业的优势在于,旅游零售商现在 可以更直接接触到真正的中国消费者。 以前,随着如此多的代购商品进入商 店,市场趋势被人为操纵。这也是该行 业调整当地基础设施、改善支付渠道或 建立专门针对中国消费者的其他直销渠 道的黄金机遇,”Shen 指出。 Shen 认为,有些代购可能走联盟营销 路线,通过更大的持牌组织销售商品, 但是他说,“凭借活跃的微信群和强大 的信任因素,很多人认为,代购作为 个人[零售]辅助手段,虽然很难让他们 扩大规模,但仍能保持密切的消费者 关系。” 但代购业务的衰落带来了喜忧参半的 结果,Maingreaud 解释说:“我们 预计,政府对代购贸易商进一步加强限 制,将给零售商带来更多挑战。 “必须牢记,这些购买者往往会因为批 量购买而获得很大的折扣,因此,尽 管代购的销量帮助他们给他人印象深刻

的数字,但盈利方面可能不尽人意。许 多注重自身形象的品牌可能很欢迎这些 限制。”

国内优势 中国国内奢侈品市场正在发展壮大,随 之而来的是奢侈品价差缩小,这明确呼 吁人们重新思考旅游零售战略。 “中国消费者的信任感下降,意味着, 奢侈品牌很可能面临越来越大的压力。 因此,必须真正理解购物者不断变化的 需求,而不是基于以往的消费模式制定 战略决策。”TFWA 的 Maingreaud 评论道。 鉴于中国 18 至 30 岁消费者的消费能 力和影响力不断增强,以及二线城市锐 意进取的游客的潜力,中国人口结构带 来的创新的成熟时机。 “一线城市的消费者已经习惯购买奢侈 品的理念,而在二线城市,他们渴望拥 有某些品牌,”Shen 说;他指出,黄 金周期间,福州、杭州和武汉等二线城 市的游客消费相比 2017 年,分别同比 增长 70%、50% 和 31%。 Shen 建议,旅游零售商还应考虑将销 售方式多样化,提供游客在国内无法获 得或无法广泛获得的库存单位。

追随(意见)领袖 在 Shen 看来,中国意见领袖比西方成 熟市场的意见领袖更有影响力,因为消 费者对品牌的忠诚度较低,而且他们在 选择产品时往往无所适从,因此他们会 向主要意见领袖寻求建议。 “在日本,我们与领先的百货公司松屋 (Matsuya) 合作。我们把中国的主要 意见领袖带到消费者购物地点,并在社 交媒体上直播他们的旅程,结合促销和 折扣,从而增加独特的个人接触,这在 在提供优质客户体验时尤为重要。转化 率是正常水平的两倍,这在某些旅游零 售场所也适用,”他说。 Maingreaud 补充道:中国名人意见 领袖,人们称之为“网红”(Wang Hong),可以为免税品和旅游零售品牌 带来相当大的名声,并为品牌建立新的 可能性,吸引更年轻、精通社交媒体的 消费者。我们看到,尤其是韩国旅游零 售商利用名人代言的力量。”

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Chinese domestic spend

Ring fencing Chinese duty free spending abroad The Hainan Island offshore duty free model has gone from strength to strength, raising over a billion dollars in sales that might have gone abroad

S

pending by Chinese travelers abroad is the lifeblood of the global duty free industry, so much so that marketing activities by both brands and retailers are heavily geared to this core nationality. According to the UN World Tourism Organization, Chinese tourists spend, in total, twice as much as those from the US. They account for 21% of worldwide travel spending even though they make up about 10% of traveler numbers (UNWTO 2016 data). In its latest report last summer, luxury goods industry advisor Bain & Company expected the global personal luxury goods market in 2018 to grow by 6-8% “driven by a strong rebound in China”. The Chinese government, however, has not been happy with rising cash outflows, especially on luxury goods, and has other plans for its citizens. It has been developing strategies to ensure more of that revenue stays within its borders. Setting up Hainan as an offshore duty free island is regarded as the most successful of these projects. This master stroke has worked exceptionally well, attracting Chinese nationals in search of bargain prices they might have gone abroad for. 16 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

The duty free allowance, which started life in 2011 at just CNY5,000 (US$737), has been increasing steadily as retail demand on the island has shown no sign of abating. In November, China’s Ministry of Finance raised the duty free allowance for visitors yet again. This time it almost doubled from CNY16,000 (US$2,357) to CNY30,000 (US$4,420) from December 1. According to Hainan’s Provincial Department of Finance, the amount applies equally for Chinese citizens whether they live in or outside Hainan. The relaxations have led to duty free revenue on the island reaching more than CNY8 billion (US$1.18 billion) in 2017, indicating just how valuable a lure they have been. Other tactics have included a customs crackdown on Chinese arriving from foreign countries to stop the daigou phenomenon (when individuals shop to order abroad for Chinese mainlanders); a green light for more arrivals shopping at airports and ports as well as downtown duty free shopping. All of it is designed to keep Chinese spending at home. State-controlled China Duty Free Group (CDFG), which claims to be the largest luxury operator in China, has spread its wings further in its home mar-

ket as well as abroad. The past two years were pivotal for CDFG with the acquisition of the Sunrise Duty Free business, plus big contract wins at Hong Kong, Beijing Capital and Macau airports. But back on its own turf, President of CDFG and Chairman of Sunrise Shanghai, Charles Chen, says: “As the largest duty free operator in China, CDFG will continue to deliver on its commitment to making China’s duty free industry larger, stronger and better. (We will) work towards bringing overseas spending back home and improving the international competitiveness of China’s duty free industry.” In mainland China, Bain forecast luxury goods growth of 20-22% (at constant exchange rates) for 2018. This year’s growth may not be as stratospheric as official GDP growth last year slowed to +6.6%, the lowest in 28 years. With a downward GDP trend prevailing since 2010, this will only spur the Chinese government to redouble efforts to keep spending within its borders. It seems just a matter of time before the Hainan duty free blueprint is duplicated elsewhere.


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Chinese domestic spend

中国海外免 税品支出遭 到限制 海南岛离岸免税模式不 断取得成功,销售收入 超过 10 亿美元,这些 收入原本可能流向海外

中国游客在海外的支出是全球免税业的 命脉,所以各个品牌和零售商的营销活 动都与这个核心国家密切相关。 根据联合国世界旅游组织 (UNWTO) 的 统计数据,中国游客的总支出是美国 游客的两倍。中国游客的总支出占全 球旅游支出的 21%,尽管中国游客仅 约占全球游客总人数的 10%(UNWTO 2016 年数据)。 奢侈品行业顾问贝恩公司 (Bain & Company) 在去年夏季公布的最新报 告中预计,“受中国经济强劲反弹的推 动”,2018 年全球个人奢侈品市场将 增长 6-8%。 但是,中国政府对不断上涨的现金流出 (尤其是奢侈品方面)并不满意,因 而,为中国公民制定了其他计划。中国 政府不断制定战略,确保更多的收入留 在国内。 把海南建设成离岸免税岛,人们认为是 最成功的项目。这一神来之笔效果非常 好,强力吸引原本想在海外寻找便宜商 品的中国公民。 自 2011 年开始,中国政府实施的免税 额度仅为 5,000 元(合 737 美元), 18 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

随着在海南岛零售需求不断上涨,免税 额度也一直在稳步增长。11 月,中国 财政部再次提高游客的免税额度。这一 次,从 12 月 1 日起,免税额度从 1.6 万元(合 2,357 美元)增至 3 万元(合 4,420 美元),几乎翻了一倍。海南省 财政厅表示,无论是否居住在海南的中 国公民,这一免税额度均一视同仁。 这些宽松措施令海南岛 2017 年免税收 入超过 80 亿元(合 11.8 亿美元),显 示出这些措施的强劲诱惑力。 其他策略还包括海关方面打击从外国入 境的中国人,阻止代购现象(即个人到 海外为中国大陆人采购商品);为更多 旅客在机场、港口以及市区免税购物大 开绿灯。所有这些举措的目的都是为了 让中国人在国内消费。 国有企业中国免税品(集团)有限责任 公司(中免集团),是中国最大的奢 侈品运营商,其业务范围已涵盖海内外

市场。过去两年对中免集团而言至关重 要,其收购了日上免税行的业务,与香 港、北京和澳门机场签订了大笔合同。 但谈及自己的优势所在,中免集团总经 理兼上海日上董事长陈国强表示:“作 为中国最大的免税品运营商,中免集团 将继续恪守承诺,使中国的免税业做到 更大、更强、更好。(我们将)努力将 海外消费带回国内,提高中国免税业的 国际竞争力。” 贝恩预计,中国大陆 2018 年奢侈品 销售额将增长 20-22%(按固定汇率计 算)。今年的增长幅度可能不像去年官 方 GDP 增长放缓至 +6.6%(28 年来最 低水平)那么迅猛。 2010 年以来,中国 GDP 一直呈下降 趋势,这只会促使中国政府加倍努力, 将支出控制在国内。海南免税蓝图必将 在中国其他地方复制,这似乎只是时间 问题。


 Qatar Duty Free

Deliver amazing Qatar Duty Free has created a 40,000 square-meter shopping paradise in Hamad International Airport, and the company is on a constant quest for improvement by HIBAH NOOR

Qatar Duty Free works beyond the confines of the airport by implementing several interactive social media campaigns

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espite the ongoing illegal blockade of Qatar by neighbouring countries, Hamad International Airport’s passenger numbers have continued to increase. The airport – which ranks among the top-five “Best Airports in the World” and “Best Airports for Shopping,” according to the Skytrax World Airport Awards 2018 – posted double-digit growth in its passenger numbers year on year from 2017 to 2018. Its retailer Qatar Duty Free (QDF) also announced 2018 as a banner year. The award-winning travel retailer offers more than 90 elegant boutiques and luxury, high-end stores at HIA, as well as more than 30 restaurants and cafés covering a total area of 40,000 square meters and providing travelers with a world-class shopping experience under one roof.

