Chinese Traveler - Special Issue March 2016

CHINESE

TRAVELER

Asia Duty Free Travel Cover_FINAL.pdf

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MARCH 2016 · SPECIAL ISSUE

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China’s future potential p. 10 Dufry’s state of readiness p. 24 DFS always one step ahead p. 28

DUTYFREEMAGAZINE.CA

LETTER FROM THE EDITOR

Two billion reasons

to put China first

F

or the year of the fire monkey, we turn up the heat in our dedicated China focus issue, which will be distributed digitally across our Asia, Americas and Gulf-Africa network, providing in-depth analysis of the country’s future potential.

As it continues to dominate discussion amongst the duty free and travel retail fraternity, despite a slowing economy, weak yen and government push for increased in-country spend, all the signs are pointing toward China’s role as a major contributor to industry revenues for the foreseeable future.

You only have to run the numbers to realize the scale of its development ambition as the country forges ahead with plans for 66 new airports between now and 2030, with US$117 billion allocated to civil aviation infrastructure in 2016 alone.

Add 200 new international routes to the skies above the world’s third largest country by geography, and the fact that it is expected to overtake the US as the world’s largest passenger market by 2029, and few of us would argue that China should be a strategic priority.

In real terms, we are looking at two billion passengers on the move within the next decade or so. Aviation traffic is on a continued upward trajectory, populated by travelers who consider shopping an essential component of the travel experience, both domestically – which ticks Government boxes – and internationally.

If ostentation is out and moderation is in (for now at least), the biggest challenge facing our industry is how do we adapt the duty free and travel retail landscape to harvest a healthy commercial crop peopled by a growing middle class with differing needs, a shift away from group to independent travel and lower key premium traveler?

TFWA and APTRA have always talked opportunities rather than constraints, and repeatedly highlight the importance of putting the Chinese traveler at the top of the strategic agenda in order to capitalize on future volume potential as rising purchasing power and more affordable air travel translates to millions more travelers.

While the current reality is a decrease in the number of long-haul trips by mid to upper-mid bracket tourists, moves such as the US’ 2014 decision to offer 10-year visas to Chinese nationals is boosting visitor arrival numbers to its key gateway cities with LA, New York, Honolulu, San Francisco, Washington DC, Boston and Orlando among the top hotspots for independent Chinese travelers.

In fact, by 2020, up to five million Chinese visitors are forecasted to land on US soil, up from 2.2 million last year. And Europe is also reaping the benefits of the growth in Chinese inbound travel according to i2i Group China, which pinpointed a paradigm shift in spend in leading European cities in H2 2015 as the biggest trend of last year.

With two billion travelers set to keep those cash tills ringing, it’s time to put China first.

Kindest Regards,

Hibah Noor Editor-in-Chief hibah@dutyfreemagazine.ca

MARCH 2016 · CHINESE TAVELER SPECIAL ISSUE

Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean.

The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. March 2016, Special Issue. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2016 Global Marketing Company Ltd.

AMERICAS, GULF-AFRICA, 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 EDITOR Wendy Morley wendy@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca CONTRIBUTORS Claire Malcolm Mary Jane Pittilla Rebecca Byrne

ADVERTISING SALES ADVERTISING & MARKETING EXECUTIVE Jacqueline Hammill jacqueline@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION accounts@globalmarketingcom.ca

LETTER FROM THE EDITOR

拥有 20 亿客流量的中国市场 蓄势待发，抢占先机不容错过

值

此火红猴年来临之际，我们隆重推 出中国专刊。该专刊的电子版将深 度分析中国市场的未来潜力，面向 亚洲、美洲以及海湾非洲网络发行。 尽管中国经济放缓，日元贬值以及中国 政府鼓励增加内需等一系列现状，中国市场 依旧是免税品和旅游零售业关注的焦点。所 有迹象表明，在可预见的未来，中国将是行 业收入增长的主要贡献者。

从以下几个简单的数字，我们就可以一 探其中巨大的市场规模。中国计划从 2016 年至 2030 年新建 66 个民用机场， 仅 2016 年民用航空机场设施建设投资就达 1170 亿美元。 中国 — 这个国土面积排名第三的国家 — 将新增 200 条国际航线。预计到 2029 年，中国将赶超美国成为世界上最大的客运市场。中国市场的战略重要性 毋庸置疑。 实际上，未来 10 多年，预计客运流量将达 20 亿人次。航空运输呈现上升 趋势。对于游客们来说，购物是一项重要的旅行体验，旅行购物既指国内市场 （政府所积极倡导的领域），又包括国际市场。 在当前市场上，炫耀式消费已经过时，轻奢成为时尚。对于免税品和旅游零 售业来说，最大的挑战在于如何审时度势，满足日益扩大的中产阶级的不同需求 以占据这一巨大市场份额，我们是否应该将服务重点从团队游客转向散客以及低 调的高端旅行者呢？ 世界免税品协会以及亚太区旅游零售协会一直致力于探讨发展中国市场的机 会而非限制其发展，多次强调将中国游客作为战略重点的重要性，以把握未来随 着中国游客购买力日益增强以及航空费用降低而新增数百万游客所带来的机会。 当前，中等至中高收入旅客群体的长途旅行数量不断减少。因此，美国 2014 年决定给予中国游客 10 年期旅游签证，以增加到访洛杉矶、纽约、檀香 山、旧金山、华盛顿特区、波士顿、奥兰多等热点城市的散客游客数量。 实际上，到 2020 年，预计访美中国游客将超过 500 万人，去年这一数字为 220 万人。根据爱戴爱展览集团中国公司统计，不断增长的中国游客正在给欧洲 市场带来巨大利益。2015 年下半年中国游客的消费集中于欧洲主要城市，使得 中国成为去年欧洲市场的重要来源国。 伴随 20 亿游客拿着钱包准备买单的趋势发展，我们专注中国市场适逢其时。 敬上

Hibah Noor 主编 www.dutyfreemagazine.ca

MARCH 2016 · CHINESE TAVELER SPECIAL ISSUE

Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean.

The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. March 2016, Special Issue. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2016 Global Marketing Company Ltd.

AMERICAS, GULF-AFRICA, 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 EDITOR Wendy Morley wendy@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca CONTRIBUTORS Claire Malcolm Mary Jane Pittilla Rebecca Byrne

ADVERTISING SALES ADVERTISING & MARKETING EXECUTIVE Jacqueline Hammill jacqueline@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION accounts@globalmarketingcom.ca

CONTENTS

What’s inside LEAD STORIES 10 China Overview ADVANTAGE CHINA

With US$11.7 billion earmarked for civil aviation infrastructure development in 2016 and more than 200 new international routes to be added to the mix, China’s future potential is prodigious

16 Industry News: i2i Group China HEY, BIG SPENDER!

i2i Group China’s CEO Alexander Glos discusses the Chinese shopper’s spending habits and how i2i is targeting an attractive subset: the repeat traveler

10

20 Beauty: Shiseido Group ULTIMATE AMBITION

By 2020, Shiseido Group aims to triple the size of its travel retail business and achieve US$1 billion in travel retail sales. Global Travel Retail Marketing Director Elisabeth Jouguelet explains how this target will be reached

24 Dufry STATE OF READINESS

With the Middle East and Asia currently representing 9% of its global business mix, agility and flexibility are the mantra for Dufry’s regional growth strategy

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32

28 DFS Group ALWAYS ONE STEP AHEAD

With the Chinese traveling overseas in ever increasing numbers, luxury travel retailer DFS is continually evolving and adapting to meet the changing needs of this important demographic

30 Lagardère Travel Retail A LONG-TERM FUTURE IN CHINA

What does the slowdown in China’s economy mean for companies with operations in the country? Asia Duty Free asked Eudes Fabre, General Manager – China for Lagardère Travel Retail how the company is adapting to market changes

32 Shilla I’Park Duty Free THE WORLD’S BIGGEST URBAN DUTY FREE SHOP

In March 2016, HDC Shilla, the joint venture between Hotel Shilla and HDC, opens the Shilla I’Park Duty Free in Korea’s largest shopping mall. Asia Duty Free asked Gilhan Lee, HDC Shilla Co-President, about the imposing new store located in the heart of Seoul

24 FEATURES Sky’s the limit for ISG Big business for retailers Dryberg aims at ASPAC New audiences for Bric’s Samsonite’s on the move

34 38 42 44 46

Perfetti gets hands-on Promising outlook for spirits Portfolio expansion for CIDF Agio targets Chinese Traveler

48 50 52 54

Making Friends Since 1834 FINEST SCOTCH WHISKY Lauder’s Scotch Whisky first appeared in 1834. The original blend was developed by the Glasgow merchant Archibald Lauder soon after the distilling of whisky was made legal in 1815 and Lauder’s has changed little since it was first produced over 175 years ago in Glasgow, Scotland.

www.macduffint.co.uk

CHINA OVERVIEW

US$117 billion has been allocated for civil aviation infrastructure development this year with the identification of 11 key projects

Advantage

China by

10

CLAIRE MALCOLM

CHINESE TRAVELER MARCH 2016

With US$11.7 billion earmarked for civil aviation infrastructure development in 2016 and more than 200 new international routes to be added to the mix, China’s future potential is prodigious

Traffic both to and out of China has remained on an upward trajectory

C

ivil Aviation Administration of China (CAAC) plans for the construction of 66 new airports between now and 2030 is a gargantuan undertaking but one that will herald a new era of opportunity for the duty free and travel retail industry.

A total of US$117 billion has been allocated for civil aviation infrastructure development this year with 11 key projects identified and work on new facilities at Beijing, Chengdu, Dalian, Qingdao and Xiamen to be accelerated, along with 52 existing airport upgrades.

This will bring the number of Mainland China airports to 272 within the next five years and accommodate growing domestic demand, which saw Chinese travelers log more than four billion trips in 2015. Meanwhile, outbound travelers made 120 million trips according to the National Tourism Administration, representing a year-on-year increase of 16%.

According to IATA research, China is expected to overtake the US as the world’s largest passenger market by 2029. With an annual growth rate of 5.2%, by 2034 it will account for just under two billion passengers - that’s 758 million more than 2014.

According to Jaya Singh, APTRA President, despite the effect of government austerity measures, which prompted a shift in purchasing patterns as consumers replaced ostentation with moderation, the move towards a more sustainable middle ground is the new reality of China’s fluid landscape.

Erik Juul-Mortensen, President of TFWA is on the same page, and also highlights Chinese government initiatives to encourage consumers to spend domestically - which was impacted by the twice-devalued Yuan - as major market influencers.

“Both of these initiatives have taken their toll on the duty free and travel retail market. However, traffic both to and out of China has remained on an upward trajectory, and growth rates such as the 12.5% reported at Shanghai Pudong will be the envy of the majority of airports across the world,” he says.

But far from being pessimistic about the future, he contends that the opportunities are “considerable” and stresses that the Chinese traveler must be a priority for everyone involved in the duty free and travel retail sector, both within China and as travelers beyond the region.

“Chinese customers are also particularly interested in luxury brands. Whereas in the past this meant largely Western brands, there is now an increasing number of Chinese premium and luxury names.”

ERIK JUUL-MORTENSEN, PRESIDENT, TFWA

CHINA OVERVIEW

Adds Singh: “Business travel to China has been on the increase in recent years, and it will be among the world’s most popular business travel destinations this year. The improvement in the quality of hotels in some tier two cities, and other lessvisited cities, will stimulate growth in business and leisure travel.

“The constantly rising purchasing power and expansion of the country’s middle class, who are able to travel internationally, coupled with the increasing affordability of air travel, all bodes well for our industry.”

With the success of duty free zones like Hainan, JuulMortensen says that Chinese state commercial authorities will be keeping a watchful eye on these and the progress of border trade.

The specter of further legislative change that could negatively impact sector growth remains a live concern, but Juul-Mortensen believes that there is a consensus of understanding that a balance needs to be struck between control of conspicuous consumption, which is highly political, and the significant negative economic impact which could be the result of too tight a control.

As the Chinese traveler continues to evolve, this brings with it exciting industry opportunities, as Singh explains: “We have seen a definite shift from the group travel phenomenon to travelers favoring self-organized independent travel.

“This brings a different dynamic to travel retail marketing as before it was quite easy to target group organizers in order to market the channel or a specific shop. Now, marketing needs to be much more sophisticated to reach traveling individuals.

The rise of social media and WeChat in China means its now a sine-qua-non marketing channel for any brand or retailer who is serious about Chinese travelers.”

He also references the online availability of countless luxury brands, which should act as a reminder to duty free retailers of the importance of marketing their premium as well as core offering.

M1nd-set’s Q1 2015 research offering insights into the Chinese duty free shopper revealed some interesting motivators to drive increased purchases such as better promotions and sales, more exclusives and clearer highlighting of savings.

TFWA’s Juul-Mortensen reinforces the fact that the industry needs to ensure it delivers the right experience and the right products at prices that are perceived by the price-conscious Chinese customer as offering value.