Constant improvement

The travel retailer always aspires to be bigger and better, says Mr. Thabet Musleh, Vice President Operations, QDF. “Even though it has been a fantastic year, with exclusive pop-up stores and high sales, we always have high expectations for the future. This is what drives us every day as a business.” As the company is always looking at developing and evolving the business, new launches are a constant. QDF launched a brand new Qatar Airways shop early this year, a unique store concept with a full range of products designed for travel. “To deliver a more effectively targeted retail experience, we have also opened two express convenience stores in strategic airport locations,” Musleh adds. “We continuously work with Hamad International Airport to understand passenger profile and flow between the

Qatar Duty Free launched a new Qatar Airways shop early this year, a unique store concept with a full range of products designed for travel www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

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Qatar Duty Free

different departure gates throughout the airport and tailor our retail offers accordingly. One express store is tailored for Asian passengers while the other is personalized for European passengers.”

Other news

Other recent news from the retailer includes the launch of its exclusive Dior Les Parfums podium and its traditional Qatari Souq that was built to celebrate the 2018 Qatar National Day. Additionally, an important appointment was made this year to the company’s senior management team, when Mr. Bruce Bowman was announced as new Senior Vice President. Bowman has spent more than 20 years working in the luxury and travel retail industry in the Middle East, where he held a number of key positions with retail companies.

Cooperative vision

Travel retailers have a notoriously difficult time balancing astronomical fees, trinity relationships and the obvious need for profit. Musleh says: “If we want to be successful we have to do things differently, which is what Qatar Duty Free aims for as a retailer. We believe in and deliver a cooperative partnership with our suppliers. As a retailer, we go into ventures and projects hand in hand. Sometimes commerciality has to be put aside to deliver the vision.” Airport stores have both limited space and limited time to reach their customers, but customers want a personalized, individual experience. Musleh says the best retailers are the ones who are innovative, and those are the retailers who will survive. “There are so many different ways of providing individual customer needs in a traditionally limited space. One example is providing rotation shelves that would move around the shop floor several times a day to cater each passenger segment or placing a shelf per each passenger segment.”

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Qatar Duty Free and Parfums Christian Dior launched a Dior Les Parfums Podium at Hamad International Airport, designed as a tribute to fragrance creation


Digital reach

Along with limited space come other restrictions that can impact a travel retailer’s connection to, and impact on, a customer. This is especially the case when shopping inflight. QDF worked beyond the confines of the airport by implementing several interactive social media campaigns to raise awareness and promote many of our high end leading brands. Last year, we collaborated with PUIG to launch the Million Lucky campaign by activating a 360° integrated media campaign using various digital touch points to ensure that passengers were engaged with the Paco Rabanne fragrances at every step of their journey from pre-flight, through social media posts, to online check in, inflight and once landed at HIA. This was achieved through airing a Paco Rabanne TVC on the in-flight entertainment system on board Qatar Airways aircraft, banner advertisements featured on all e-boarding passes during the period of the campaign as well as social media activations. “We are very lucky to be part of the Qatar Airways Group under the guidance of his Excellency Akbar Al Baker,” says Musleh. “We need to ensure that we are capitalizing among the opportunities by communicating with the customer on every touch point around the various segments that we have across the group, whether it be the duty free stores, hotels or lounges. A good example is the way we capitalize on the passenger flow modeling from the airport and airline. We have a unique ability to locate various touch points and provide targeted messaging to the relevant customers.”

FIFA World Cup

In 2010 it was announced that Qatar would be home to the 2022 FIFA World Cup, and it’s safe to say that the event is as top of mind for QDF as for the rest of the country. “In the next two to three years, our vision is part of the country’s vision to make sure we gear up to ‘deliver amazing’ for 2022,” says Musleh. “Our goal is to showcase the state of Qatar in the best possible light and for all our guests to have an amazing experience from the minute they land in the airport to the minute they board their flights.”

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 Dufry Asia

Understanding the

customer The Asia Pacific region and the Chinese customer in particular are becoming increasingly important for Dufry; the company is reaching customers in this region by a number diverse strategies, from expansion to partnerships to a focus on digital by HIBAH NOOR

Dufry has strong relationships with brands such as Cartier, here in Shanghai airport

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But that percentage should increase, with the company’s expansion plans. “We opened three important new duty-free locations in the region in 2018,” Diaz says. “These include the MTR high-speed train station connecting Hong Kong with Shenzhen, the Genting Highlands downtown operation in Kuala Lumpur and the new shops at the Perth airport in Australia operation – which will further increase the weight of this division within the group. There is still clearly strong potential to further grow across Asia Pacific and we are excited about the prospect of increasing our footprint in the region.”

Development opportunity

Julian Diaz, CEO of Dufry

Diaz says Dufry “has been very clear that we aim to further develop our presence in Asia and the wider Asia Pacific region and to do so, we will be extending our focus beyond just airports.” This company trend is also apparent in the Americas, where cruise and border shops are high on Dufry’s expansion list for the coming year. “We are dedicated to an omni-channel presence – airports, railways, downtown and border shops and cruise ships across all territories. This includes locations such as China, Malaysia, Indonesia, Vietnam and Japan, to name but a few,” adds Diaz. The company is no stranger to the concept of mergers and acquisitions, having acquired major retailers Nuance, NuanceWatson and World Duty Free Group in 2014 and 2015, and Diaz says the company is not averse to more. “In addition to organic growth, we are constantly evaluating merger and acquisition opportunities in Asia Pacific, which is a market with a relatively higher level of fragmentation and which is characterized by the presence of strong local champions.”

Branching out

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t’s no secret that Asia has taken over the lion’s share of the global travel retail dollar. The region’s growth both in duty free and in airline passenger numbers generally outpaces global growth. As of November 2018, the Asia-Pacific region represented 34% of all global passenger travel and according to ACI that number will increase to over 50% by 2040. China itself is expected to dominate passenger rankings, with growth expected to bring the country’s share of the global passenger traffic market to 19% by the year 2040. Currently, China’s domestic air travel sits at 9.1% of total global domestic travel (based on November 2018 figures.) The Chinese have the distinction of being both the largest source of outbound tourists but also the population with the highest spend.

Important growth region

It should come as no surprise, then, that Asia Pacific is an important focus for Switzerland-based global travel retailer Dufry. “Asia Pacific presents a significant opportunity to the travel retail sector, representing more than half of the worldwide travel retail market,” says Julian Diaz, CEO of Dufry, who adds that the company generated 13% of its total sales across its Eastern Europe, Middle East, Asia, and Australia Division during the first nine months of 2018.

Diaz says the company is satisfied, overall, with its recent development efforts in Asia Pacific. “Not only did we secure the Hong Kong West Kowloon High Speed Train Station Duty Free contract, but also the seven-year core Duty Free contract at Perth Airport in Australia. In addition, Dufry has also entered Malaysia’s Travel Retail market, with a fully fledged execution of a multi-brand Beauty and Accessories shop at Genting Highlands Resort,” he says. While both Perth Airport and Hong Kong West Kowloon are very recent undertakings for the company, Diaz says Dufry sees strong potential for growth in both operations. “With Hong Kong Duty Free we have seen a relative prominence of the Liquor and Tobacco categories, and are very enthusiastic about the prospects for Beauty. We expect it to develop even further, given we are at a stage where personalizations have not been fully completed, so there is definitely more potential in this category.” The company also reports progress on its mono-brand boutique development, with several Fashion boutiques opened at Chinese airports, including Guangzhou, Shanghai Hongqiao and Hong Kong. “We also completed several boutique openings in Singapore,” says Diaz. “These developments were made possible as a result of the strong and collaborative relationships we have with our brand partners including Cartier, Montblanc, Ermenegildo Zegna, Tod’s, Longchamp, Ferragamo, Chloé, MCM, Max Mara and Samsonite. Together, our airport duty free stores, downtown stores and mono-brand boutique wins have further strengthened and consolidated our position in the region and set the foundations for more to come over the coming years.”

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Dufry Asia

Montblanc is one of Dufry’s strong partners, here in Shanghai offering the feel of understated luxury

Digital age

One of the company’s focuses over the past two years has been the creation of its “New Generation” stores. Intended to deliver a highly personalized shopping experience, these stores make extensive use of digital technology to boost customer engagement by communicating with the most represented nationalities in their own language and addressing the individual preferences of the different passenger profiles. A New Generation store was opened in Melbourne in late 2017. Diaz says the company is very pleased with the response. “With both a large Australian customer base and a solid Chinese customer base, we believe the shop effectively blends a retail offer and product assortment that caters to a very diverse customer group with different shopping habits and preferences,” he says. Because Chinese nationals expect a premium offer, Diaz says: “The store delivered a great execution in all core categories. These included ever-growing lines that are key to these consumers, such as ‘Health & Wellbeing,’ which we delivered with a bespoke concept, alongside ‘must have’ products for Chinese consumers such as a wide selection of cognac, local Chinese liquors and Japanese whiskies and a significant cosmetics offering.” Australian nationals have a different focus, with liquor as the predominant category, so the company ensured that a very appealing execution was carried out. “We had a prominent tasting bar as a centerpiece, and a fantastic showcase of newness and value across the entire shop, to tempt customers into the store,” says Diaz. He adds that the tailored product range is coupled with a strong sense of experiential retailing, allowing customers to enjoy a truly personalized and immersive shopping experience that blends in-store digital execution, customization, and multisensory elements: “A truly 360° experience.”

Refurbishments

In addition to the Melbourne New Generation store, Dufry recently refurbished Bali’s main Departures Duty Free store,

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The Chinese consumer has no problem with buying on impulse, as long as the brand is recognizable and communication is good

and the company is in the process of refurbishing its Atrium Downtown shop at Macau’s Parisian Hotel & Casino. “Looking at the immediate future, we also expect to open a fully refurbished Departures shop at Perth Airport, encompassing our latest store design principles with a strong digital implementation,” says Diaz. “The new shop will transform the retail offering at Perth, with a strong execution of local western Australian and Australian goods, our Collection concept featuring Sunglasses & Accessories and an overall strong sense of place, creating an atmosphere that is really unique to the airport and that imprints elements of Western Australia into the shop.”

Of great importance

As Diaz attests, Chinese consumers have become the engine of travel retail. “We serve Chinese customers in our stores all around the world from Canada to the UK, from Spain to Russia, to mention just a few locations.” In some locations, the Chinese traveler is of particular importance. “Clearly, we enjoy a strong share of Chinese consumers in our Asia Pacific operations such as Bali, Cambodia, Australia,


With a large number of Chinese and Australian passengers, Melbourne was a perfect location for Dufry to set up one of its New Generation stores

Singapore, Hong Kong with, in some cases a share of sales as high as 50%,” says Diaz. According to Diaz, the recent successful opening of the highspeed rail station in Kowloon Hong Kong is contributing to a significant increase in Dufry’s sales to the Chinese, and also enhancing the company’s exposure to Chinese business passengers and commuters. “In addition, Dufry has presence in mainland China in three domestic airports, if we include the recent opening in Guanghzou, and we have been operating for more than a year in the Cruise business onboard Norwegian Joy.”

Chinese-focused offer

Premium liquor, Chinese tobacco, luxury fashion and beauty, premium watches and health & wellbeing all take center stage in terms of Chinese customer preference, according to Diaz. “They are discerning consumers who seek newness and novelties and show a high level of sensitivity to value. They tend to be more prone to impulse purchases out of a range of brands they have in mind and are looking for a more personal service and more interaction with knowledgeable and expert staff.”

Dufry has entered Malaysia’s Travel Retail market, with a multi-brand Beauty and Accessories shop at Genting Highlands Resort

Diaz says building the Chinese passengers’ trust is “down to getting the basics right, as we have been doing for decades in terms of innovation, product assortment, setup of attractive promotions and value for money, delivering world-class stores and shopping environments and nurturing knowledgeable sales associates with the right language skills.” He adds that the company is significantly growing its cooperation and partnerships with Asian brands across various categories.

Digital connection

Because the dominant profile of the Chinese shopper is younger, and given the high penetration of the digital economy in China, Diaz says it’s important that Dufry deliver an omni-channel integration as well as a high level of digital interaction in general. “In this respect we are very pleased with the progress achieved in our digital strategy,” he says. “We have successfully rolled out on a global basis our Reserve and Collect service, the now-wellknown RED by Dufry App based loyalty card, and our social media platform ‘Forum.’ These tools are raising the game in terms of digitalization, and we are already reaching more that 1.5 million customers.” He adds that they are very pleased with the adoption of the loyalty program RED by Dufry by Chinese consumers. “In our new MTR operation, we are recruiting more than 1,000 new members every week, to whom we can now deliver tailormade offers.”

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 Retailer response to Chinese traveler

Lotte Duty Free sales reached a record high in 2018

Capturing the Chinese customer As duty free is the most important shopping channel for Chinese tourists, Asia Duty Free talks to retailers in South Korea and Australia, two popular destinations for the Chinese traveler, about how they attract these affluent shoppers by REBECCA BYRNE

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ccording to a report from think tank Fung Global Retail & Technology and consultancy China Luxury Advisors, duty free shopping accounts for almost one-third of Chinese tourists’ retail spending, well ahead of the department store channel at 18% and single-brand stores at 15%. The survey also reported that the majority of Chinese tourists expect services that enhance their shopping experience, such as Chinesespeaking staff, payment by UnionPay and on-site tax refund services. South Korea remains a key destination for Chinese tourists. While the 2017 THAAD missile dispute may have

Richard Goodman, Managing Director, Heinemann Australia


Andrew Gardiner, Melbourne Airport’s Chief of Retail

Luxury fashion brands such as Burberry are enjoying stellar sales growth at Lotte The Shilla Duty Free has recently opened a store in Gimpo Airport

impacted numbers to the country, especially when the Beijing government banned the sale of group tour packages to South Korea, recovery began in 2018. According to the Korea Tourism Organization, the proportion of Chinese tourists entering Korea over the last 10 years has increased from 17% to 30%. The number of Chinese customers in duty free shops has increased in parallel. While these numbers may still fall well short of 2016 levels, down just over 40% for the first 11 months of 2018, increased spending has pushed the duty free market to new heights. Indeed, Incheon Airport recently announced record annual sales of US$2.4 billion for 2018, beating its previous record set in 2017 and ranking it the number one airport for duty free in the world.

Firmly established

One of South Korea’s leading retailers, The Shilla Duty Free, continually revamps its marketing targeted to Chinese customers. With the latest addition of its store at Gimpo Airport, the company now has a presence in all the major airports in South Korea. It is also the first South Korean retailer to manage duty free stores in the three largest airports in Asia: Singapore’s Changi, Incheon and Hong Kong. With

several South Korean downtown stores in its portfolio, The Shilla Duty Free is well placed to capitalize on the influx of Chinese shoppers. In downtown Seoul’s The Shilla Duty Free stores, Chinese travelers are the main consumers. A company spokesperson commented that the most prolific shoppers are millennials in their 20s and 30s, and that they mostly buy in the Perfumes and Cosmetics category. This category has consistently ranked the most popular over the last five years, however the company is now seeing an expansion in the type of products purchased within the category and beyond, saying: “Chinese customers used to mainly buy luxury Korean cosmetic brands like Sulwhasoo or Whoo. More recently, their purchases have broadened to K-fashion/accessories and non-premium cosmetic brands.”

Targeting tours

While the company is seeing the proportion of tourists that are individuals as opposed to part of a tour increasing compared to previous years, tour groups are still a popular way to visit South Korea. Shilla Duty Free targets this segment by running nine offices in China’s main cities including Beijing, Shanghai and Guang-

zhou. These offices work closely with local travel agencies, strengthening The Shilla Duty Free’s partnership with Chinese credit card companies, banks and airlines, for example, all of which helps give the traveler reason to visit and shop. Inside the store, the company focuses strongly on reaching this traveler, with Chinese-speaking staff and a Chinese customer service center open year-round. The Shilla Duty Free has been operating Chinese SNS like Weibo and Wechat since 2014, and Alipay since 2016 – of great importance, since these are by far the most common ways for the Chinese national to spend. The company’s online presence is available in Chinese, and marketing campaigns target that group by celebrating Chinese holidays and offering beauty classes. The Shilla Duty Free employs social media influencers from China to promote its events and products.

Store sales explode

For South Korea’s leading travel retailer, Lotte Duty Free, sales reached a 38-year record high in 2018 at more than KRW 7.5 trillion (US$6.7 billion). This marked a year-on-year increase of 25%, due in part to the sharp drop in 2017 and subsequent recovery. Over the past five years, the company has seen sales to Chinese shoppers at its downtown stores explode, growing 320%. Sales at Lotte Duty Free’s flagship store in Myeong-dong, Seoul exceeded KRW 4 trillion (US$3.6 billion), a landmark, in December 2018. That all-time high represented an approximate 35% increase year-on-year. However, it is a different story at the airport, where sales increases have been flat over the same time period, with the exception of last year when Lotte pulled out of some stores at Incheon Airport.

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Retailer response to Chinese traveler