“Chinese customers are also particularly interested in luxury brands. Whereas in the past this meant largely Western brands, there is now an increasing number of Chinese premium and luxury names. These also have a role to play in the travel retail mix. In addition, we need to bear in mind that what is a midrange brand to one consumer may be a luxury offer to another, so affordable luxury is the watchword,” he notes.

Uncertainty about customs regulations was also flagged as a major reason for non-purchase, and is another thorn in the side of retailers.

Says Singh: “It has to be a collaborative approach with all stakeholders playing an active role in our duty to be responsible retailers and ensure passengers have all the information at their fingertips with regards to different regional allowances and regulations.

“The passenger does not necessarily always associate a duty free shop with a named retailer, rather with an airport location.

So if they feel misinformed or uninformed, the industry’s image

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CHINESE TRAVELER MARCH 2016

in general is negatively affected. It is therefore vital that airport authorities and their retailers work together on this.”

“Solving this problem must be a joined-up effort, and both the retailer and the airport have a responsibility to make sure accurate and intelligible information is made available. Likewise, the traveler also has a responsibility to seek this information which is readily available on the net,” adds Juul-Mortensen.

M1nd-set’s research also showed that staff interaction is key to Chinese traveler conversion, yet the majority of interactions are initiated by the customer, and Juul-Mortensen believes that a more “sophisticated” approach is required.

“It’s not just about being able to speak to customers in their language, we also need to consider the overall service style, and an approach that might be considered as pestering by some European shoppers may well be welcomed by the Chinese traveler,” he says.

“Chinese customers are keen to benefit from price-off or giftwith-purchase promotions and therefore it is in the retailer’s best interest to interact with these customers to ensure that they are well informed about such offers,” he continues.

With the customer service basics already in place, and yielding results, according to Singh it’s all about managing the interaction. “Whether this is initiated by the customer or staff, it’s important to have the means in place to be able to respond to the Chinese travelers seeking assistance.

“What we see from the M1ndset research is that the Chinese are particularly sensitive and reactive to sales staff, and the impact on sales is more significant than with other nationalities so it’s vital that retailers who are not yet China-focused adapt rapidly or they will continue to lose out.”

“Business travel to China has been on the increase in recent years, and it will be among the world’s most popular business travel destinations this year.”

JAYA SINGH, PRESIDENT, APTRA

CHINA OVERVIEW

China is expected to overtake the US as the world’s largest passenger market by 2029

中国优势， 锐不可挡 2016年，中国将专项拨款117 亿美元用于民航基础设施开 发；同时，国内外航空公司新 开200多条国际航线，中国未 来发展潜力不可估量。

中

国民用航空局（CAAC）计划到2030年新建66个 机场，这是一项非常艰巨的任务，但对免税与旅游 零售行业而言，也预示着一个充满机遇的新时代。

响，促使消费者采购模式发生转变，从炫耀性消费转向适度 消费，但向更可持续的中间立场发展是中国消费形势面临的 新现实。

中国今年共投资117亿美元用于民航基础设施开发，已 确认11个重点项目和52个现有机场升级项目，并将加快北 京、成都、大连、青岛和厦门等新机场建设的步伐。

世界免税协会（TFWA）主席Erik Juul-Mortensen也表达 了一致观点，其强调中国政府因受人民币两度贬值影响而鼓 励国内消费的举措是主要市场影响因素。

2015年，国内游客人数超过40亿人次，民航基建计划 将使得中国大陆机场数量在未来五年内增加到272个，从而 满足日益增长的国内需求。同时，国家旅游局表示，出境游 客人数达1.2亿人次，同比增长16%。

他表示：“这些举措将对免税与旅游零售市场带来冲 击；但是，中国出入境客流量仍保持上升趋势，且增长率（ 如上海浦东机场报道12.%）仍令全球大多数机场艳羡”。

据国际航空运输 协会（IATA）调查， 到2029年，中国将有 望超越美国成为全球 最大客运市场。2034 年，中国旅客数量将 达到近20亿人次，比 2014年增加7.58亿， 年均增长率为5.2%。

Dr. Peter Mohn, Owner, M1nd-set

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CHINESE TRAVELER MARCH 2016

亚太旅游零售协会 （APTRA）主席Jaya Singh表示，尽管受 政府财政紧缩措施影

他对未来形势非常乐观，声称机会是“相当巨大”的， 同时强调中国游客无疑是免税与旅游零售行业优先争取的客 户，无论是中国境内还是境外。 Singh补充道：“近年来，中国商务旅游客流量不断增 长，今年中国将是全球最热门的商务旅游目的地之一。一些 二线城市和旅游人数不多的城市酒店质量的改进将促进商务 旅游和休闲旅游的发展。 能够负担出国游的中国中产阶层不断壮大且其购买力持 续增长；同时，航空旅游负担能力不断提高，这些都将为我 们行业带来良好前景。” Juul-Mortensen表示，随着海南等免税区的成功，中国国 有商业机构将持续密切关注免税区的发展和边境贸易的进展。

尽管仍存在未来立法变化可能 对行业发展带来负面影响的担忧， 但Juul-Mortensen认为，已达成这 样一个共识，即需坚持具有高度政 治性的炫耀性消费控制与可能因控 制太紧而造成重大负面经济影响之 间的平衡。

M1nd-set的调查还说明，人员互动对中国游客消 费观念转变非常重要，但大多数互动都是有由消费者发 起，Juul-Mortensen认为需要一种更“综合”的方法。

随着中国游客的不断增长，将 为这一行业带来令人激动的发展机 会，正如Singh所解释的：“我们 已见证了随团游向自助游的明确转 变。 这将为旅游零售市场带来不 同于以往的推动力，因为以前为推 销某一渠道或某一家店而很容易将 目标锁定团体组织者。现在，市场 营销需更为多样化，以吸引自助游 旅客。同时，中国社交媒体和微信 的发展也预示着，对于关注中国游 客的任何品牌或零售商而言，中国 现在已成为不容小觑的市场营销渠 道。”

“中国消费者热衷于折扣或附赠礼品的促销模式，因 此，零售商要获得最大利益，应与这些消费者互动，确保他 们熟知此类让利活动，”他继续道。

他还参照了无数奢侈品牌的网 上供应状况，认为其能起到提醒免 税零售商重视推销其名优商品和核 心商品的作用。

他说：“不仅仅要能以消费者的语言与其交谈，还需考 虑总体服务模式，与某些欧洲消费者相比，不胜其扰的方法 可能很受中国游客欢迎”。

Singh 认为，在已掌握客户服务基本知识的情况下，要 取得成果，完全在于互动。他说：“无论互动是由消费者还 是服务人员发起，都有必要掌握能为寻求帮助的中国游客给 予回应的适当方法。 从M1ndset调查结果可知，中国人对销售人员尤其敏 感和排斥，而他们相比其他国家或地区的人对销量的影响更 大；因此，尚未关注中国游客市场的零售商必须迅速做出调 整，否则将继续失利”。

Online availability of luxury brands should act as a reminder to duty free retailers of the importance of marketing their premium as well as core offering

M1nd-set 2015年第一季度调查 结果给中国免税商店的启示揭示了 刺激客户购买欲的一些有趣促进因 素，如改进推销措施、扩充独家商 品和明确突出节省额。 TFWA主席Juul-Mortensen强调，业界需确保以价格敏 感型中国消费者认为优惠的价格提供适当购物体验和产品。 他指出:“中国消费者也特别关注奢侈品牌。在过去， 所谓的奢侈品牌主要指西方名牌；而现在，中国名优和奢 侈品牌越来越多。这对旅游零售业也具有一定影响。另外， 我们要记住的是，对某一消费者而言的中档品牌，对其他消 费者而言可能是奢侈品牌，因此可负担奢侈品才是应遵循的 口号”。 对海关法规的不确定也被标为拒绝购买的一个主要原 因；对零售商而言，这是又一障碍。 Singh表示：“必须与对我们履行零售商责任具有积极 作用的利益相关人士通力合作，确保游客可随时掌握有关各 地补贴和法规的信息。 提到免税店，游客不一定始终联想到知名零售商，还可 能联想到机场。因此，如果他们被误导或无所适从，行业形 象一般会受到负面影响。所以，机场管理当局及其零售商的 协作至关重要”。 Juul-Mortensen补充道：“要解决这一问题，各方必 须开展合作；零售商和机场方有责任确保提供精确、简单易 懂的信息。同样，游客也有责任在网上搜索现有消息”。

www.dutyfreemagazine.ca CHINESE TRAVELER

15

I2I GROUP CHINA

Hey, big spender! by

HIBAH NOOR

i2i Group China’s CEO Alexander Glos discusses the Chinese shopper’s spending habits and how i2i is targeting an attractive subset: the repeat traveler

i

2i Group is a consultancy that specializes in analyzing Chinese market trends, and Asia Duty Free recently sat down with Alexander Glos, CEO of i2i Group China, to discuss the latest developments with regard to this important duty free shopper demographic.

He told us that the big Chinese shopping trend in the second half of 2015 was the significant increase in shopping by the Chinese in Europe. “It was good before, but in the second half of 2015 it was explosive,” Glos said. “Global Blue reported their refund processing grew 72% year over year. This is largely due to the exchange rate shift; today, the Euro is cheap compared to the US Dollar for the Chinese. As a result, they are flooding Europe.”

Glos said that globally, the inbound Chinese traveler market is growing rapidly— for example to the US, from 2.2 million last year to a projected 5 million by 2020. What’s more, repeat travelers, which currently count for 1.4 million Chinese, spend an average of nearly US$10,000 on luxury shopping. While he notes that these travelers are particularly attractive targets for duty free, he concedes that they’re a hard group to reach given that they’re independent travelers as opposed to part of a homogeneous group.

“Many brands are now focused on how best to align the flow of goods with the flow of qualified and capable Chinese buyers,” Glos added. “Fully 80% of Chinese luxury purchases originate outside of China because Chinese consumers prefer the retail experience of buying abroad. Furthermore, they enjoy sharing their experiences with their friends and colleagues through social media.”

Facts and figures Glos cited a number of sources which indicate that despite widespread economic turbulence in many markets throughout the world, Chinese tourism and shopping continues strongly. China Luxury Advisors notes that the Chinese slowdown isn’t changing the amount of travel, but rather the nature of it. This includes fewer long-haul trips among the middle class and a lower average spend, but one that is still strong compared to other nationalities.

Backing up Glos’ claim that Chinese travelers prefer shopping outside the country, China Luxury Advisors says that figures indicate that Chinese consumers currently spend US$229 billion per year outside China. This amount is projected to double by 2020.

“Eighty percent of Chinese luxury purchases originate outside of China because Chinese consumers prefer the retail experience of buying abroad. Furthermore, they enjoy sharing their experiences with their friends and colleagues through social media.”

ALEXANDER GLOS, CEO OF I2I GROUP CHINA

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CHINESE TRAVELER MARCH 2016

Glos cited a number of other sources which suggest that the boom in Chinese shopping isn’t going away anytime soon: • According to marketing organization BrandUSA, Chinese visitors to the US spent a staggering US$24 billion in the country in 2014.

• China is the second-largest inbound travel market for the US, according to China Daily USA. More than 2 million Chinese visited the US in 2014, and this number is expected to increase.

• Ctrip, China’s top online travel booking service, says that the number of Chinese tourists who booked trips during China’s national holiday increased by 150% in 2015 over the previous year. Furthermore, shopping remains a major focus, with 36% of Chinese tourists surveyed by Ctrip selecting shopping as the purpose for their trip.

• Given the United States’ decision to offer 10-year visas to Chinese nationals from November 2014, more Chinese travelers are planning on visiting the US on their own as opposed to traveling as part of a tour group, says Ctrip. Los Angeles, New York, Honolulu, Las Vegas, San Francisco, Washington D.C., Boston, Orlando and Chicago are the top US destinations for independent Chinese travelers.

• Appraisal firm Miller Samuel suggests that precisely because of the economic upheaval within China, more money may finds its way into the US, particularly in residential and commercial real estate.

Reaching the right people i2i has developed a new publication called Galerié, which is distributed to Chinese travelers when they apply for their travel visa in China. Importantly, the magazine reaches the attractive repeat traveler target group since these travelers apply through CITIC Bank for their visas. The magazine is distributed across all CITIC Bank locations across China.

And there are other advantages to this approach, explained Glos: “What is particularly attractive about this way of distributing the magazine is that each of these travelers is unique because one does not typically apply for a visa several times a year. Rather than a typical magazine hitting the same readers multiple times a year, in this case we get all new readers with each issue.”

It’s easy to see why advertising in the magazine would be an attractive way for brands and retailers to reach these travelers, but i2i has taken the quest to connect advertisers and shoppers one step further with its Wechat platform. “Wechat is sort of a customer relationship management platform for our advertisers,” Glos said. “We have over 350,000 members in our Wechat platform, allowing us to connect the advertiser to the reader on an ongoing basis.”

Given the above, Glos told us he sees Galerié as much more than simply a magazine. “It’s a print and digital publication, but also an integrated marketing solution that enables luxury and premium brands to build a customer base that consists of their target shopper. The magazine reaches an impressive 640,000 repeat Chinese travelers every year.”

Another advantage to this approach is that Galerié’s readers are virtually guaranteed to travel given that they receive the magazine upon applying for a visa. “No one in China is getting a visa for fun,” quipped Glos. “They are getting a visa because they are traveling.” Most Galerié readers are going to the US, and Glos told us that nearly 80% will travel within 90 days.

“The bottom line is that Galerié offers retailers, brands and service providers an ongoing marketing and communications package that keeps them in contact with a very attractive group of travelers not only as they are making their travel plans, but also during pre-departure, while they are in the US and for months afterwards,” Glos concluded.

i2i Group China has developed a new publication called Galerié, which is distributed to Chinese travelers when they apply for their travel visa in China

www.dutyfreemagazine.ca CHINESE TRAVELER

17

I2I GROUP CHINA

Repeat travelers, which currently count for 1.4 million Chinese, spend an average of nearly US$10,000 on luxury shopping

新“看点”， 强势来袭！

爱戴爱集团（i2i Group China）首席执 行官Alexander Glos讨论了中国消费者 的消费习惯以及爱戴爱如何瞄准重游客 这一富有吸引力的小众市场。

Most Galerié readers are going to the US and nearly 80% will travel within 90 days

增加至500万人次。而且，目前重游游客达140万人次，他 们平均消费近10,000美元 在奢侈品购物上。同时，他还指 出这些游客尤其钟情于免税店，并进一步认为，鉴于这些游 客为自由行而非跟团游，很难争取。 “许多品牌现在都关注如何使商品流迎合高素质、富裕 中国买家需求，”Glos补充道，“足有80%的中国奢侈购 物自境外采购，因为中国消费者更青睐国外购物的零售体 验。而且，他们喜欢通过社交媒体与朋友和同事分享他们的 体验。”

爱

戴爱集团是一家致力于中国市场趋势分析的咨询 公司，《亚洲免税》（Asia Duty Free）杂志最近 有幸与该集团首席执行官促膝探讨了有关这一具 有重大影响的免税购物群体的最新发展趋势。 他告诉我们，2015年下半年，中国的一大购物趋势 是赴欧洲购物人数显著增长。“之前还算平稳，但2015 年下半年经历了爆炸式增长，”Glos说道，“据环球蓝联 （Global Blue）报告，他们的退税办理业务同比增长了 72%。这主要由汇率变化导致；目前，对中国人而言，欧元 比美元便宜，结果，他们蜂拥至欧洲”。 Glos 表示，从全球范围来看，入境中国游客市场迅速 增长（以美国为例），去年为220万人次，预计到2020年将

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CHINESE TRAVELER MARCH 2016

事实与数据 Glos引用了大量资料来表明，尽管广泛的经济动荡波 及全球许多市场，中国旅游购物仍保持强势增长。中国奢侈 品顾问（China Luxury Advisors）指出，中国经济增长放 缓并没有影响旅游人数，只是改变了旅游特性。例如，中产 阶层长途游客减少，平均消费额降低，但相对其他国家/地 区而言仍庞大。 支持Glos有关中国游客更青睐国外购物这一观点的 是，据中国奢侈品顾问（China Luxury Advisors）调查数 据显示，目前中国消费者每年境外消费达2,290亿美元。预 计到2020年这一数字将翻番。 Glos还引用了大量其他资料来说明，中国人的购物潮 在短期内不会消退：

• 据美国营销组织BrandUSA报告，2014年，赴美中国游 客在美国消费240亿美元，简直令人不可思议。 • 据《中国日报美国版》（China Daily USA）报道，中 国是美国的第二大入境游市场。2014年，赴美中国游客 超过200万人次，这一数字有望继续增长。 • 据中国领先在线旅游预订服务平台——携程旅行网 （Ctrip）报告，2015年中国国庆节期间，预订旅游的 中国游客数量同比增长150%。而且，购物仍是一大关 注焦点，据携程旅行网调查，36%的中国游客的旅行目 的是购物。 • 自2014年11月起，美国对中国游客签证有效期延长到 10年；鉴于此，越来越多的中国游客计划进行美国自 由行，而不再选择跟团旅游，携程旅行网如是说。洛杉 矶、纽约、火奴鲁鲁、拉斯维加斯、旧金山、华盛顿特 区、波士顿、奥兰多和芝加哥是最受自由行中国游客青 睐的美国旅游目的地。 • 评估机构Miller Samuel提出，正因为中国经济震荡，中 国人将越来越多的钱投入美国市场，特别是住宅地产和 商业地产方面。

瞄准适当人群 爱戴爱集团推出了一种名为Galerié的新杂志刊物，向 在国内申请旅游签证的中国游客发行。更重要的是，该杂志 瞄准富有吸引力的重游游客目标群体，因为这类游客通过中 信（CITIC）银行申请旅游签证。该杂志面向中国境内所有 中信银行网点发行。

这一途径还有其他优势，Glos解释道：“杂志采用这 种发行途径的特别吸引力在于，每位重游游客都是唯一的， 因为一位游客一般不会在一年内申请几次签证。而一般杂志 则一年反复多次向相同读者发行；如此，我们每期刊物面向 的都是新读者”。 对各品牌和零售商而言，在该杂志上发行广告来吸引这 类游客的优势显而易见，但爱戴爱已开始探索进一步通过其 微信平台实现广告商与购物者的进一步联系。“微信是为我 们广告商开发的一种客户关系管理平台，”Glos说，“我 们的微信平台会员超过35万人，使我们能够帮助广告商和 读者建立同步联系。” 鉴于上文所述，Glos告诉我们，Galerié远不仅仅是一 份杂志。“它不仅是一种印刷和数字刊物，而且是一种帮 助奢侈和名优品牌建立其目标购物客户基础的综合营销解 决方案。每年，该杂志向富有吸引力的64万中国重游游客 发行。” 这种发行途径的另一优势在于，鉴于杂志利用游客申 请签证时发行，Galerié的读者几乎可保证出游。“不会有 人仅仅出于取乐而申请签证，”Glos幽默笑言,“他们之所 以申请签证，是因为他们想要旅行”。大多数Galerié读者 打算赴美旅行，Glos告诉我们，90天内将有近80%的读者 出发。 “最重要的是，Galerié为零售商、各品牌和服务提供 商提供了一种与极富吸引力的游客群体保持联系的同步营销 和通信工具包，不仅在游客制定旅行计划时，而且在游客出 发前、在美国旅行期间以及旅行结束后数月均与游客保持联 系，”Glos总结道。

i2i Group China has developed a new publication called Galerié, which is distributed to Chinese travelers when they apply for their travel visa in China

www.dutyfreemagazine.ca CHINESE TRAVELER

19

BEAUTY: SHISEIDO GROUP

Shiseido Global Travel Retail Marketing Director Elisabeth Jouguelet with Shiseido Global Travel Retail President Philippe Lesne

Ultimate ambition By 2020, Shiseido Group aims to triple the size of its travel retail business and achieve US$1 billion in travel retail sales. Global Travel Retail Marketing Director Elisabeth Jouguelet explains how this target will be reached by

HIBAH NOOR

S

hiseido Group is seeing record travel retail sales in Asia and the channel still offers excellent potential for growth, according to Shiseido Global Travel Retail Marketing Director Elisabeth Jouguelet. The region represents more than 70% of Shiseido’s total travel retail sales, and Chinese travelers make up a major part of the company’s customer base.

To capitalize on the opportunities in the region, Shiseido Group established its global travel retail (GTR) headquarters in Singapore last year. The Travel Retail division is now an autonomous entity with its own internal structure and targets, one of six key regions outlined in the group’s Vision 2020 corporate strategy. During 2015, the company has accelerated its expansion in the channel, and now has more than 200 doors across Asia Pacific (excluding Japan). By 2017 30% growth in global travel retail sales and a bigger share of the Asia market are expected.

2016 looks set to be busy one for Jouguelet. “We have a super-busy calendar packed with several exciting launches for Spring/Summer 2016. There’s a big focus on travel sets and travel exclusive product, in line with our aim to provide travelers with a differentiated offer that caters to all their beauty needs.”

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CHINESE TRAVELER MARCH 2016

The Shiseido brand will launch a limited-edition duo-pack travel retail exclusive Jumbo Ultimune (2 x 100ml). Ultimune is the brand’s successful core product designed to reignite the skin’s inherent multi-defensive power, protecting it with a dynamic shield from further damage. The brand will also introduce a new Shiseido foundation soon. Shiseido’s renewed whitening skincare line, White Lucent, will see the unveiling of three new sets: Intensive Brightening Basic Care Set, Total Brightening Set, and Micro Targeting Spot Corrector Duo. For Clé de Peau Beauté, Shiseido’s most premium and prestige brand, the company will roll out four new sets: La Crème Duo; Ultimate Daily Cream Care Set; Le Sérum Duo; and Ultimate Radiance Trio Set. Meanwhile, the NARS brand will see its first travel retail exclusive NARSissist #Jetsetter Collection, comprising four individual sets to meet all facial needs: Lip Pencil Trio; Orgasm Face Set; Eye, Cheek and Lip Palette; and Travel Brush Set.

Looking forward to Vision 2020 Vision 2020 is a medium-to-long term strategy designed to rejuvenate Shiseido Group and build a sustainable future.

Announced at the end of 2014 by CEO Masahiko Uotani, the strategy outlines two consecutive three-year plans (2015-2017 and 2018-2020) to restructure the business and accelerate growth. The group aims to put the consumer first and become a consumeroriented marketing company, combining innovative product development with marketing that is focused on insights into consumer needs and purchasing behavior. Shiseido also wants to communicate the value of its highly researched products to the younger generation.

This consumer-oriented transformation is supported by a Think Global, Act Local approach which seeks to help streamline decision-making and production development. Each brand will be cultivated based on the specific needs of each region. Travel Retail is one of six regional entities (the other five being Japan, China, Asia, Americas and Europe) which will drive this change.

By the year 2020, the group aims to triple the size of its travel retail business and achieve US$1 billion in travel retail sales.

Asia is expected to be the growth engine, supported by the development of its rising brands Clé de Peau Beauté, NARS and bareMinerals and more regional lines such as Aupres and Serge Lutens. Together, these five developing brands are expected to contribute to more than 50% of sales by 2020 – a huge increase when compared to their 15% share in 2014. To attain these targets, the company plans to open more new points of sale by 2020, launch more travel retail exclusive products, formats and limited editions, as well as invest more in training beauty consultants through tailored coaching programs.

“Financial targets aside, we want to be seen as a company that connects with younger generations and one that is a blend of diverse cultures,” explains Jouguelet. This is also the thinking behind Shiseido’s new Beauty vs. The World branding campaign, which rolled out in January 2016.

“As our most important core brand, Shiseido is being revitalized to reflect the group’s transformation and to better engage the younger consumers,” she continues. “The comprehensive brand innovation covers products, advertising visuals, models, store counter design, brand logo and all communication. We want to embrace the modern world and stay relevant by inspiring empathy, while advancing our mission of helping people live beautifully.”

In setting up the new travel retail team, the company appointed a dedicated analyst to help better understand its key target of Chinese travelers. It projects that the number of cosmetics users in the Chinese market will increase to 330 million in 2020, and its research confirms several market trends.

The NARS brand will see its first travel retail exclusive NARSissist #Jetsetter Collection, comprising four individual sets to meet all facial needs, including the Orgasm Face Set, pictured here

The Chinese travel market is diversifying in terms of demographics and purchasing habits. China’s anti-corruption drive has resulted in a slowdown in consumption and growth, particularly in tier-one cities, with less gifting and more self-purchases. But the company is seeing two rising groups of Chinese travelers: those hailing from third- and fourth-tier Chinese cities, with their growing incomes and purchasing power but who remain relatively price-sensitive; and younger travelers who have more individualized tastes and are more savvy in their purchase decisions.

Targeting the millennial mindset These millennial consumers obtain information from a vast number of online resources, and have developed a selective purchasing pattern where they pick and choose from an extensive variety on the market. Consumers are no longer buying only premium brands, but are now also seeking lifestyle brands to complement their collection. That said, wealthy first-tier city Chinese travelers will continue to drive the premium and superpremium segment. “The challenge is in devising a marketing approach that allows us to reach out to all these diverse groups,” says Jouguelet.

To attract the growing third- and fourth-tier Chinese travelers, the company has recognized the need to develop more price-accessible products and communicate in a clearer way the value of its offers. After completing comprehensive research into the condition of Chinese women’s skin, Shiseido introduced the Aupres brand of skincare products designed exclusively for the Chinese market in 1994. Since its launch Aupres has become a leading brand in China, and its masstige entry-level luxury positioning and exclusive travel sets have allowed the firm to attract a broader audience from China, including those from third- and fourth-tier cities. The brand made its debut in Asian travel retail in 2014 and results have been “very promising”, says Jouguelet.

Another brand in the portfolio with good appeal for Chinese travelers in the lower purchase bracket is Anessa, which focuses on suncare and is very successful in China and Korea.