Since the THAAD dispute, Lotte Duty Free has reported a decline in the number of individual Chinese customers. The company is looking to maintain sales to this group by proactively holding various events and promotions exclusive to them. At the end of last year, for example, Lotte Duty Free celebrated the successful completion of a 20-hour live broadcast by 100 Chinese Internet celebrities from its World Tower store in Jamsil, Seoul. With The Shilla Duty Free has stores in the three largest international airports in Asia in addition to the three major airports in South Korea the aim of reaching 210 million consumers, the event was designed to promote ciaga, Alexander McQueen and Burberry Goodman comments on future trends: Korean cosmetics. The live broadcast was are also enjoying stellar sales growth “With the continued growth of digital produced in collaboration with Chinese at Lotte, as they are successfully luring wallets, we see this platform as an integral e-commerce company Alibaba. younger Chinese shoppers through their expectation for Chinese passengers. Historically, the company has aggresstreetwear-style products.” Understanding that many passengers, sively targeted tour groups, with a spokesnot just those of Chinese nationality, person saying: “We had always been the Down under exhibit planned purchasing behaviors, number one retailer in Korean duty free In Australia, Sydney and Melbourne are we see the use of influencers, targeted market in terms of attracting tour groups both popular destinations for Chinese offers, and communication on digital travelers. This population spent about platforms will also increase our ability to and customers before the THAAD disAUD$10.4 billion in Australia in 2017 connect with passengers beyond the walls pute. When Chinese group tours return, (approximately US$7.37 billion), a figure of the airport.” we will be again the one to dominate the market.” Lotte Duty Free is confident in its predicted to rise to AUD$13 billion (US$9.3 billion) by 2020. Triple the purchase total customer service, describing it as “indusAlmost half of the 1.4 million Chinese Melbourne airport has experienced try best” for Chinese shoppers, saying: visitors who arrive in Australia each year continuous double-digit growth of Chi“We opened the online store translated in travel through Sydney Airport. Here, nese travelers over the past 10 years. And traditional Chinese last year, which was over the past five years they have become a domestic online shopping industry first.” Chinese passengers have been the fastest growing source nationality, replacing its largest customer group behind AustraJapanese in the top spot. lian nationals. Demographic trends Heinemann Australia runs duty free Andrew Gardiner, Melbourne Airport’s Cosmetics, perfumes, luxury items, operations across seven stores at Sydney. Chief of Retail, points out that average jewelry and watches have always been shopping cart total of a Chinese traveler is popular purchases by the Chinese traveler, Richard Goodman, Managing Director, comments that Chinese passengers are three times that of an Australian shopper. especially with millennials in their 30s – one of the top five contributors to sales. Alongside the popular skin care products, the demographic that spends the most. As in South Korea, in Australia this group the retailer has seen a large growth of Lotte Duty free is now seeing a rise in has a particular affinity for premium perpurchases in the health and wellbeing segpopularity of eyewear and accessories. fumes, cosmetics and skincare. Premium ment, with particular emphasis on prodLooking forward, the company spirits and local assortment products such ucts made in Australia. To further attract believes that China’s younger generation as vitamins, confectionery and souvenirs customers, Melbourne has introduced a will be the most dominant shopper in the industry, saying: “Many fashion brands are also popular. “China Corner” in the arrivals hall, with including Gucci and Celine are having To maximize service and support the aim of providing information and great success at Lotte Duty Free by buildthe spending power of this important telecommunications to arriving customing strong brand identities particularly demographic, Goodman says: “We offer a ers. Internal wayfinding across the airport targeting China’s younger generation. number of Chinese service offerings that has both English and Chinese directions, Many other fashion brands such as Balenmake customers feel both welcomed and and the majority of customer-facing serwell catered to. For Chinese specifically, vice staff in stores are Mandarin speaking. we offer an Asian Markets team of seven This focus has proven highly successful. who are on hand to support with translaGardiner concludes: “We have a team tion, popular products and global trends, of people responsible for the continuous coupled with our training sales force, growth in our Chinese customers, actively many of whom are bi/multi-lingual.” generating relationships with Chinese Recently Heinemann Australia bolstered airlines and tourism bodies in China. payment options for Chinese consumers Australia attracts a very small portion at its Sydney Airport stores by accepting of the total tourism spend out of China, The Shilla Duty Free employs social Alipay. The move was implemented in and with the size of the population, the media influencers from China to time for Chinese New Year celebrations in opportunities to continue to grow this promote its events and products early February. very lucrative market are immense.” 30 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019


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Lagardère Travel Retail

Ermenegildo Zegna, an Italian luxury fashion house, is one of the brands that Lagardère Travel Retail offers at Wuhan Tianhe International Airport

Confident about

China

Eudes Fabre, the CEO of Lagardère Travel Retail Greater China tells Asia Duty Free Magazine how its long-term presence in China helps it better understand the Chinese consumers by ELENA OWYONG

L

agardère Travel Retail has revealed to Asia Duty Free that consumers can look forward to a wide range of luxury fashion and international beauty brands at the upcoming Beijing Daxing International Airport. The new travel retail space, which is expected to be ready in October 2019, will house well-known brands such as Emporio Armani, Gucci, Versace, Pandora, Jimmy Choo, MCM, and Kenzo.

A growing demand for luxury goods in China

During the interview, Eudes Fabre, CEO of Lagardère Travel Retail Greater China, says China’s travel retail industry is benefiting from the continued development of infrastructure and airport commercial spaces.

32 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

Another factor is the Chinese government’s goal of boosting domestic consumption, with an increasing amount of luxury purchases made at home instead of overseas. Given these favorable conditions, it is no wonder that many travel retail operators are opening new stores to tap into the lucrative China market. Despite the increased competition, Fabre is confident that Lagardère retains a competitive advantage over other travel retailers in China. “Our long-term presence in China gives us a good understanding of the market needs and nuances. We are also well known for our ability to bring in a broad portfolio of both international and local brands,” said Fabre.

Eudes Fabre, CEO of Lagardère Travel Retail Greater China, is confident that the company’s extensive experience in the Chinese market allows it to better understand how to engage with its customers

He added that Lagardère broad geographic reach, fully-empowered local teams and ability to deliver international standards of operational quality are also important assets for their future development. Lagardère opened its first mainland store in 2007. It currently has over 250 retail and food and beverage units in 15 airports and 30 railway stations in China, with plans to open retail spaces in three new airports in 2019, including the new Beijing Daxing International Airport.

Understanding the market

Lagardère’s experience in the Chinese market has allowed the operator to better understand how to engage with its customers. This is evident in the new 8,000 square meter master concession that was set up at Wuhan Tianhe International Airport in October last year.


Lagardère Travel Retail

When asked about the deciding factor that resulted in Lagardère winning the Wuhan Tianhe Airport Terminal 3 concession, Fabre shared that the company worked in close partnership with the airport company and brands to create an offer on par with the best international airports, with a balance of international, national brands and local favorites. Elaborating on the partnership with Wuhan Airport, Fabre said that from the early stages of the leasing of the concession space in the new terminal, Lagardère Travel Retail worked with Wuhan Airport

to identify potential brands that would meet the needs of travelers and contribute to achieving the goal of putting Wuhan Airport in the league of the world’s best airports in terms of commercial offer. He also pointed out that as capital of China’s Hubei province, Wuhan has a proud history, strong culture and unique cuisine, all of which are highlighted in the new Terminal 3. “Proper planning, flexible use clauses and an equitable sharing of risk and reward between stakeholders enable us to deliver a world-class commercial offer

to fast-growing, medium-sized airports,” Fabre said. According to Fabre, the Wuhan store is a milestone for their development in the region and he expects it to have strong traffic growth. “Wuhan Airport is an important concession for Lagardère Travel Retail Asia Pacific, not only by virtue of its size, but also because it is a powerful demonstration of the value created by our unique ‘3 business line’ development strategy, encompassing travel essentials, luxury and food and beverage,” said Fabre. Fabre noted that Wuhan has a massive market size of 23 million people, as of 2017.

Enhancing the passenger experience

Eudes Fabre (on the far left), CEO of Lagardère Travel Retail Greater China, at the opening of the Wuhan Tianhe International Airport master concession in October last year

34 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

With an emphasis on enhancing passenger experience, the new Wuhan stores offer a loyalty program and home delivery services. There is also a VIP Lounge for high potential customers. These customers are not necessarily those who spend the most, but those who showed keen interest in the products and could become loyal customers. Lagardère Travel Retail’s desire in enhancing passenger experience is also reflected through the Wuhan store designs and tenant mix. For instance, the brand line-up includes many celebrated local food and beverage such as Old Hankou and Yiping that specialize in Hebei food. Local Wuhan heroes also appear in the form of packaged food, fashion, gifts and souvenirs.


Dubai Duty Free

Dubai Duty Free at 35:

A force to be reckoned with In a wide-ranging interview, Colm McLoughlin, Executive Vice Chairman and CEO of Dubai Duty Free, looks back on 35 years of the operator’s phenomenal success by AIJAZ KHAN

C

olm McLoughlin, Executive Vice Chairman and CEO of Dubai Duty Free, was in jovial mood when we met at the company’s headquarters to discuss the operator’s 35th anniversary on December 20, 2018, writes Aijaz Khan, Publisher, Gulf-Africa Duty Free. And he had every right to feel cheerful, as just a few weeks later, the world-leading operator announced that it had smashed through the US$2 billion sales barrier in 2018. What a record-breaking year it was – and what a remarkable achievement from the unstoppable Irish businessman, who has headed and shaped the industry-leading retailer for more than three decades. So how did the company celebrate the 35-year milestone? McLoughlin said: “We started celebrating in mid-December, going to different areas, giving staff awards, such as People of the Month, and cutting the celebratory cake. And on the night of the 20th December, we held a small function with senior people, which we’ve been doing every year since we started.” Musing on the possible final end-ofyear sales figure, McLoughlin revealed: “It’s certainly going to be best year we’ve ever had from a sales point of view, and fingers crossed, providing the rest of December holds up, we will crack US$2 billion this year. Last year we were at US$1.91 billion, and this year we’re +4-5% up on last year – it’s a terrific thing for our 35th anniversary.” 36 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

From left: Dubai Duty Free’s Colm McLoughlin with Gulf-Africa Duty Free’s Publisher Aijaz Khan, celebrating the retailer’s 35th anniversary

When we met in Dubai, McLoughlin had just returned from a celebratory visit to Dubai Duty Free’s border store operation with Oman. “I visited the store last Thursday and met staff and cut cakes. I was walking round, shaking hands, joking that 35 is my age!” The year 2018 was certainly busy. Concourse C was refurbished with a new fitout, and it’s turning out to be a sales success, served by flights from Emirates and flydubai. “It’s just about complete now and it looks fantastic,” enthused McLoughlin. “We’re taking about 1 million dirhams (US$272,400) a day there. “We’ve introduced some new shops – we opened Victoria’s Secret a few weeks ago, and that’s doing very well. We’ve opened a refurbished Ferragamo store and a new Gucci store in Concourse B. There are no new areas, but we’re upgrading a lot of what we have. And the big exciting thing for the future is the new airport [Al Maktoum]. We have 4,000 square meters there now.”