To ensure that it continues to offer value for money, the GTR team has appointed a Travel Retail Exclusive Products Manager, which will result in more exclusive offers, travel sets and sizes, and limited-edition products.

www.dutyfreemagazine.ca CHINESE TRAVELER

21

BEAUTY: SHISEIDO GROUP

For Clé de Peau Beauté, Shiseido’s most premium and prestige brand, four new sets will hit the shelves, including this Ultimate Radiance Trio Set

Purchasing habits shifting online Buying habits in China are also seeing an increasing shift to online, necessitating a change in marketing strategy and distribution. With the rapid growth of mobile penetration and online retailing in China, coupled with the fact that the Chinese are increasingly traveling to new destinations such as South Korea, Japan, Thailand, Australia, and the US, the number of communication touchpoints has been expanded. A robust communication strategy has been put in place with a strong digital element, focusing on mobile and social media platforms.

“Digital marketing will play a big part in reaching those savvy shoppers who plan their purchases before buying, and we are working with specialists to help grow brand awareness and to target travelers before they even reach the airport,” Jouguelet.

To capitalize on the booming e-commerce market, an independent e-commerce division was established in October 2014 to help build expertise throughout Shiseido Group, creating fresh platforms and promoting collaboration with shopping malls. As a result, the company’s China e-commerce sales have more than doubled year-on-year. On a group level, the company is working towards making e-commerce account for 20% or more of China sales in 2017 and expanding this share to 30% or more in 2020.

The wider Asian market is key to Shiseido’s vision, asserts Jouguelet. “The region helped to grow the group globally at 1.4 times above the market in 2014 and is a crucial piece of the puzzle to help us achieve our travel retail targets for Vision 2020.”

The region contributed 78% of Shiseido’s total travel retail sales as at year-to-date September 2015 and this proportion is expected to exceed 80% by 2020. “Our brands are performing well in Asia, especially in China, and there is still plenty of potential for them to grow,” she observes.

According to Generation research, the cosmetics category will generate 60% of total global travel retail sales by 2020, with 75% of these sales coming from Asia and 47% from skincare. As a company with its roots in Japan and an authority in research on Asian women’s skin, Shiseido Group wants to lead

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CHINESE TRAVELER MARCH 2016

this shift in the travel retail industry and be recognized as one of the category leaders.

Strong brands in China Clé de Peau Beauté is the most premium brand of Shiseido Group’s portfolio. This Japanese skincare brand is available domestically throughout Asia and is successful in Japan (where it is the number one brand), Hong Kong and Taiwan, and is seeing excellent growth in Asia travel retail, especially among Chinese travelers.

“Even with the tough trading climate in Hong Kong where there has been a dip in Chinese passenger numbers, sales of Clé de Peau Beauté have soared,” notes Jouguelet. Last year seven new travel retail doors opened.

This spring Clé de Peau Beauté’s new Radiance Transcending Time collection will be launched into Asia travel retail, containing the brand’s exclusive, state-of-the-art Illuminating Complex EX. The core best-seller La Crème, using exclusive new technology, will also be relaunched.

Clé de Peau Beauté’s concept of “revealing the radiance of skin” is very appealing to Chinese consumers, who – thanks to the Korean wave – aspire to a fairer complexion using skin whitening/brightening treatments. The brand’s product development, backed by R&D from Clé de Peau Beauté Laboratories, provides the quality assurance sought after by the younger generation of savvy Chinese consumers, says Jouguelet.

The NARS make-up artist brand has also been performing extremely well in Asia travel retail, especially in South Korea, where its counter in Lotte Duty Free’s main store in downtown Seoul is now the brand’s number one door worldwide.

“We’ve also seen very encouraging sales with Chinese shoppers, even though the brand will only be launched there domestically in 2017,” says Jouguelet.

NARS, with its versatile and creative range of wearable, highquality make-up products, is still in its infancy in travel retail but there is much potential for growth in Asia, Europe and the

Americas, she adds. The brand has a large and loyal fan base who are active on social media: the NARS Instagram account has 2.5 million followers. With word-of-mouth being the number one factor influencing brand preference and cosmetics buying decisions among Chinese consumers (source: Nomura Global Market Research), this is deemed to be especially significant.

“We are looking to open flagship travel retail counters in locations where NARS is performing well in the domestic market,” reveals Jouguelet.

Aside from Clé de Peau Beauté and NARS, its core Shiseido brand continues to do well among the Chinese, driven by the Ultimune line. “We’re seeing a revived interest in Shiseido from Chinese travelers, who appreciate the quality assurance of Japanese brands, and we believe that the brand renovation will help us to gain even more traction with new and existing customers,” she says.

Market trends indicate that the premium skincare segment in China is still performing strongly despite the economic downturn. Additionally, the cosmetics market in travel retail is diversifying through dermocosmetics and lifestyle brands, which is good news for Clé de Peau Beauté and NARS, she notes.

Undoubtedly, the Chinese are Shiseido Group’s biggest customers in Asia – they contribute more than two-thirds of sales for Shiseido as well as Clé de Peau Beauté, and almost 100% of

Aupres travel retail sales. They are also NARS’s biggest customers, even though the brand is not yet available in China.

Excellent customer service Training will be vital to helping Shiseido’s frontline staff extend excellent service to our customers. The group has more than 20,000 beauty consultants worldwide, and they are encouraged to embody the spirit of omotenashi (the Japanese word for hospitality). This is outlined in the Shiseido Beauty Consultant Omotenashi Credo, a code of conduct created in 2011. The group plans to invest more in recruitment and training, as well as revise the evaluation system to include both customer satisfaction levels and retail sales.

Shiseido Group is also using a system called Mirror to collect, analyze and organize consumer feedback for internal sharing among research, production, product development, and sales.

This centralization has allowed the firm to make improvements in all areas quickly and efficiently, and in the long term helps it to create better value for its customers.

Last but not least, turning to promotions, the company has created Clé de Peau Beauté and Shiseido branded red packets as GWPs for the 2016 Chinese New Year, in gold and red colours respectively. Several Shiseido products will also feature special sleeves for the festive season.

For 2016, Shiseido will launch a limited-edition duo-pack travel retail exclusive for Ultimune, the brand’s successful core product designed to reignite the skin’s inherent multi-defensive power

www.dutyfreemagazine.ca CHINESE TRAVELER

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RETAILER NEWS: DUFRY

State of readiness by

CLAIRE MALCOLM

The new Artisans d’Angkor destination store in Phnom Penh

Andrea Belardini, Divisional CEO for Middle East, Asia and Australia Dufry continues to add value across its Asia portfolio with local retail initiatives that create a sense of place

With the Middle East and Asia currently representing 9% of its global business, mix, agility and flexibility are the mantra for Dufry’s regional growth strategy

A

giant of the global duty free and travel retail world with presence at 283 airports in 63 countries and a total of 2,197 stores, Dufry is primed and ready to take advantage of new regional opportunities according to Andrea Belardini, Divisional CEO for Middle East, Asia and Australia.

He cites agility and flexibility as the buzzwords for future growth, with the latter particularly important given the vagaries of the timings of some market openings.

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CHINESE TRAVELER MARCH 2016

Dufry has implemented several highly innovative digital technologies designed to improve in-store customer dialogue such as the ‘live and learn’ visual technology display at Hong Kong airport

At Busan, Dufry customers can purchase seaweed, local cookies, ginseng and Korean liquor products.

The company has longstanding Asia presence, and with recent investment into the regional organization and logistic platform, Belardini says that Dufry is in a “state of readiness” with its eye on initiatives that can fulfill ROI expectations and drive value for concession partners and shareholders.

“Exploiting our global scale whilst adapting to the local market is already proven Dufry strengths. Just consider the similarities and differences between our arrival shops in Brazil and our new walk-through store in Athens,” he notes.

“The recent integration of Nuance and World Duty Free, and the build-up of ‘one company’, not only offers Dufry an unparalleled position to truly understand any traveler profile, but has also enhanced our ability to provide state-of-the art solutions ahead of our competition,” he adds.

Belardini expects to see further growth from the region’s most important economies this year, albeit at a slower pace. “Asia will

certainly continue to be the driver of retail growth, innovation and new product development. The region is also increasingly seeing some of its member countries become more prominent as consumer markets to watch. In the global context, Asia still appears to hold more potential and opportunities than other world regions.”

The starting point for Dufry’s Asia team is its commitment to satisfying regional diversity and this, in turn, requires a diversified approach when it comes to strategic action.

“Some markets with a heavily concentrated population and high level of internet utilization provide a promising future for online retailing, while other markets are more geared towards bargain hunting and ‘hands-on’ shopping favoring in-store activity,” says Belardini.

Working together with different airport partners in a hugely disparate region, requires a fair degree of individualization, as he

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25

RETAILER NEWS: DUFRY

elaborates: “Every destination requires a different approach to the individual character and the desire to offer its travelers a specific shopping experience at each airport.

“The travel retail industry, especially airport retail, needs to capture and maximize on trends and translate them into viable retail propositions. This is an ongoing process at Dufry, and much more so in Asia where rapid social and economic changes drive speedy new taste and purchasing habits and tendencies.”

He says that another important factor in optimizing airport retail revenues is passenger flow and airport set-up. “If, for example you have the opportunity to install an arrival shop or a walk-through concept, you can immediately improve the value generation for both the travel retail operator and the airport authority.”

Examples of Dufry success in Asia include recent developments at Hong Kong International Airport’s technology stores, as well as at Phnom Penh and Siem Reap in Cambodia.

Says Belardini: “In fact, at all our Asia locations we have actively enhanced and continue to add value with initiatives such as the Artisans d’Angkor destination store in Phnom Penh and Hongqiao’s Shangxia Chinese traditional fashion craftsmanship, which is further enhanced by an in-store tea ceremony.

At Korea’s Busan airport customers can enjoy a tasting that creates a sense of place with seaweed, cookies, ginseng and Korean liquor all available for purchase.”

As Dufry expands in Asia, talent recruitment is also a priority, as he explains: “We have a long-lasting tradition and policy to train employees and operational management internally, since we strongly believe that communicating a collective culture and way of doing things is very important for the business and its profitability.

“We have global training programs and development cycles in place, and this year we plan to introduce a unique employee award system across the group, which will provide all employees with an equal base for competition.”

Technological advancement also has a part to play, as Belardini explains: “At group level, going forward we will closely examine any digital technology-related opportunities, not only sales activity focused but also concerning customer service.

“To drive this we have established a dedicated department to focus on assessing and developing new digital technology opportunities across our operations. However, we are mindful that the duty free sector is often subject to additional regulations, which do not necessarily allow the introduction of the same services as in high street retail.”

That said, Dufry has already implemented several highly innovative digital technologies designed to improve in-store customer dialogue, including a virtual sunglasses fitting camera in Macau and ‘live and learn’ visual technology display at Hong Kong airport.

Dufry is currently working on a number of regional initiatives across its Asia portfolio that target its evolving traveler profile and purchasing trends, which it hopes will “uplift” and refresh its brand and product range as well as benefit customer interaction.

Concludes Belardini: “In short, we want to open the doors wide to a new shopping experience at Dufry Asia.”

An in-store tea ceremony adds to the local flavour at Hongqiao Shangxia

Passengers at Macau can experience the virtual sunglasses fitting camera

Local cashews display at East Bali

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CHINESE TRAVELER MARCH 2016

RETAILER NEWS: DFS GROUP

DFS introduced the T Galleria brand in 2013 as the “ultimate evolution in its downtown luxury retail business dedicated to travelers”

Always one

step ahead by

REBECCA BYRNE

W

hile spending habits in China may be changing, its people are traveling more than ever. In 2014, 109 million Chinese traveled abroad, yet this number represents less than 10% of the urban population. In the first half of 2015 alone 61.9 million travelers left the country, 12.1% greater than the same period in 2014 despite the gloomy forecasts.

According to Philippe Schaus, DFS Group Chairman and CEO, the company anticipates that, with the rise in economic growth in China, around 200 million people per year will be traveling out of China by 2020. “Spending has also risen among this customer base, doubling from around US$100 billion to over US$200 billion,” he comments. “Clearly, the Chinese traveler continues to be an important consumer for our business, with a broad demographic in terms of age groups and origination.”

A new, younger, savvier customer Schaus sees a new type of customer coming from China: a younger consumer with a growing disposable income who is

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CHINESE TRAVELER MARCH 2016

With the Chinese traveling overseas in ever increasing numbers, luxury travel retailer DFS is continually evolving and adapting to meet the changing needs of this important demographic

digitally savvy, very connected to trends and advancements in product innovation, and adventurous when it comes to trying new products or brands – a customer who seeks value as well as novelty.

To meet the changing needs of its customer, both new and old, DFS is constantly evolving its approach. Last year, for example, the company realized that there was interest among its customers to experience more choice and excitement in the Beauty category. This led to a new store concept, T Galleria Beauty by DFS, with different executions in Macau and Hong Kong, two of the most popular destinations for Chinese tourists.

Schaus explains: “T Galleria Beauty

by DFS is a good example of our response to these customers’ needs. We enhanced the experiential shopping experience by offering services including skin analysis, skin treatments, makeup consultation and specialty massages. We widened our assortment of different price points, introduced communal sampling areas and created new environments that are brighter, fresher and trendier than before. The stores also feature a changing lineup of pop-up boutiques for new, upcoming brands. Interestingly, we’ve found our core customers are enjoying

these adjustments just as much as the newer, younger customer!”

Universal appeal However, it is not just the Chinese that are changing the way they purchase, says Schaus. DFS is seeing changes in terms of customer desires and expectations of travel retail, regardless of nationality. “We see a growing appetite of all our travelers for good quality destination products, be it local wines and chocolates in San Francisco or LA, handmade silk products in Indonesia or Arabic fragrances in Abu Dhabi. We have developed strong sourcing and development capabilities of these locally sourced products around the world.

“In parallel, we continue to constantly adapt our airport offer and programs to the ever-evolving tastes and desires of our Chinese and other travelers, whose increasing appetite for new experiences we meet through new product and category launches, pop-up stores and tasting events in all price segments,” he adds.

Loyalty and innovation A key initiative designed to engage consumers is the DFS’ worldwide LOYAL T program. Through the LOYAL T program,

DFS will open its first store in Siem Reap, Cambodia in 2016

The T Galleria Beauty concept was developed to meet the changing needs of customers

members can have first access to products, specialized shopping experiences in Prestige Lounges and Beauty Concierges at the T Galleria stores, as well as events such as the Masters Series. Through these experiences, DFS aims to connect LOYAL T customers with products from the brands they love that they won’t be able to find anywhere else. “It’s that connection that encourages our LOYAL T members to travel for events like Masters of Time in Macau or Masters of Wines and Spirits in Singapore,” says Schaus.

Additionally, the company is investigating the options of digital platforms.

DFS is currently testing different digital services offerings in some of its airport and downtown locations to ensure they meet the expectations of its global, multinational customer base. According to Schaus: “E-commerce is changing the way people shop in the way that the jet airplane changed the way people travel. It is a fantastic opportunity for retailers. We look forward to providing our customers with an expanded platform for them to engage with us wherever their journey takes them.”

Inviting events In the future, DFS will continue to grow and adapt, always with the consumer at the forefront of its ambitious plans. New openings in Asia and Europe are planned during the year to accommodate the increasingly intrepid customer wanting a more cultural experience. Furthermore, the company will continue to produce creative campaigns and activations including the well-established Master Series events.

Schaus comments on the year ahead: “With the opening of our new T Galleria

by DFS stores in Siem Reap, Cambodia and Venice, Italy we’re expanding our footprint to follow our customers as they explore these iconic destinations, with a clear focus on the international traveler from Europe, Asia and America. And of course our expansion of our City of Dreams store in Macau to four times its current size, in close partnership with our friends at Melco Crown Entertainment, and with an unparalleled array of new retail concepts, is expected to create a new level of excitement and engagement in Macau. 2016 will be an unprecedented year for DFS,” he concludes.

“City of Dreams will be the ultimate lifestyle destination for all visitors to Macau, combining world-class retail, award winning shows and Michelin-star restaurants.”

PHILIPPE SCHAUS, GROUP CHAIRMAN AND CEO, DFS GROUP

Dreaming Big in Macau DFS is expanding its store at City of Dreams to nearly four times its current size. With over 160,000 square foot, the new retail space will feature: •

The largest luxury shoe salon in Hong Kong and Macau with 20,000 square feet over two floors • The largest beauty hall in Southern China • A dedicated men’s shopping experience including watches, shoes, accessories, ready-to-wear, gifts, grooming and two cafes Fashion floors are planned to open mid 2016 and new brands and boutiques will be added throughout the year.

www.dutyfreemagazine.ca CHINESE TRAVELER

29

RETAILER NEWS: LAGARDÈRE TRAVEL RETAIL

Lagardère operates a 1,000-square-meter store at Kunming’s Changshui International Airport in China

A long-term future in China by

Lagardère has recently expanded its operations in Hong Kong with luxury fashion and travel essentials brands

REBECCA BYRNE

What does the slowdown in China’s economy mean for companies with operations in the country? Asia Duty Free asked Eudes Fabre, General Manager – China for Lagardère Travel Retail how the company is adapting to market changes

L

agardère Travel Retail is one of the major players in the Asia Pacific region with over 300 outlets in 16 airports and presence in train stations. It is also the only company that has operations across all segments with its three distinct business streams: Travel Essentials, DutyFree & Luxury and Foodservice. The company began its operations in China in 2007, starting with its news and convenience stores in airports and gradually introducing luxury brands and food concepts to airports and high-speed railway stations.

“Although China still represents only a modest part of our global footprint, it is still one of our fastest-growing markets,” comments Fabre. “Our initial focus was on serving the high-spend business traveler.

However, as we have seen tourism in China develop over the years we have expanded to better capture the growing traffic and rising spending of leisure travelers.”

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CHINESE TRAVELER MARCH 2016

Fabre sees conflicting effects of the recent trends in the Chinese market, with anti-austerity measures impacting sales in certain sectors. “Like everyone else operating in the Chinese market, we have been impacted negatively by the new sense of frugality. However, we also see some positive effects as luxury brands adapt their products and pricing to return to growth in these new market conditions. More affordable brands priced for impulsive and personal purchases are thriving, while we finally see big brands coming to their senses on pricing strategies and making an effort to narrow the excessive price gap that exists between China and Europe, for example.

“Like most of our luxury brand partners,” he continues, “we take a long-term view of the market. Do we face difficult times currently? Absolutely. Yet we know that market position and local expertise in a country like China are not built

overnight, so we continue to invest and develop even in a turbulent context.”

One recent investment is the first high-end luxury concession at Kunming’s Changshui International Airport, in South-West China, which Lagardère opened in September 2015. With a store of 1,000 square meters, featuring brands such as Emporio Armani, Salvatore Ferragamo and Dior, the company hopes to attract consumers from the 40 million passengers passing through the airport each year.

“We have had a great start to the business,” comments Fabre. “Of course it takes time to get it exactly right, after all we have introduced over 10 international luxury fashion brands, almost all of which are new to Kunming airport. However, we are encouraged with the first few months of trading, which have been, on the whole, ahead of our expectations. Our strategy in Kunming is the same as in our

Sales at Kunming are doing well since the store opened

other locations in China: to answer the full spectrum of customer needs across segments with a combination of leading international brands, proven proprietary concepts and local favorites adapted to the travel environment. We are already working on our next projects in the same airport: watch this space!”

Fabre points out that there is a wide divergence in customer behavior when dealing with such a vast and fragmented market domestic market. “One common thread throughout the country is the rise in spending power and consumer expectations, but beyond that we see huge differences. For example, in the largest and most developed cities, our customers have already attained a high level of sophistication. While there is always a place for the big brands, they are no longer enough to attract consumer attention; they want trendy, unique and personalized experiences. They also have high expectations

in terms of customer service as consumerism evolves from simple product ownership to a more holistic notion of ‘lifestyle values.’”

As a result, he says, airport operators that up until recently were focused on top brands and national chain concepts are now adding more “niche” brands and concepts that represent the best of local culture, whether it be products, traditions or culinary specialties. “This quest for quality and differentiation is very consistent with what we see in our industry in the most developed markets,” he says.

In turn, smaller airports are also becoming more sophisticated and introducing mainstream brands that travelers trust for quality and fair pricing.

Unbranded and unsophisticated concepts are being driven out of the commercial offer, replaced by concepts that create better image, higher conversion, and ultimately higher revenues.

Lagardère faces particular challenges in the foodservice segment. Fabre notes: “It goes without saying that there is a huge diversity in tastes, cuisines and dietary habits. This is a big challenge for us to address, in particular because western food ultimately represents a small segment of market demand. So we are drawing on our experience in partnering with locally significant culinary icons to build an offer that is customized, representative and appreciated by local visitors and travelers alike. We work with airport operators to build an offer that represents the heritage of the area while bringing safe bets that can appeal to all customers.”

When asked about Lagardère’s future in China, Fabre is very clear: “Our medium-term strategy for China is to grow our partnerships with key landlords, ensuring we are best able to handle their needs and meet the expectations of their passengers. Leveraging our broad capabilities to take on large-scale projects, we want to be known in the market for the excellence of our operations, the competence of our teams and the strength of our concept portfolio. The management of infrastructure in China is evolving, with commercial revenue becoming a strong focus. We intend to grow by meeting these changing needs with a combination of international competencies and local market expertise. Our success will be built on offering attractive and comprehensive solutions to our existing and future landlords.”

Fabre concludes: “China has definitely delivered clear growth for us across all business segments during our many years operating there. The country will continue be a key element in our long-term business strategy.”

Eudes Fabre, General Manager – China for Lagardère Travel Retail

SHILLA I’PARK DUTY FREE The Shilla I’Park is located in Yongsan in the heart of Seoul

The world’s biggest urban

duty free shop by

REBECCA BYRNE

In March 2016, HDC Shilla, the joint venture between Hotel Shilla and HDC, formally opens the Shilla I’Park Duty Free in Korea’s largest shopping mall. Asia Duty Free asked Gilhan Lee, HDC Shilla Co-President, about the imposing new store located in the heart of Seoul

Gilhan Lee, HDC Shilla Co-President

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CHINESE TRAVELER MARCH 2016

Q: When did you win the license for the I’Park and why did you choose Yongsan?

A: We won the duty free license in July 2015. As it was the first bid for 15 years the competition was fierce among Korea’s seven major retail companies: Lotte, Shinsegae, SK Networks, Hanwha, Hyundai Department Store, E-land and HDC Shilla. We were delighted to be the successful tender.

Our store is located in the Hyundai I’Park Mall in Yongsan. Yongsan is truly at the heart of Seoul. It is located exactly in the capital’s center, which means travelers can reach any of Seoul’s popular tourism attractions within 10 to 20 minutes. Major tourist attractions such as Myeongdong, Mount Namsan, and Han River are only a short distance away.

The district is also a major transport hub, and well connected to provinces outside of Seoul. Annually around 80 million people pass through Yongsan, giving it an unrivaled status in terms of domestic tourism. In the near future we will also have an airport express station and city airport terminal with a pre-boarding service, offering the same level of convenience as a duty free shop in the airport.

This will enable our customers

to enjoy shopping almost right up to their departure.

We also have the benefit of being close to the business district and to one of the most affluent residential areas in Seoul.

Hotels are in easy reach, and there are plans to build a 1,700-room hotel by 2017 in walking distance to our store, again bringing tourists to the Shilla I’Park.

Finally, Yongsan is central to the Korean Government’s urban development plan. The surrounding area is being transformed and regenerated; for example, a US army base is set to become a park similar to New York’s Central Park. It will truly be a spectacular place for travelers and play a key part the renaissance of Korean tourism.

We see Yongsan becoming similar to the Akihabara district of Japan, a cultural center and shopping district popular with consumers. With the new I’Park shopping mall and the special shopping zone for electronics in close proximity, Yongsan will truly be a shopping destination of choice.

Q: Can you tell us a bit about the layout and content of the store?

Shoppers will find trendy Korean cosmetics in the K-discovery zone

Branded boutiques can be found in the Luxury Landmark Zone

A: Shilla I’Park partially opened on December 24, 2015 with about 400 brands in categories such as Cosmetics & Perfumes, Fashion & Accessories and Local Specialties. Currently we have three floors open to customers, which covers around 16,500 square meters.

After our grand opening in March and then by September this year, we will operate on five floors (from the 3rd to the 7th floor) showcasing a staggering 600 brands over 30,400 square meters of retail space.

On the third floor we will offer imported Cosmetics & Perfumes and Luxury Fashion & Accessories. Here, we have created the Beauty Maison, hosting more Cosmetics & Perfumes brands than any other duty free shop in Korea.

The fourth and fifth floors will house our luxury fashion brands and watch & jewelry collection. Here we are planning to establish a Luxury Landmark Zone with branded boutiques. Our sixth floor will be our K-Discovery Zone and will sell Korean products from several categories such as K.cosmetics, K.fashion and K.food. Finally, on the seventh floor you will find Korean local specialties and a premium dessert café.

Q: Chinese customers make up a large proportion of duty free shoppers in Korea, how will you attract them to the Shilla I’Park?

A: In 2016, approximately eight million Chinese tourists are expected to come to Korea and we predict that 60% of these tourists will visit Shilla I’Park Duty Free.

We believe that our K-Discovery Zone will be extremely popular with our Chinese customers, as our mega-sized flagship stores will offer a huge variety of K-Products. Chinese shoppers will not only find their all-time favorites like Whoo and Sulwhasoo, but also next generation K-wave brands such as Style Nanda and Chosungah 22.

In addition, from March, customers can experience the complete K-wave shopping with the opening of the Local Specialty Zone on the seventh floor. In this zone, customers will be introduced to local Korean specialties including food, making their K-wave experience more comprehensive by exposing them to products outside of beauty and fashion.