Big Chinese spend

Sales have held up strongly despite the introduction of 5% VAT in the UAE on January 1, 2018. “VAT is charged on Arrivals at Dubai, so we’ve lost maybe close to 100 million dirhams (US$27.2 million) versus last year on Arrivals, but it’s more than compensated for by a similar increase in sales in similar categories on Departures. So it has made a difference, but the bottom line is it’s positive for us,” explained McLoughlin, adding that a refund system had been recently set up, with desks being installed at the airports. Passengers have to spend a minimum of 250 dirhams (US$68) before they can claim the VAT. McLoughlin pondered the huge operation that Dubai Duty Free has become over the years, both in terms of its sales and its sales force. “We now have 6,200 people working for us. Our tennis tournament celebrated 27 years in February, we’ve held the Golf World Cup for 26 years… and we’ve won about 700 awards.


“Sinead [El Sibai, Senior Vice President for Marketing] has just been to Los Angeles, where we collected Best DutyFree Shopping in the World for the 12th consecutive year at the Global Traveler Awards. And I’ve just attended the awards for MENAA, where we were presented with a second Customer Delight Award and CEO of the Year.” Dubai Duty Free’s success is due in no small part to the Chinese traveler. To attract these high-spending passengers, the retailer employs more than 800 Chinese sales staff. “15 years ago we had two or three Chinese staff and now we have 840 – our third largest group,” he said. “There are 16 flights a day from Dubai to Chinese cities and Hong Kong. To the end of November, the Chinese accounted for 4% of traffic through the airport but accounted for almost 17% of Dubai Duty Free’s business – which is why we have Chinese-speaking staff. It’s very positive for our business and doing very well.” Dubai Duty Free has a contract with Ctrip, one of China’s biggest travel agencies, in which customers booked through Ctrip get a discount with a minimum purchase. The retailer was the first operation in the Middle East to accept China’s UnionPay payment card. From January 1 to the end of November, UnionPay accounted for 6.4% of Dubai Duty Free’s business and it is now the third largest payment card after Visa and Mastercard. For years, the company took more than 50% in cash payments, and now 55% of its business is on cards, noted McLoughlin. He revealed that the Chinese like to buy a lot of skincare and makeup, watches, Chinese cigarettes such as Chunghwa, and high-end liquor such as Hennessy Cognac. Also high on their

shopping list are handbags, ready-towear fashion, Gucci, Hermes and Chanel. The company actively seeks to identify products they want to satisfy what he calls their “big spend”. Dubai Duty Free’s success also owes a lot to its close partnerships with suppliers. During December’s Black Friday event, Lancôme did a special promotion giving a 20% discount if people bought two of particular product with more discount if they bought three. “We took 10 million dirhams (US$2.7 million) in sales, and one Chinese group spent 1.2 million dirhams (US$327,000) on lots of Genifique face treatment.”

ing at US$10,000 per bottle. “Collectors will buy this type of product and it will probably double in price,” he smiled. Indeed, one of McLoughlin’s former neighbours has ordered a bottle. He goes on to tell the tale of a similar gift from Diageo, who once gave him six bottles of Johnnie Walker with his name on the bottle. “I gave one to each of my three kids, one to [wife] Breeda’s brother-in-law, one to my former Indian neighbour, and I kept one for myself. I put it on the shelf of my bar but of course I’d never touch it. One of my brothers visited – he always has a tipple of whisky at night – and he opened it. That much of the whisky had gone. I was angry and wrote a note on the label – ‘Do not touch – rat poison!’ I waited for his reaction before he left. I said: ‘You didn’t touch that, did you?’ We had great fun about that.”

Boosting airport capacity

A ceremonial cake-cutting to mark DDF’s 35th anniversary

Another loyal supplier is Pernod Ricard, whose turnover at Dubai Duty Free reached 168 million dirhams (US$45.8 million) last year. For the operator’s 35th anniversary, the French spirits group hosted a dinner in Dubai in December for 35 guests only. Each guest received a bag including a silver quaich engraved with their name. The hosts ended the evening by presenting a 35yo Scotch whisky – only 35 bottles of which are available at Dubai Duty Free – retail-

Dubai Duty Free also plays its part to boost travel numbers to the Emirate. Last year, for example, the retailer sent two staff on a sales trip to China with the Dubai Tourist Board (DTCM). The company also has contracts with recruitment agents in China who do promotions and attend events on its behalf. Traffic through Dubai International Airport hit 88 million last year, and is forecast to exceed 90 million this year. With the new Al Maktoum Airport now being built, its capacity is set to grow from 5 million to 27 million. A decade from now, spending there is set to reach US$42 billion, noted McLoughlin. The airport will boast three runways and capacity for 135 million passengers at the start, rising to 260 million in the onward plan. As well as its famous duty free stores, Dubai Duty Free operates shops in the Emirates Airline First and Business Class lounges. The company is finalizing plans for a concierge service where products are brought to your lounge seat. The company is also looking forward to the Dubai 2020 show and is in discussions with the organizers to see what kind of services it could offer. “We’re positive about it. They are talking about 22 million visitors during the six months. It will create a lot of traffic.” After achieving so much in his stellar career, is there anything McLoughlin can’t turn his hand to? Well, despite Dubai Duty Free’s extensive use of social media, he confessed: “Instagram – I don’t do it!

DDF hits a new record raking in US$2 billion in sales in 2018 www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

37


Hong Kong International Airport

Looking to the future

The airport’s East Hall will undergo makeovers to elevate the passenger experience

Hong Kong International Airport (HKIA), which celebrated its 20th anniversary last year, has embarked on ambitious plans to increase its capacity and enhance passenger experience. Here, Asia Duty Free finds out how HKIA keeps up with the needs of its passengers by ELENA OWYONG

H

ong Kong International Airport is one of the busiest and most profitable airports in the world, welcoming a record 74.7 million passengers in 2018. In its 20 years of operation, it has consistently received many accolades, including the 2018 Skytrax’s World’s Best Airport for Dining and World’s Best Airport for Transit. Despite its high passenger traffic, HKIA is not resting on its laurels. With the new developments such as the Hong Kong-Zhuhai-Macao bridge launched in October 2018, Hong Kong Airport Authority Chairman Jack So expects HKIA to continue on this successful path in the coming years. “With the continued development of Hong Kong’s cross-boundary transport network, including the Hong Kong-Zhuhai-Macau Bridge and Express Rail Link, 38 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

HKIA is poised for further and faster growth. The airport will continue to be the most successful aviation hub in South East Asia, and a source of pride for Hong Kong people,” Chairman So said.

Increased capacity

To meet the increasing passenger capacity needs for its airport services, HKIA is expanding its Terminal 1 and building the massive SKYCITY. The expansion works will be carried out to the north of the existing Terminal 1 building. According to HKIA’s spokesperson, the expanded area alone will offer over 40 new check-in counters with self-bag drop facilities, and two new additional baggage reclaim carousels will be installed. More seats, shops and catering outlets will be included in the expanded Arrivals Hall, in addition to a new runway. The main projects of

the Terminal 1 expansion will cost HK$7 billion (US$892 million), with completion scheduled for 2020. Additionally, the development of SKYCITY is also underway, with the aim to expand and transform HKIA into an “Airport City.” The SKYCITY is an integrated development with retail, entertainment and dining facilities, plus hotels and offices. The 25-hectare development is one of the largest commercial projects in Hong Kong; it is scheduled to be open in phases from 2023 to 2027, while the hotel is scheduled to open at some point between 2020 and 2021.

Improving the tenant mix

Along with its expansion plans, HKIA has also been aggressively updating its portfolio of concessions. Last year alone, it called for and awarded multiple conces-


store, the spokesperson shared that both licensees have been offering a broad range of customer engagement activities that have driven higher traffic and sales. For instance, the Beauty & You store has “magic mirrors” for virtual makeup and a “New Generation” zone featuring emerging Korean and Japanese beauty brands. Duty Zero feautures tasting bars, an augmented reality digital bartender and an in-store VIP lounge. Apart from the traditional retail categories, HKIA has also expanded its retail trade mix to include new categories such as athleisure, kidswear, entertainment, express hairdressing, lifestyle and more.

Hong Kong International Airport is expanding its Terminal 1 to cope with increasing passenger traffic

Online shopping

To further enhance customer experience, HKIA has launched a new one-stop, airport-based online shopping platform, the HK Airport Shop in July 2017. It allows passengers to order a wide array of products from beauty, wine, packaged food to airport exclusives anytime and anywhere. Thereafter, passengers can collect their orders at the airport as early as three hours after order confirmation, before or after their flights, or opt to have the shopping delivered to a Hong Kong address. Stressing that HKIA sees digitalization as “an integral part of the airport’s retail development,” the spokesperson noted that the airport has introduced mobile payment platforms such as Alipay, WeChat Pay and Apple Pay at shops and restaurants.

An artist’s impression of SKYCITY, HKIA’s integrated development with retail, entertainment and dining facilities, hotels and offices

sion tenders, including the largest, an award of 36 luxury store concessions in a tender to a glittering line-up of the world’s renowned luxury brands at Terminal 1. Elaborating on the store line-up, HKIA’s spokesperson said that Louis Vuitton and Chanel will occupy the two duplex icon stores at Terminal 1’s East Hall. These stores are ranked as travel retail’s most prominent shopping locations worldwide. The spokesperson noted that along with Louis Vuitton, a mix of nine other renowned brands will also be added to HKIA’s current portfolio: Panerai, Breitling, Chloé, Montblanc, Salvatore Ferragamo, Rimowa, Roger Vivier, Saint Laurent and Alexander McQueen. To keep up with market trends and passengers’ luxury brand preferences, HKIA is completing a number of retail makeovers in the East Hall. Specifically, the central area will see a cluster of luxury watches and jewelry brands, in response to passenger demand. Meanwhile several tenants, including Tiffany & Co, Bulgari and Moncler, will move to larger units

where they will be able to offer a wider range of products. Gucci will be expanding into a 5,000 square feet 465-squaremeter flagship store. The luxury boutiques will be introduced in phases, with renovations beginning in April 2019. Most new shops will be reopened by the end of 2019.