For example, we have signed a memorandum of understanding with provinces around Korea for direct sales of highquality local specialties. Customers will be

able to enjoy the finest Food & Beverage products delivered from provinces such as Kangwon and Jeju.

Within the I’Park Mall, outside of our store, Chinese customers will find a range of facilities to delight them. These include: a mega-sized K-wave concert hall; the largest IMAX movie theater in Korea, screening content only for Chinese; and a “Nanta” theater, the performance most loved by Chinese. It will be the only place in Korea to offer the opportunity to have an all-inclusive experience of K-Pop and K-Content.

And of course, throughout the year we will look at offering promotions around holiday celebrations such as Chinese New Year as we know these are high spend periods.

Q: Finally, what are your goals for 2016?

A: By our grand opening in March we will have added more brands, enlarged the shopping space and improved our customer service. We are planning an unprecedented and stunning opening!

Furthermore, we will work with the local community to develop various types of tourism content and facilities for foreign travelers in order to make the shopping mall a key attraction. Our aim is to make Seoul a global shopping destination and we will take the lead in promoting the nation’s tourism industry.

In terms of sales, our goal in 2016 is to achieve sales of KRW1 trillion (US$827 million) within the shortest time possible.

In the longer term, we are expecting KRW7 trillion (US$5.79 billion) over the next five years. We believe this is possible because we have the world’s largest urban duty free store with the most diverse selection of products in the center of Seoul.

www.dutyfreemagazine.ca CHINESE TRAVELER

33

ONBOARD DUTY FREE: INFLIGHT SALES GROUP

The ISG team receives the award for Inflight Retailer of the Year at Airline Retail Conference in 2015

The Sky’s The Limit

I

nflight Sales Group (ISG) has been providing airlines with duty free and inflight retail expertise for over 30 years. During this time, the company has seen the market grow steadily, particularly in Asia. According to Vimal Rai, Executive Director of Inflight Sales Group HK, however, the company will now have to look to extract value from selected opportunities only, as the days of expected, automatic growth are probVimal Rai, Executive Director of Inflight Sales Group HK

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CHINESE TRAVELER MARCH 2016

Inflight Sales Group continues to gain market share in Asia through new partnerships and innovation by

REBECCA BYRNE

ably over. “The last 10 years has seen the inflight sales market in Asia fast outpace the overall market. While there are still pockets of potential, the market is maturing with the rate of growth in some areas declining year on year.”

Many factors have contributed to this slowdown: the financial and currency turmoil has eroded personal wealth and dampened shopper sentiment, but the industry has also faced terrorism, political unrest, MERS and volcanoes, to name but a few areas of concern. A significant contributor to the slowdown in Asian growth is the change in Chinese spending habits.

“Five years ago, the Chinese affinity for luxury goods translated into high sales.

These days, with the growing duty free space within the Mainland, in Hainan for example, and with the anti-corruption measures in place, there has been an obvious decline in conspicuous consumption.

Furthermore, the increased mobility of the Chinese, who are now traveling further afield, means they are spending their money in less-traditional channels. This has been made worse by brands that have obviously increased pricing in traditional shopping markets like Hong Kong and Singapore. The result has been a decline in the value proposition for the Chinese

ISG has been providing airlines with inflight expertise for over 30 years

traveler as other countries become more attractive. Mobile-savvy consumers today know exactly where to find the best deals. That said, the increased number of travelers means there is still potential for increasing Chinese custom; we just have to be flexible in our product range to meet the changing market.”

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LETTER FROM THE EDITOR

This flexibility to offer bespoke, tailored products and promotions plays a key role in ISG’s success and has contributed to contract wins in 2015. “We constantly seek to understand what passengers are buying and tailor our range for each route. For example, flights going to China and Japan need to carry a particular brand of liquor, tobacco and skincare, and these brands would not sell as well on other routes. Similarly, with changes in the Chinese demographic we need to offer more affordable and trendy products such as Korean skincare brands alongside luxury products such as La Mer.” This carefully planned product offering is achieved through detailed market analysis. Take, for example, the recent win with Garuda Airlines. “We will start providing our retail solutions in April 2016.

Prior to that the in-depth research begins.

We spend time in shopping malls looking at what people buy, the colors, the trends and availability. We talk to suppliers. We look at non-traditional brands too, to fill

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CHINESE TRAVELER MARCH 2016

Missha and Sulwhasoo: Alongside its luxury brands, ISG now offers more affordable and trendy products such as these Korean cosmetics

any gaps – all this helps us get a real sense of what works and what doesn’t for a particular route.”

So, with slowdown in growth of inflight sales and consolidation in the industry, what does the future hold for ISG in Asia? “Consolidation in Asia has meant that there are really only two or three main players competing for inflight business. With the focus for travel retail increasingly on the retail experience, success will only come from new ways of leveraging the inflight environment.

Currently we have a captive audience restricted to browsing a magazine and calling a crew member to make their purchase. That needs to change. To increase sales penetration we need to fundamentally upgrade the customer’s mindset with respect to inflight duty free.

Going forward, we are looking at ways of significantly improving the inflight retail experience, from the way the products are communicated to the way you buy it and the overall engagement in the process. “The winner over the next five years will be the one that can bring sales out of the plateau by changing the game fundamentally.”

CHINESE TRAVELERS

Big

business

Not only is the number of Chinese travelers passing through the world’s airports increasing, in many cases so too is the amount that they’re spending by

RYAN WHITE

The South Concourse at Los Angeles International; in 2014 the airport welcomed 449,155 arriving passengers from China

R “In 2015, Chinese travelers represented 3.75% of all passengers, but they spend considerably more than many other nationalities.”

COLM MCLOUGHLIN, EXECUTIVE VICE CHAIRMAN, DUBAI DUTY FREE

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CHINESE TRAVELER MARCH 2016

ecently released statistics from the United Nations World Tourism Organization (UNWTO) indicate that international tourist arrivals grew by 4.4% in 2015 to reach a total of 1,184 million in 2015. Some 50 million more tourists (overnight visitors) traveled to international destinations around the world last year as compared to 2014. Noteworthy for travel retailers and brands with a focus on duty free is that China continues to lead the pack when it comes to outbound travel.

UNWTO calls China a “leading source market” that has “driven tourism expenditure in 2015.” Indeed, China has posted double-digit growth in tourism expenditure every year since 2004. Destinations such as Japan and Thailand are benefiting, but the United States and selected European countries are also seeing their fair share of Chinese travelers.

At the airport A recent conversation with Executive Vice Chairman of Dubai Duty Free (DDF) Colm McLoughlin backs up UNWTO’s findings. “The Chinese passenger

comprises an important segment of our customer mix,” he tells us. In 2011 Dubai International Airport (DXB) served 2,183,679 Chinese passengers. In 2015 this number grew to 2,830,972, representing an increase of 29.64%. For Chinese travelers departing DXB, the top five destinations are Beijing, Hong Kong, Shanghai, Guangzhou and Kunming.

Los Angeles International Airport (LAX) is also seeing a large number of Chinese travelers pass through its gates.

Los Angeles World Airports, operator of LAX, tells us that in 2014 there were 449,155 arriving passengers from China, with 54 planes arriving weekly from the country representing 17,150 weekly seats.

Echoing the figures from LAX, Jamie Foley, Vice President of Global Communications for the Los Angeles Tourism & Convention Board, tells us that 2015 visitation figures shed light on the high numbers of Chinese travelers visiting The City of Angels. “China was the most dynamic market driving international visitation [in 2015], with a year-over-year growth of 13.6%, officially becoming LA’s number two international market behind Mexico,” she says.

Dubai Duty Free’s introduction of luxury fashion brands in Concourse A at Dubai International has resulted in a significant increase in Fashion sales across the board, including to Chinese travelers

In the stores It’s no secret that Chinese travelers like to spend when abroad. In the US, for example, Chinese visitors spent a staggering US$24 billion 2014 according to marketing organization BrandUSA. DDF’s McLoughlin says that the demographic’s reputation also holds true at DXB. “In 2015, Chinese travelers represented 3.75% of all passengers, but they spend considerably more than many other nationalities,” he explains. “Chinese travelers accounted for 12.7% of total DDF sales in 2015.”

Average Chinese spend per person at DDF in October 2011 was AED338 (US$92); this rose to AED413 (US$112) in 2015, representing an increase of 22%.

Their favorite categories in order of highest to lowest in 2015 were Cosmetics; A Chinese New Year promotion at Dubai Duty Free

Watches and Clocks; Cigarettes, Tobacco and Cigars; Perfumes; and Spirits.

Moreover, Chinese travelers appear to be remarkably consistent in the categories they purchase, with the order of top categories in 2011 being the same with the exception of Cosmetics and Watches and Clocks switching places.

McLoughlin tells us that Chinese travelers are also very interested in the Fashion category: “Our introduction of luxury fashion brands like Chanel, Gucci, Hermes and Salvatore Ferragamo in Concourse A at DXB has resulted in a significant increase in Fashion sales,” he says.

“The majority of Chinese passengers are brand-oriented and continue to patronize luxury brands that are known worldwide.”

In addition to introducing the above

brands, DDF has taken other steps to ensure that Chinese travelers feel at home when passing through DXB. The retailer has increased the number of Mandarinspeaking staff over the years, from 33 in 2006 to 682 as of January 2016. Furthermore, when adding new products to mix across categories, DDF factors in Chinese buying habits. A great example of this, says McLoughlin, is that many products now offer packaging that features Mandarin translations, certainly an advantage when it comes to capturing this attention of this high-spending demographic. Finally, DDF has ensured that top-selling products now feature signage in Mandarin to increase visibility among Chinese shoppers.

CHINESE TRAVELERS

Expanding the focus The Los Angeles Tourism & Convention Board notes that the Chinese aren’t the only Asian travelers arriving to LA in droves; visits from South Koreans also grew by 11% year over year in 2015 to reach 282,000. For its part, LAX is also seeing a swell of arrivals from other Asian countries, with 222 weekly flights in 2014 representing 68,260 weekly seats from

points of origin as diverse as Japan, China, South Korea, Taiwan, Hong Kong and the Philippines.

And widening the scope of the discussion for DDF, it becomes clear that Chinese travelers aren’t the only Asians buying when passing through DXB. Indeed, South Asian travelers make up an important portion of total spend at the retailer’s operations. The top five nationalities in

terms of spend, in order from highest to lowest, are Indians, Chinese, Brits, Saudi Arabians and Pakistanis.

UNWTO figures tell a similar tale with regard to travel from other Asian countries in 2015. The vast Asia Pacific region (+5%) recorded 13 million more international tourist arrivals last year to reach 277 million. Oceania (+7%) and South-East Asia (+5%) led growth, while South Asia and Northeast Asia recorded an increase of 4%.

Bright future Based on the current trends, UNWTO forecasts international tourist arrivals to grow by 4% worldwide in 2016. While this increase can be characterized as modest, it should be heartening for companies with a stake in travel retail to know that Asian travelers, and especially the Chinese, will continue to lead the pack.

By region, growth is expected to be stronger in Asia and the Pacific (+4% to +5%) and the Americas (+4% to +5%), followed by Europe (+3.5% to +4.5%). The projections for Africa (+2% to 5%) and the Middle East (+2% to +5%) are positive, though with a larger degree of uncertainty and volatility.

Los Angeles International Airport has 222 weekly arriving flights from points of origin as diverse as Japan, China, South Korea, Taiwan, Hong Kong and the Philippines

Heinemann Duty Free sees Chinese travel spending boost In the run-up to the 2015 end-of-year holiday season, Frankfurt Airport offered a wide range of festive activities – many of which were designed to appeal to Chinese travelers. Indeed, the signage advertising the festivities was translated into Mandarin. The delights on offer for gift-seeking passengers passing through the German hub included Christmas decorations, gift wrapping, singing Christmas angels, shopping coupons, and special offers.

Following the official opening ceremony for the airport’s new Davidoff of Geneva walk-in cigar humidor in Terminal 1 on December 14, operated by Gebr.

Heinemann, co-owner Claus Heinemann spoke of the increasing importance of the Chinese traveler to the company’s overall business.

“The Chinese traveler is very important to Heinemann Duty Free,” he said, adding that 16% of the operator’s sales at Frankfurt Airport are made by people from Chinese destinations.

“They love local German products, which they buy for souvenirs,” he observed. “Furthermore they like exclusive and expensive products in categories such as accessories, perfumes, chocolates and cigars… In the Cognac and whiskies category, they choose the most prestigious products as a gift.”

Heinemann said he was pleased with the current level of Chinese per-capita spend, which had increased dramatically over the past years. This year, the company has seen a 25% upswing in sales among Chinese travelers.

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Claus Heinemann, Co-owner, Gebr.

Heinemann

JEWELRY: DYRBERG/KERN The Travel Fairy Tale bangle and bracelet set is inscribed with a quote from famous children’s author Hans Christian Andersen

Danish design

has ASPAC aims One of Scandinavia’s most successful fashion brands, Dyrberg/Kern is building on its inflight sales success to crack new Asia markets by

CLAIRE MALCOLM

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decade of travel retail sector exposure has given the Danish company a solid foundation, and as the bestselling jewelry brand on board Philippine Airlines, as well as strong performance with Dragonair, Cathay Pacific, Hong Kong Airlines and Korean Air, inflight sales have been the main driver.

“We started working with Scorpio after TFWA WE in 2014, and have broadened our reach territory-wise, but Asia is definitely a market where it’s harder to punch through,” says Jacob Harbo Olsen, the group’s Travel Retail Manager.

According to Olsen, inflight sales currently account for 80% of its travel retail business, which is controlled from head office, making it a logistical dream.

The elegant watch collection has opened up another avenue of travel retail opportunity

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Dyrberg/Kern is known for its use of stones that add glitter and glam to the fashion jewelery category

“However, airport ground operations is the next step for us. To kick things off we have developed a ‘grab and pay’ unit solution that we are tying to get into as many airports as possible,” he says.

“With the market share we have in Asia today we are doing quite well in travel retail, but we need to build brand awareness on the ground as we want to capture these customers and that’s our next focus,” he adds.

He also hints at news regarding the brand’s re-entry into China. “We are in the process of developing there; it’s very close and there are very big projects. This is definitely a big focus for the company.”

Creating the right product for the right market is also critical and 2014 threw up one surprise in particular, in the form of a simple enamel bracelet, as he explains: “We wanted something light and fun for a mid-season summer collection, just to stir things up, and the feedback was overwhelming, and huge success with pretty much every airline we’ve been listed with.

“It’s a little bit different than what we are known for, which is all about stones, glitter and glam.”

The company even built a brand story around the collection. Says Olsen: “Being a Danish brand, we decided to include an accompanying bangle which is inscribed with a quote from famous children’s author Hans Christian Andersen, that says ‘to travel is to live’.

“This was an obvious fit for the travel retail market and so we named this our Travel Fairy Tale bracelet.”

Exploring other design avenues also gave Dyrberg/Kern the chance to differentiate itself from other brands with a similar focus. “With stones we realized that we are all chasing the same customer, so we decided to go another route, and it really paid off for us,” he remarks.

Watches are another area that has opened up new interest, with an elegant collection that also plays on the brand’s signature mix and match layering philosophy, with bracelets paired with timepieces.

“It’s also all about creating a look, about standing out, and matching products to incentivise multiple purchases. We don’t consider them as watches per se, but as jewelry that tells time.”

Inflight Sales Group info@inflightsales.com

+852 2722 0293

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Thinking Global Acting Local

THE WORLD’S LEADING INFLIGHT RETAILER Join us at Sky Service 2016 in Moscow 19-21 April 2016 skyservice2016.ru

Crafting a new audience

FASHION: BRIC’S

The new Bellagio Metallo collection represents an evolution in polycarbonate design

across

Asia by

CLAIRE MALCOLM

The Italian seal of quality is BRIC’S brand hallmark, and new collaborations are taking its iconic luggage and accessories to new locations

A

domestic player in a number of Asian markets, BRIC’s has been in the region for over 15 years, but its travel retail presence in still in the nascent stage.

“Korea was our first entry point in the region, and we’ve also been in the downtown duty free store for more than 12 years,” says Attilio Briccola, Chief Executive Officer, BRIC’S. In August 2015, the brand opened a store in The Venetian Macao, another tourist-centric destination, and Briccola places strong emphasis on growth in China moving forward.

Another key market is the Philippines, as he explains: “We have three domestic stores in the local market, two in Manila and one in Cebu, and also good duty free presence through Regent, as well as a shop-in-shop at Fiesta Mall with Duty Free Philippines.

“We are also opening a 25-square metre BRIC’S store in Manila’s new Terminal 3,

so it is a strong market for the brand.”

He reels off a list of other destinations, including Japan and Indonesia, where he would like to see the brand crack the duty free market, but where it is currently focused on domestic exposure through existing distribution partnerships.

BRIC’S is currently in discussion with a number of prospective partners to make this a reality. “We think there are great opportunities for us in travel retail in Asia and, based on our success in Europe and the US, this is a logical progression,” he adds.

Plans are also underway for an airside location at Changi’s new terminal, with a scheduled operational date of 2017.

The other challenge is getting the BRIC’S name out there. Says Briccola: “We are only now starting to become well known in Asia. Despite the fact that we’ve been here for 15-plus years we are still relatively new to the region when you look at other key destinations.

“It takes time to establish brand presence, but what we have found is that when Asian consumers travel to Italy or elsewhere in Europe, they love BRIC’S products; so we need to transfer this level of recognition back to their own home countries.”

Briccola is unconcerned by the challenge and has already conquered other markets, such as the US, without issue, although he does have other concerns when it comes to duty free.

“The real issue is that we are recognized for our luggage, and travel retail is not necessarily the best arena in which to sell luggage. To address this, we introduced other lines such as handbags and smaller items. With our luggage we are definitely in the top 10 of bestselling brands, but for our handbags we are just starting to focus on this,” he says.

Appealing to a slightly more mature consumer, in the 35 to 55-year old range, BRIC’S customers know what they want. Its

The XBag range features a wide selection of bags and handbags

BRIC’S’ functional but attractive XTravel range is made of waterproof nylon satin with leather trimmings, and includes a wheelie holdall and travel kit

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In August 2015, the brand opened a store in The Venetian Macao a high traffic tourism destination Asian consumers traveling to Italy or elsewhere in Europe, have a strong affinity for BRIC’S products

A classic BRIC’S collection, it fits perfectly with the brand’s timeless vintage positioning

travel retail bestseller is the cabin size trolley, which, he says, is reflective of consumer demand and changing travel patterns.

“This is definitely the most important category for us and, in travel retail, cabin size trolleys are an easy sell,” he notes.

But he is equally proud of the fact that the company’s range of nylon handbags is proving extremely popular with Asian travelers.

Its functional but attractive XTravel range is made of waterproof nylon satin, with leather trimmings, and includes different items such as trolleys, a wheelie holdall, a travel kit and carry-on holdall with detachable strap, while the XBag range features a wide selection of functional bags and handbags.

“What we are also seeing to start selling well are our backpacks. We produce a range of business backpacks and also some classic female versions, and these are very attractive design-wise,” says Michele Maccapani, Travel Retail Manager for the brand.

Also targeting the traveling community is the new Bellaggio Metallo collection, which was on show at the TFWA World Exhibition in Cannes last year.

The iconic Bellaggio silhouette has been redesigned using new ultralight, durable materials accented with

Tuscan leather trim and thoughtful details. The new concept delivers an ultra-light polycarbonate trolley with an aluminum frame, that stills embodies the essence of the BRIC’S seal of quality and craftsmanship.

“This really does represent a luggage evolution, giving travelers a large case that is, at the same time, very light

and extremely elegant. Plus, it opens up to reveal the beautiful interior workmanship that is unique to our brand,” says Maccapani.

Adds Briccola: “We are definitely a classic brand, but we prefer to say vintage and timeless. We cater to a niche market, but our goal is to be a market leader and travel retail is very important for us.” www.dutyfreemagazine.ca CHINESE TRAVELER

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FASHION: SAMSONITE

BRAND

The new Star Wars licensed collection uses a powerful brand identity as an emotional hook

on the

MOVE

Samsonite has its 2020 strategy ‘in the bag’ as today’s hyper mobile travelers look to the leading luggage brand for inspiration in the non-travel category by

CLAIRE MALCOLM

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he Q1 2015 acquisition of Rolling Luggage marked another milestone for Samsonite’s international travel retail footprint, with the addition of 36 key airport retail locations including Sydney, Melbourne, Hong Kong and at The Venetian Macao.

“The idea is to create the perfect offer for all types of airport consumer across the brand portfolio, through third party brands and with different concepts targeting different locations,” says Edouard Wattel, Director of Communications, Samsonite Europe.

“This supports our vision for 2020, to shift from a luggage-only group to a ‘bag’ company, that also does great luggage,” he adds.

It is also looking to capture increased spend with the launch of a new home

delivery service, whereby travelers can order anything from the Samsonite range and, if they are within the EU, have it can be shipped to their home address upon returning from vacation or a business trip.

“This is already active at Brussels Airport and we will roll it out to Heathrow by the end of this year,” says Alex v Willson, Managing Director, Rolling Luggage.

For its Asia business, Wattel flags the increased relevance of the non-travel category as a growth driver.

“Consumers tend to use a non-travel product on a more regular, or daily, basis, and so having these items upfront in the store window is a good hook, and they also tend to be more emotional purchases compared to traditional luggage, which tends to have a more functional purpose,” he says.

That said, Samsonite’s partnership with Disney and Marvel has brought a number of products to market that wholly rely on emotional drivers, and its new Star Wars range is hitting the mark, backed by a powerful brand identity.

Says Wattel: “One of the major trends that we are seeing right across Asia and around the world is the rise of the business backpack.

“This is helped by the fact that these days we all need hands-free mobility, and

Lipault’s contemporary yet feminine look is being positioned as the ‘ready to wear’ luggage equivalent

Samsonite’s strategic direction is centered on creating the perfect offer for all types of airport consumer across its brand portfolio

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CHINESE TRAVELER MARCH 2016

while the backpack used to be considered very casual, it has now become much more classy and elegant, and is a symbol of ‘hyper mobility’.”

Samsonite has developed a businessfriendly collection with the commercial traveler in mind, and brought in the high fashion photographic skills of acclaimed Italian photographer, Giovanni Gastel, for its marketing campaign, which places the backpack firmly in the style spotlight.

Women are also picking up on the backpack trend and Wattel highlights the appeal of the group’s Lipault brand to female travelers, as he explains: “This is a very contemporary yet feminine line with a very soft nylon fabric luggage collection that appeals to our female customers; so we are pushing Lipault as the ‘ready to wear’ for luggage.

“So you can pair the different colors with your outfit, which also change quite regularly, so this is a great selling tool; plus we are also seeing a lot more female business travelers using rolling totes on an everyday basis.”

Leather is another option coming from the brand’s design innovators, with a range of items that are all about slim elegance, and that fit into the premium pricing bracket, another pillar of the group’s travel retail strategy.

Says Willson: “One of our bestsellers is the Pro-DLX, and we are now producing this in leather, specifically for the

travel retail market and with a higher price point.”

This focus on product and market differentiation is centered on creating multigenerational appeal and winning new Samsonite customers. “There is a clear focus within our portfolio on different brands to suit different market segments.

So, American Tourister, for example, is much more geared towards the younger traveler, while Hartmann is more of a luxurious classic product that appeals to a more mature audience,” remarks Willson.

Hartmann has long enjoyed success in Asia, particularly in Japan, and is now heading to Australia with presence in travel retail stores at Melbourne, Sydney and Adelaide airports.

Physical presence and market share is the end goal but Samsonite is also looking to dominate destinations in terms of media activity.

“When we go for something then we go big, like what we did at Changi to support the airport’s 50-year anniversary.

We worked with an artist to create a large-scale installation that depicted the Singapore skyline – made entirely out of suitcases,” says Wattel.

This kind of creativity is also explored in other areas with the company recently launching a new app – Travlr by Samsonite – that has flight tracking capabilities as well as useful tips on how to pack for a trip, among other things.

The rise of the ‘hyper mobile’ traveller has prompted development of a stylish business backpack product

Samsonite’s bestselling Pro-DLX range is now available in leather; targeting the business traveler

www.dutyfreemagazine.ca CHINESE TRAVELER

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CONFECTIONERY: PERFETTI VAN MELLE

Confectionery gets hands-on T Perfetti van Melle looks to innovation and interactivity as the major touch points for its 2016 portfolio

Chupa chups fun pen includes edible rice paper and an edible ink pen for an interactive experience The Mentos UFO dispenser toy is set to be another bestseller and contains mini Mentos and fun stickers

he most famous lollipop brand in the world, Chupa Chups sells over four billion sweet suckers each year, but that doesn’t mean the brand is resting on its laurels, especially when it comes to travel retail.

Perfetti van Melle’s 2016 line-up of exclusives will debut this coming April, and Letteke Vullinghs from the company’s travel retail marketing division is expecting big things.

“We think that one of our most popular items will be the Chupa Chups magnet, which comes in a choice of four messages. It’s a first for the brand and the idea behind it was to create something that specifically targeted teens and young adults,” she says.

With emotionally charged messages ranging from ‘Love you’ to ‘Miss you’, the magnet comes filled with a selection of mini lollipops and is just one element in Perfetti van Melle’s strategic travel retail arsenal that it hopes will offer something for each target group.

“You also have items like the fun pen, which clearly targets little kids, and which has four strawberry lollipops together with an edible ink pen, so they can draw on the lollipop and edible rice paper, then eat it,” she remarks.

New for this season are Chupa Chups Mini Sours, another first for the brand

Chupa Chups’ mini lollipop-filled magnet gift has a choice of four messages including ‘Love you’ and ‘Miss you’

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CHINESE TRAVELER MARCH 2016

Interactivity seems to be the name of the game across the NPD portfolio and for an older confectionery fan, Perfetti is hoping to hook shoppers with its Mentos secret book concept.