Strategies to enhance the customer experience

During the interview, HKIA’s spokesperson shared that the airport takes multiple elements into consideration when planning its retail development. “To cope with the needs of today’s growing millennial travelers, we have focused on elevating passengers’ shopping experience through omniretail, digitalization and customer engagement with interactive features,” the spokesperson said. Citing their two anchor licensees Duty Zero by CDF, which is a liquor and tobacco concession, and Shilla Duty Free’s “Beauty & You” perfume and cosmetics

Hong Kong International Airport’s online shopping platform, the HK Airport Shop, gives passengers the convenience of shopping online and picking up their orders upon reaching the airport

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

39


 Oriental General Trading

Oris

China brand fashions further success Oriental General Trading’s focus on globetrotting Chinese smokers is paying dividends as the brand gains traction worldwide by HIBAH NOOR

Oriental recently introduced its Oris Fashion double-capsule, super slim cigarette, which boasts two flavors in one, as well as the latest Orange peel capsule flavor range in both the Panda and Peace variants

40 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019


O

riental General Trading Inc, the maker and distributor of tobacco and spirits products for Chinese travelers, is ending 2018 with a flourish, as it prepares to move its headquarters by the end of the year. Following the successful launch three years ago of its Oris China cigarette brand targeted at Chinese smokers, the company recently introduced its Oris Fashion double-capsule, super slim cigarette, which boasts two flavors in one, as well as the latest Orange peel capsule flavor range in both the Panda and Peace variants. The company’s latest product innovation was launched in the fourth quarter of 2018 and immediately secured a listing at the new Dufry MTR location in Hong Kong. Oris China secured listings with Zhuhai Duty Free in September 2018, a major promotion took place with the operator during the Mid-Autumn Festival in September featuring Oris-uniformed promoters and a special display at the front of the store. “We’ve done really well since our launch in September and we’ve already gotten repeat orders,” says Tania D’Souza, General Operations & Marketing Manager, Oriental General Trading Inc. In addition to the Oris Fashion brand, Zhuhai Duty Free carries the Oris Peace Queen Size, Oris China Nano packs, King Size and Super Slims. Recently, the Oris China brand was also launched in a big way at the new Dufry MTR duty free store, where it will soon have a dedicated wall bay. Although Oris China is targeted at Chinese travelers, D’Souza has observed that many international passengers at Dubai Duty Free also purchase the brand, especially the Panda version and the Super Slims. She explains: “We’ve noticed that the packaging appeals to non-chinese passengers as well, as it is quite unique, and the blend is fit for non-Chinese smokers. A popular SKU is the blue Panda nano packaging, which is a popular size for middle-eastern smokers.”

Trained brand ambassadors in-store

To gain brand visibility in duty free stores, Oriental signs up for promotional periods, offering special promotion packs or a 10% discount. The company endeavours to have a dedicated brand ambassador working in every duty free store, as D’Souza explains. “Purchases by Chinese travelers are usually planned, but if they aren’t planned, they feel more comfortable speaking with sales staff who can speak Chinese and who understand the brand. When they travel, they are out of their comfort zone and need to converse with someone who speaks the language. If they’re not sure about a product, they won’t buy it. If they don’t know the brand, our trained brand ambassadors do a great job of explaining the brand to them as well as the differences between each SKU, flavor and blends.” The company introduced the Oris China brand after gaining a lot of experience distributing Chinese brands in the Middle East, Africa and travel retail some 15 years ago. The company has experience in distribution of Chinese tobacco and liquor products and understood what Chinese travelers were looking for. “We saw an opportunity because we could tell smoker trends in China

were changing. The older generation are brand loyal and prefer to smoke the same thing, but young adult smokers are always searching for something new. They want international brands to smoke that are lighter, they want packaging that’s different, unique and trendy. We wanted to create a combination between a traditional Chinese packaging and international packaging for to appeal to our target consumers as well as still maintain the Chinese elements of the brand.” As a result of its travel retail presence, Oris China has gained “huge” brand recognition, says D’Souza, who oversees the Oris China brand. The rest of the sales team is based in Dubai, in Asia Pacific, and in North America. Oriental also has listings with Dufry and DFS at San Francisco, Los Angeles International Airport, New York JFK, Hawaii and DFS Abu Dhabi. The brand is listed with King Power in Bangkok as well as in Cambodia, Vietnam, Singapore, Japan, Maldives, Sri Lanka and South Korea, and is set to launch in Taiwan soon. Macau and Malaysia are upcoming projects.

Beating off the competition

The company’s two main challenges are competition and regulation. The latter is a “big” challenge, says D’Souza. The company has joined the lobby against the WHO’s initiative to ban sale of tobacco products in duty free channels because of alleged links to illicit trade. Other difficult issues include the requirement for plain packaging in certain countries – as the attraction of the brand is the packaging – and countries that change their health warnings every year, which can be quite costly for the firm. To fight off the stiff competition, Oriental makes sure its packaging and product are of high quality, and available at the right price. It offers different price ranges – high, middle and low-end. “We can also compete through our duty free marketing, brand ambassadors, promotions and visibility,” she notes. Chinese travelers are quite focused on using apps such as WeChat, to learn more about product offerings in the airport duty frees. This has proven to be good measure of brand awareness. “For instance, at DFS in Abu Dhabi and at Dubai Duty Free, we’ve noticed that when Chinese people who smoke our product are going abroad, they have a picture of our product on their phones when referring it to the sales staff, which shows a positive growth in brand awareness.” As its business expands, D’Souza has a message for travel retailers. “We are flexible and we work super-quick. Wherever brand support is required, we’re there. We are a one-stop-shop, if retailers need promotions, brand ambassadors, merchandising support, or require special limited edition packaging for a specific airport locations or Chinese New Year.” She cites the example of Oriental’s Dubai Duty Free-exclusive gift box packaging featuring the UAE skyline for Chinese New Year that made its debut in January 2018. In the future, the company plans to develop travel retail exclusive products for Chinese New Year as well as other occasions, featuring special packaging.

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

41


Coccinelle

Our

window to the

world

Coccinelle’s Spring/Summer 2019 advertising campaign stars three models on their travels in Morocco

Coccinelle’s Head of Travel Retail explains how the accessible luxury accessories brand is tackling the ultra-competitive fashion sector

2

018 has been a busy and flourishing year for Coccinelle, the Italian accessible luxury leather goods brand. The company racked up 35 openings around the globe: boutiques, shop-inshops and corners in Europe, Russia, Asia Pacific and Central America, at airports, seaports, downtown duty free malls and on cruise ships. “We are very pleased with this achievement, as we see travel retail as our window to the world and we want to thank all our partners for their trust and all their support and dedication with all the openings,” enthuses a delighted Emanuele Mazziotta, Head of Travel Retail, Coccinelle. He describes the Asia Pacific region as an important area for the brand’s expansion in travel retail and in the cruise channel, which, combined, saw 12 new openings in 2018. They included a 20 42 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

square meter corner at Ever Rich Duty Free Plaza Neihu in Taiwan, a 15 square meter corner at NagaCity Walk Duty Free Mall in Phnom Penh, Cambodia, two corners at KLIA and KLIA2 in Malaysia, and at Busan Duty Free Mall and Busan Seaport in South Korea. The company has continued to build its cruise business with additional Starboard ships and with CDFG on Costa Atlantica, also in Asia.

Entering new regions in the Americas

2018 has also seen Coccinelle entering new regions in Central America with locations at San Salvador El Salvador Airport and at Port of Spain Piarco Airport in Trinidad and Tobago. Meanwhile, in Europe and Russia, in travel retail and in the cruise retailing channel, 21 locations have begun trad-

ing at Budapest Ferenc Liszt Airport, in Greece at Heraklion and Rhodes airports, in Italy at Cagliari and Florence airports, in the UK at London Gatwick Terminals South and North, and in Estonia at Lennart Meri Tallinn Airport. In Russia, described by Mazziotta as an important and strategic region for the brand, Coccinelle has strengthened its presence with openings in Moscow Sheremetyevo Airport Terminal B, an additional location at St Petersburg Pulkovo Airport and at St Petersburg Seaport, two locations at Novosibirsk Tolmachevo Airport, and at Krasnodar International Airport. In December 2018, an additional personalized 40 square meter boutique opened for business in the Czech Republic at Prague Václav Havel Airport Terminal 2. The store is designed with Coccinelle’s new, refreshed retail concept made of two primary colors, Coccinelle Graceful Pink and Coccinelle Elegant Gold. It showcases the Spring/Summer 2019 season – taglined Space is the Place –


Coccinelle’s newly opened personalized points of sale include Ever Rich Duty Free Plaza Neihu in Taiwan

which aims to take people to a dimension suspended between a dream and real life. Handbags sport an elegant, soft leather flap, unusual materials, and a bubblewrap effect for shopper bags. Viennese straw is also featured, as well as a jelly-like texture for tubular bucket bags. See-through details adorn the brand’s signature Ambrine bag. Supernatural colors are used for details: fuchsia, neon blue, silver and optic white, with fun techno influences. Coccinelle is well distributed around the globe with 170 points of sale in 34 different countries, notes Mazziotta. The company started developing the travel retail channel in 2014 when it had only 20 points of sale, mainly in Europe and Russia. Today, the brand counts 70 locations in Europe and Russia, 32 in Asia Pacific, and it is onboard 64 cruise ships globally, with many additional openings in the pipeline for 2019.

Experiences and emotions

In 2018, the brand has worked on several projects to strengthen its travel retail business. They include what Mazziotta calls the “retailization” of its points of sale, the product assortment and the opening of personalized stores. Explaining the term retailization, he says: “It’s about making the full retail potential of the business, rethinking, reimagining and restructuring the business to optimize sales by connecting brands to shoppers through the power of retail thinking. “It is a new way of marketing, a new way of dealing with branding. It is a way to look at travel retail as a domestic retail store.” He has a clear view of what the company wants to achieve in-store. “Travelers dream about experiences and look for emotions, something to stir their heart. Stores in the travel retail channel need to reflect what customers can find in

Prague Václav Havel Airport Terminal 2 carries Coccinelle’s Spring/Summer 2019 collection

the domestic stores in terms of product assortment, display and service. Customer service plays an important role; sales staff need to be well trained in explaining the essence of the brand and the products to end customers, who are more and more conscious about spending money. The competition in the product offer is getting very strong among the brands, so customer service could be a key to success.” Visual merchandising is also crucial, he adds. “We have worked with our partners, training the sales staff in the stores, improving the customer service and visual merchandising.” Mazziotta has studied all the brand’s points of sale and aims to offer “a very strong assortment made of image lines and commercial lines conveying a unique message around the globe”.

Space to grow

Additionally, Coccinelle has opened several personalized points of sale, always bearing in mind the experiences and emotions travelers are looking for. He cites as examples Prague Václav Havel Airport T2, Ever Rich Duty Free Plaza Neihu in Taiwan, NagaCity Walk Duty Free Mall, KLIA, Florence Airport, and Moscow Sheremetyevo Airport Terminal B.

“We already have several new openings in the pipeline for 2019 in all the regions and we’re considering entering other sub-channels in travel retail such as the inflight business. 170 points of sale and 34 countries is a good basis to develop and grow further,” he says. Asked about his vision for 2019, Mazziotta explains: “I think there will be space to grow for the fashion category in travel retail and the democratization of travel will play an important role for affordable luxury brands. At the same time, customers look for experiences and emotions, so the brands would need to invest in what I call ‘retailization’ to be successful. A strong and supportive partnership with the retailers will be fundamental in order to train the sales staff in the stores, have a strong product assortment and impeccable visual merchandising.” The aim is to open more personalized spaces, featuring Coccinelle’s sophisticated and elegant store concept, where customers can experience the essence of its brand and products. “We want to open Coccinelle locations in key destinations worldwide and in the Asia Pacific region, where the highest traffic airports are located. Travel retail is our window to the world where we can capture millions of travelers,” Mazziotta concludes.

Florence International Airport is one of 35 retail openings Coccinelle celebrated during 2018

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FOREO

FOREO’s UFO is a portable smart mask device that uses LED light therapy to rejuvenate the skin in 90 seconds

The LUNA mini 2, a facial spa massager and cleanser, is one of FOREO’s best-selling travel retail products

High tech beauty for everyone Swedish beauty and oral care device company FOREO is making waves in the industry by placing professional-level treatments in the hands of ordinary consumers by HIBAH NOOR

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olorful, cute, compact and practical. FOREO’s products have received rave reviews since its launch in 2013. While these descriptions are accurate, what really defines the brand is the cutting-edge technology used to create its professional-level products. One such example is FOREO’s award-winning line of facial cleansing brushes – LUNA. This line currently includes products such as the LUNA play plus, LUNA go and LUNA 2. The LUNA 2 is the LUNA range’s flagship product. It is made of medical grade silicon and can generate transdermal sonic pulses, called ‘T-Sonic’, at varying intensities to provide facial cleansing and anti-aging benefits. Asia Duty Free speaks to Ashlee Park, PR & Marketing Assistant Manager, FOREO Travel Retail, to find out how the company develops products that cater to the needs of today’s travelers.

Appealing features for travel retail According to Park, travel retail is one of FOREO’s highest growing channels. The company currently has 230 duty-free retail stores in airports, airlines and border points across every continent. Even though FOREO’s foray into the travel retail industry is relatively short, its success has been stunning. Since its entry into the market, FOREO has sold

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over four million devices through travel retail, half of them from the LUNA line. One of the most popular items is the Luna mini 2, a facial spa massager and cleanser, which won the Best Electronics Product at the 2018 Travel Retail Awards. The Luna mini 2 comes in six colors such as mint, pearl pink, fuchsia, sunflower yellow, to suit different skincare needs. Park attributes FOREO’s success in the travel retail industry to two key factors – travel-friendly features and advanced technology. “All FOREO products have been designed specially to cater to travel retail. They are practical, portable, and visuallyappealing. Our devices also come with a USB charger and travel pouch,” Park said. Beyond having user-friendly features, the company also places a lot of emphasis on addressing consumers’ needs. To bridge the gap between beauty and technology, the company believes in making professional-level treatments easily accessible to the consumers. For instance, FOREO’s UFO device is the world’s first LED thermo-activated smart mask that offers customised treatment to its users. According to Park, the UFO Activated Masks are developed and formulated by top Korean skincare experts and the FOREO institute to “bring a revolution in Korean beauty trends by combining with Swedish beauty technol-

ogy”. Additionally, consumers can manage their UFO gadget using the FOREO beauty app. Some functions of the app include building a personalised skin profile, tracking their mask usage and setting reminders for the mask.

Trends in the beauty market

FOREO has always been at the forefront of technology, developing quality products that can be used by consumers at their convenience. So, it is no wonder that the company is inspired by the rising digital wellness trend. “Digital wellness is a trend that is evolving and growing. FOREO aims to upgrade the active lifestyle through innovative, forward-thinking technologies especially since more and more travelers are seeking products and services to enhance their appearance on the go,” shared Park. Aside from that, FOREO also sees personalized care as another important trend. Park revealed that their future products will offer skincare treatments tailored to suit the users’ needs. “We are looking to incorporate many more lifestyle features, such as detecting air quality and the user’s skin condition at the time. Based on personal data the device could come up with a mode or treatment that is best suited for that particular time.”


WHEN INTEGRATED BECOMES INTEGRAL TRAVEL RETAIL’S BEST TURN TO FILTR FOR STRATEGIC MARKETING AND DESIGN FILTR’s team of travel retail experts have delivered projects for some of the industry’s biggest and most progressive names, all over the world. We build brands. We stimulate growth. We promote innovation. We change perceptions. Whether you’re an established leader or an ambitious challenger, we can create and execute tailored strategies across a range of marketing and design disciplines which cut through the noise, make an impact on key audiences and help you thrive in an increasingly challenging market. If this sounds interesting – (and why wouldn’t it?) – then feel free to get in touch.

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Editor’s Picks

As good as gold

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The Year of the Pig was celebrated with flashes of red and gold and a surplus of good luck and good fortune. See how duty free encapsulated 2019’s festive spirit

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1. Limited Edition Davidoff Cigars: Davidoff Cigars celebrates the Chinese Year of the Pig with exclusive Limited Edition cigars. The Gran Toro 6 x 56 format with its pigtail is wrapped in a shiny and oily Habano 2000 wrapper from Ecuador and develops creamy notes with pepper and oak wood once lit 2. Clé de Peau Beauté Refined Lip Luminizer (Sweet as Candy): The Refined Lip Luminizer delivers vibrant, intense color with a sophisticated shine. Housed in a slim, teardrop bullet to give precise application, lips are smoothed and moisturized, and given the illusion of fullness

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3. Penderyn Single Malt Welsh Whisky: This Welsh export is made at the Penderyn Distillery, located in the Brecon Beacons National Park in Wales, UK. Each cask is nosed and tasted individually and then finished in ex-Madeira barriques 4 MDActive Honey & Propolis Candy 75g: A conveniently packaged candy by AstraGrace combines the antibacterial properties of Medicative 20+ honey and propolis with eucalyptus oil. The ingredients provide relief for initial signs of cold and flu, and the taste keeps your breath fresh


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9 7. 88 Vineyards: Hailing from South Africa, Diverse Flavours brings travelers vibrant and vigorous wine with a deep garnet color and powerful blackcurrant and black cherry flavors. This rich, fruity Cabernet Sauvignon has honed tannins brushed with the herbaceous complexity of indigenous shrubs

5. Balmoral Collection 12’s Year of the Pig: Agio Cigars presents the Balmoral Collection 12’s Year of the Pig wooden box, which contains four small Panatelas, four Panatelas, two Coronas and two Corona Tubos cigars. The high-end packaging makes for an enticing gift 6. Ritter Sport Chocolate World (4 x 16.67g): Bring your world travels home with this new Ritter Sport Chocolate World. It offers four mini bars to choose from in Chocolate World: Cornflakes, Hazelnuts, Strawberry Yoghurt and Fine Milk Chocolate

8. Seasonal - Gold kaleidoscopic limited-edition range: Vibrant flavors like Spiced Caramel tea provide a kaleidoscopic journey through authentic East India Company patterns of the world from textiles, tapestries and wallpapers in layers of textures and rich colors, creating a sense of celebration 9. Leonidas Chinese New Year Dora Gift Box: Belgian chocolatier Leonidas has created the round Leonidas Dora Gift Box dressed for Chinese New Year. This limited edition design depicts a peony flower, which is associated with good fortune in China, and other seasonal symbols. The round shape itself represents unity and togetherness. A collection of 13 ganaches, pralinés and caramels are contained in vibrant red with the design elements highlighted in gold hot foil.

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Kiehl’s

Cutting the ribbon at the Kiehl’s launch are (from left:) Jonny Wan, Artist of Kiehl’s Lunar New Year Limited Edition; Gwyn Sin, General Manager of Changi Airport Group Airside Concession Operations; Taemin, SHINee Member; Petrina Kho, General Manager of Kiehl’s Travel Retail Asia Pacific; Phil Yoon, Managing Director of The Shilla Duty Free and Pek Hai Lin, Manager of ZeroWasteSG

KIEHL’S CELEBRATES

Chinese New Year at Changi Airport Asia Duty Free Magazine was a guest at the opening of Kiehl’s Travel Retail Asia Pacific’s first pop-up store at Changi Airport’s Terminal 2

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by REBECCA BYRNE

he Kiehl’s exclusive pop-up at Singapore Changi Airport Terminal 2 is a colorful, welcoming space with a host of interactive stations designed to capture customer attention. The bright red theme epitomizes the essence of the forthcoming Lunar New Year, symbolizing good fortune. Through its collaboration with illustrator, Jonny Wan, Kiehl’s has created a fun and cheeky character called Lucky the pig, who navigates his route home from New York to Singapore, inviting travelers to join him on his journey. Asia Duty Free Magazine spoke to Petrina Kho , General Manager of Kiehl’s Travel Retail Asia Pacific, at the launch. When asked about the strategy behind the event, she said: “We wanted to celebrate Lunar New Year with travelers by highlighting Kiehl’s 160 plus years of brand heritage. It feels natural to tie the link between New York City, where our headquarter is, with Asia. The reception today confirms we have made the right decision.” The partnership between Kiehl’s, The Shilla Duty Free, and Changi Airport 48 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

Group started in 2014. Kho believes that these three companies share the same values and feels that this Changi-first pop-up will elevate customer’s shopping experience. Travelers visiting the pop-up will be able to purchase limited edition products, take advantage of exclusive offerings and play interactive games designed with Wan’s graphics. In March, following on from the popup and capitalizing on the raised awareness of Kiehl’s products, the company will launch its new Ultra Facial Cream with ultra clean formula to remove parabens for an improved experience. Commenting on this new offering, Kho said: “With-

out compromising the experience and performance via the removal of parabens, the new Ultra Facial Cream comes with stronger and proven efficacy that helps your skin be 1.7x more hydrated.” At the pop-up launch, the company announced its collaboration with ZeroWasteSG, a non-profit and nongovernmental organization dedicated to help Singapore eliminate the concept of waste, through its BUY Your Own Bag program. Kiehl’s has pledged to donate SGD$1 (US$0.75) for each purchase in the pop-up store. Kho is also passionate about community outreach saying: “We believe that a worldwide international company must have a purpose for its existence, to go beyond the everyday work, and make better the community we operate in. Even the smallest change or action can make a big difference to the entire world.”

Petrina Kho, General Manager of Kiehl’s Travel Retail Asia Pacific, tells us about the company’s collaboration with ZeroWasteSG. Kiehl’s has pledged to donate SGD$1 (US$0.75) for each purchase in the pop-up store


Year of the Pig   

CONFECTION CELEBRATES good fortune and prosperity The Year of the Pig was celebrated with firecrackers, gift giving and other festive traditions. Asia Duty Free delves into the confectionery category to see how different brands maximize their presence during this auspicious occasion by JAS RYAT

C NITR is building engaging solutions for its brands as a part of the Beijing Airport refurbishment of T2 and T3, shares Stewart Dryburgh, General Manager at Nestlé International Travel Retail

hinese New Year is an important occasion across the world, as a sixth of the world’s population celebrates the 15-day holiday. The event represents the world’s largest human migration as Asians head home to celebrate with family, and this is why confectionery brands plan strategic innovations around this holiday in travel retail. Asia Duty Free spoke to several leaders in the confectionery category to understand more about why the occasion has become a permanent fixture in their calendar. Speaking to Peter Dige, Travel Retail Director at Anthon Berg, Stewart Dryburgh, General Manager at Nestlé International Travel Retail (NITR), and Miriam Richter, Marketing Manager at Lindt Travel Retail, we received the simple answer: buying power.

Lindt celebrated the Year of the Pig at Changi Airport T2 with a festive activation featuring an interactive photo booth to share the experience

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media platforms in order to directly reach and engage with the Chinese audience. Chinese millennials are key to global travel retail growth and – like their fellow millennials in other regions – prioritize spending money on collecting and sharing life experiences rather than things, leading to a boom in the so-called experience economy. Furthermore, they are willing to hand over their data in return for enhanced, customized experiences, and they are digital natives, which impacts on their expectation of the retail process. In terms of product, they are seeking premium brands and a sense of indulgence.

The theme of this year’s Chinese Lunar New Year was firecrackers. Anthon Berg was sure to illuminate its presence at Singapore Changi Airport Terminal 3 and Guam International Airport amongst other airports in Asia

ADF&TRM: Why is the Chinese traveler so important to your brand? Peter Dige: The Chinese are very important because of the buying power and also because they want to have brands with a story and a quality that is acceptable. When we look at the numbers of Chinese who are traveling, then we have a huge target group, and here we are working with information on the shelf for Chinese customers. We have information in Chinese, and that is an extra service to these customers. Stewart Dryburgh: Chinese travelers are important to us for the potential they represent, and we need to work extra hard to introduce these consumers to the fabulous world that is chocolate and confectionery. According to data from the Association of Chinese Chocolate Manufacturers, the Chinese consume 70 grams of chocolate per capita every year. Tiny when compared to the 2 kilograms consumed by the Japanese and Koreans and 7kg of Europeans (source: Association of Chinese Chocolate Manufacturers – www.marketingtochina.com). However, that is changing, and when one considers the Chinese population, the potential is huge – both in China and throughout global travel retail. Miriam Richter: Asia is one of the regions Lindt is very much focusing on for this and the coming year. Chinese travelers represent an estimated 30% of global duty free sales (source: L2 Insight Report 2017 - Cross-Border and Travel 50 ASIA DUTY FREE & TRAVEL RETAILING MARCH 2019

Retail). Chinese millennials make up 73% of the Chinese outbound market (source: APEX Insights: The Chinese Millennial Traveler). Millennial target groups younger than 40 years have one of the highest spending powers in confectionery travel retail (source: CIR – The Lindt Nationality Study). ADF&TRM: Outbound tourism from China in 2019 will reach 174 million Chinese travelers. What is your brand doing to capture this market? Are you able to share any trends you see in consumer shopping behavior? PD: We are very well informed. The theme of this year’s Chinese New Year is Firecrackers. The Chinese celebrate the coming of the New Year with traditional Chinese customs. We have made sleeve solutions for the Anthon Berg product, and that is really helping the brand. Sales have a great impact with this kind of sleeve. We know that they are looking for special products, and we have our Chocolate Liqueurs, Chocolate Coffee and Chocolate Cocktails in a bottle shape with different kinds of fillings. We therefore have something unique for the Chinese. SD: NITR is building engaging solutions for its brands as part of the Beijing Airport refurbishment of Terminals 2 and T3 and will look to be the best-inclass solution for Shanghai. NITR has also rebranded its Nestlé Swiss fixtures in Guangzhou to make them more appealing to the Chinese consumer. In addition, 2019 will see us testing with relevant social

MR: We have a number of strategies. The first is to tackle the festive opportunity: Chinese New Year and further Chinese festivities. We have launched Lindt Mini Pralines, a cute, young and colorful pralines proposition in small sizes and available as a multipack – a perfect choice for informal gifting for a younger Asian target group. And finally, we have placed more focus on self-consumption and snacking options, as the millennial Chinese target groups buys a lot, but in small packs as a snack on the go. For example, our Fruit Sensation Pouch Bags, which are going to be launched at the beginning of 2019, are an example of how to leverage this trend better. ADF&TRM: Are you able to tell us about any activations or new products you are promoting during Chinese New Year? PD: Yes, we have the Chinese New Year sleeves for the product, and then we are running different kinds of promotions during this festive period. SD: In 2019, NITR will continue to implement its SOUL framework (Stories, Occasion, Unique and Local) to help deliver aspirational and shareable brand stories across all brands, enriching millennial consumers’ travel experiences. The Chinese form a critical part of that strategy. MR: Upcoming Chinese New Year 2019 will include a peach blossom activation theme starring Lindt’s best-selling products: the Lindor Tube Milk 400g and Assorted Napolitains 500g Carrier Box with a special Chinese New Year design, integrating the traditional lucky knot symbol. The lucky knot is a typical gift for Chinese New Year and a traditional lucky symbol.


DUTY FREE & TRAVEL RETAIL

NEW VENUE HYATT REGENCY ORLANDO

SUMMIT OF THE

AMERICAS A PLACE TO DO BUSINESS WITHOUT ALL THE USUAL DISRUPTION A TIME TO DIALOGUE DIRECTLY WITH EACH OTHER A WAY TO LEARN ABOUT SHARED PROBLEMS & SUCCESSES ASUTIL & IAADFS A gathering of people who care deeply about Duty Free & Travel Retail

www.2019summitoftheamericas.org March 24–27, 2019 Hyatt Regency Orlando Orlando, Florida, USA


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Asia TFWA China's Century Conference 2019  

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