A decorated box, featuring recognized global landmarks, it opens up to reveal eight rolls of fruit-flavored Mentos and, once emptied, can be used for keepsakes.

“This works for teens and adults. The design is generic, but we are also thinking about a special sleeve as a destinationspecific option,” adds Vullinghs.

Other products coming online in April include the Mentos UFO dispenser toy, containing mini Mentos and fun stickers, as well as another Chupa Chups first –Mini Sours.

The company has also upped its Asia focus with the appointment of Estee Teo YiLi, Area Manager, Travel Retail for the ASPAC region.

“Key markets for us in 2016 are Korea and Japan, where we are leveraging our relationship with our partners there, not forgetting Indonesia and China, which are also important for our growth plans,” she says.

“China has shown a lot of growth in 2015, and we are looking at expansion within the duty free space, where we currently work with three or four of the key players,” she says.

The company is currently present in Hainan, Macau, Hong Kong, Zhuhai and several border shops in China, through

Perfetti is hoping to hook shoppers with its Mentos secret book concept.

its partnership with a strong Chinese distributor.

“Our children’s products are doing very well, and this is primarily because we are one of the only sugar confectionery companies with a focus on a younger audience,” says Teo. This is helped by China’s one child policy, as she explains: “If you visit our stores, you see parents willing to spend money on whatever the child wants, so this is where the toys work very well.”

There is also a shift in focus for Mentos, with the secret box created to target the premium-gifting category. Says Teo: “This is the first year we’ve done this, and as an affordable gifting option, we are making a push into this category. The fact that it is an airport exclusive is also a major plus.”

Perfetti van Melle is one of the only sugar confectionery companies with a clear focus on a younger audience

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SPIRITS REPORT

In Hong Kong International Airport, Royal Salute launched a “Royal Salute The Eternal Reserve” pop-up space where travelers could add a message to a gift card designed by Hong Kong master artist Shen Ping

Promising outlook

Despite the austerity clampdown hitting high-end spirits sales, liquor suppliers are reporting better prospects for the year ahead, partly thanks to the emerging middle class by

D

espite the economic slowdown in China, Chinese travelers are still spending on liquor in travel retail stores. That’s the message from suppliers in a survey for Asia, Gulf-Africa and Americas Duty Free & Travel Retailing magazines.

While sales of high-end spirits such as Cognac have been hit hard, Chinese passengers are turning to the many other products on the market, such as premium Scotch whisky and even niche brands such as new entrant byejoe. This upswing is thanks to the rise of the middle class traveler, seen by all producers as the big opportunity for 2016.

Pernod-Ricard launches many pop-ups 2015 has been a challenging year for Pernod Ricard in Asia travel retail as China’s anti-extravagance laws continue to hit high-end spirits sales. Additionally, geopolitical factors and health concerns have slowed down travel to certain destinations. However, the company is seeing encouraging trends within certain categories, bringing better prospects.

Notably, the emerging middle class opens up opportunities for growth for products in the portfolio with a lower price point, according to Sandrine Tesniere, Marketing Manager at Pernod Ricard Asia Travel Retail. The company will be looking at offering exciting products at a more affordable price range to attract this new customer.

Among the new product launches in Asia travel retail are Ballantine’s 21-Year-Old Signature Oak Edition. In addition, Martell La French Touch Limited Edition glow-in-the-dark bottles by DJ Etienne de Crecy are designed to appeal to the younger generation. In January, Martell introduced Legendary Journeys, a new festive packaging exclusive to travel retail. The Chinese New Year festive period also included the launch of limited-edition products such as the Royal Salute 21 Year Old limited edition designed by Bill Amberg.

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CHINESE TRAVELER MARCH 2016

MARY JANE PITTILLA

This past year, the company has staged many pop-ups throughout Asia. Chinese New Year activations included Royal Salute’s pop-up in Taiwan Taoyuan Airport, where a tag on a Royal Salute 21-Year-Old Bill Amberg limited edition bottle could be personalized. In Hong Kong International Airport, the Royal Salute The Eternal Reserve pop-up allowed travelers to add a message to a gift card designed by Hong Kong master artist, Shen Ping.

Brown-Forman: Authentically American Marshall Farrer, Vice President and Managing Director of Brown-Forman Global Travel Retail, notes that along with Asian locations, Los Angeles and San Francisco airports are productive for the US spirits company, as they provide an opportunity Brown-Forman says that given their fondness for North American whiskey, the Chinese travelers’ gift of Americana is often in the form of Jack Daniel’s or Woodford Reserve

for passengers traveling back to China to buy a quintessential American gift. Opportunity also lies further afield, he says. “Australia is emerging nicely with an impressive number of Chinese travelers, as are other international airports around the world.”

Brown-Forman has seen good growth in sales from the Chinese traveler in 2015, with consistent purchases of Jack Daniel’s Old No.7, Gentleman Jack and Jack Daniel’s Single Barrel. Lately, however, Chinese travelers have shown a growing interest in Jack Daniel’s No. 27 Gold Tennessee Whiskey and Jack Daniel’s Sinatra Select. Brown-Forman intends to put additional emphasis on Woodford Reserve Double Oaked expression.

In 2016, Brown-Forman is projecting “steady but conservative” increases in sales to the Chinese traveler, while being alert for shifts in their favored destinations. The company’s brands have not been hit by the austerity trend, says Farrer, because North American whiskey remains in demand worldwide.

Today’s Chinese traveler is interested in products that are authentic. “This is important because Chinese passengers actually take this interest in authenticity a step further in that they frequently do considerable research before traveling. We have also found that unique or rare product offerings have considerable appeal,” says Farrer.

Ancient China meets the modern west with byejoe byejoe is a niche US-based brand that offers something truly new to travel retail. CEO Matt Trusch says it is the first baijiu product that appeals to sophisticated Western and Chinese consumer alike. byejoe launched duty free sales with DFS in 2015, and has seen tremendous sales growth monthly, according to Trusch.

The brand’s strategy is to focus on Chinese travelers in the US, especially as they return home from Los Angeles, San Francisco and New York JFK. byejoe cannot be found in mainland China, so Trusch reckons it is the perfect gift item. “With 15 gold medals under its belt, byejoe has become the best-selling baijiu in America among American and Chinese domestic consumers alike, successfully reinventing the ancient Chinese drink for the west,” he adds. Trusch is upbeat about sales, expecting “exponential growth” in 2016. byejoe was the first in the world to introduce infusions into the spirit, with dragon fire, infused with dragon fruit, lychee and hot chilis. This year, the brand is launching tiger eyes, infused with passion fruit, peach and pomegranate. These infusions sell two to one over the original, and are designed for mixing in Western cocktails, like flavored vodka, explains Trusch. byejoe lives and breathes Chinese New Year, and offers special packaging, social media campaigns and gifts. The brand scheduled events in airports across the US and Canada for 2016.

A promotional campaign for The Macallan X-Ray Series was staged in major airports including Taiwan Taoyuan, with storytelling elements

Brand experience helps produce results for Edrington “We’ve seen solid growth in our sales to Chinese travelers in 2015,” asserts Ryan Hill, Managing Director of Asia Travel Retail at Edrington. “While we’re not still in the hyper-growth phase, we are still definitely in a growth phase. Anti-corruption measures are still having an effect, but Cognac has been the segment most affected.”

Edrington is seeing a move toward more considered, less ostentatious gifting and more self-consumption and connoisseurship. Another key factor he sees in Chinese travel is the increasing importance of younger consumers and the rise of the middle class.

“Although many would see The Macallan as a luxury brand, we’ve been careful to build out a range, exclusive to travel retail, from entry-level right through to the fine and rare bottlings, so we’re well positioned to cater to Chinese consumers looking for affordable options,” explains Hill. Sales of The Macallan’s high-end fine and rare bottling remain strong, and the travel retail-exclusive 1824 series has been popular. A new product aimed at the Chinese traveler is The Macallan Rare Cask Black, part of the 1824 Masters Series, which is exclusive to travel retail. Airport promotions have included a campaign for The Macallan X-Ray Series, taking in major airports such as Taiwan Taoyuan and culminating in Hong Kong.

Hill observes that in the past Chinese consumers were loyal to just a few brands, but now that they have more choice, brand experience is crucial to differentiate brands and educate consumers. The Macallan’s Six Pillars in Lalique limited editions has benefitted from this experience. byejoe’s portfolio comprises byejoe red ultra premium; the new byejoe tiger eyes infused with passion fruit, peach and pomegranate; and byejoe dragon fire, featuring dragon fruit, lychee and hot chilis

www.dutyfreemagazine.ca CHINESE TRAVELER

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TOBACCO: CIDF

Portfolio expansion

to drive CIDF

growth in

2016 Worldwide distributor of Chinese products adds first-ever fragrance line to successful tobacco and baijiu catalogue by

CIDF will launch its own line of travel retail exclusive Novi vapour sticks in a number of high profile US airport locations this March

CLAIRE MALCOLM

The ultra-premium US$415 agarwood oil-infused Hua Tian Xia

A

Sophie McGirr, Key Account Manager, Southeast Asia, CIDF

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double-digit increase in profit and 10% growth in shipment volume saw China International Duty Free (CIDF) wrap up 2015 on a high note as the distributor and marketer of Chinese tobacco and liquor products continues to build its global business.

Commenting on performance, Sophie McGirr, CIDF’s Key Account Manager, Southeast Asia, says: “We also had continued success with new listings globally and it was a great year in the cruise channel in particular.

McGirr also reports a turnaround in the baijiu market, with a significant pickup in sales over the last year. “We recently added Haizhilan from Yanghe to our portfolio, which is a more value-friendly variant, priced at US$16, as we have noticed that there is more interest in these products than before,” she says.

The company’s current bestseller at Hong Kong International Airport and

across the Middle East is the US$65 Tianzhilan, while in the tobacco category Ashima SuperSlims (US$24) have strong global appeal along with Furongwang Yellow (US$30).

“We’ve also seen good interest in our newer products, Hongtashan Grand Master and YunYan 99, which we launched in the Maldives and Singapore,” she adds.

CIDF is also keeping a close eye on developments on the multi-billon dollar e-cigarette market, and will launch its own line of travel retail exclusive Novi vapour sticks in a number of high profile US airport locations this March. Says McGirr: “The Novi Metropolitan Series is perfectly suited to the GTR market and comes in five flavors, with each one a tribute to one of the world’s greatest cities.

Paris Afternoon, for example, is paired with tasting notes of lemon, cream and honey and distinctive graphics to evoke the enjoyment of a citrus crème brûlée in a busy Parisian café.

“The cigar and cigarillo market in China is also growing, and in order to cater for this segment we are introducing a new super-premium products, Maos’ Factory 132, which is a variant of the Great Wall Series.”

Retailing at US$310, it will initially launch at Hong Kong International Airport in February, with rollout to select destination in due course, and is a faithful recreation of the cigarillos enjoyed by Chairman Mao. “We have also launched an ultrapremium US$415 agarwood oil-infused cigarette product in the Maldives and Singapore, called Hua Tian Xia. Agarwood oil routinely trades for more than gold, and agarwood products are very popular with the Chinese,” notes McGirr.

This year will also see the company move outside of its original remit following the signing of a distribution deal for ‘The Voice’ fragrance.

Says McGirr: “We are looking to find the next big thing for the Chinese traveler

and China’s ‘The Voice’ TV show is currently the country’s number one program.

As it is also aired in 60 other countries, it has popular global appeal.”

Aimed at a younger fun-loving audience, with a separate male and female line, the fragrance is also being positioned for gifting, and CIDF plans to launch in both Southeast Asia and the Middle East.

For Chinese New Year 2016, CIDF will introduce its first-ever ‘Monkey King’ scratch card promotion at destinations in Sri Lanka, the Maldives, Dubai, Abu Dhabi and Qatar.

“One of our major campaigns for 2016 is continued focus on personalized instore space. Last year we installed units in Abu Dhabi, Bali and Jakarta. This year we will have wall bays placed through Dufry in Phnom Penh and Siem Reap, plus a super exclusive dedicated area in Changi T2 with DFS,” concludes McGirr.

For the growing cigarillo market.

CIDF is launching the new superpremium Maos’ Factory 132

Aimed at a younger fun-loving audience, The Voice fragrance will launch across Southeast Asia and the Middle East

www.dutyfreemagazine.ca CHINESE TRAVELER

53

COMPANY PROFILE: AGIO CIGARS

Wavelength Agio cigars find the Chinese traveler to be an enthusiastic travel retail partner by

C

hina has been a focus for Agio cigars, and the company’s Balmoral cigars have been especially popular in the country and the region. “In Asia there is a substantial growth potential for Agio at the international airports and Chinese airports in particular, especially our Balmoral cigars,” says Gertrude Stormink, Agio Cigars Global Travel Retail Manager. “This is the case for our premium

WENDY MORLEY

Agio’s special selections, such as this special Balmoral Year of the Monkey gift box, are very popular with Chinese travelers

shortfiller range, the Balmoral Dominican Selection cigars as well as for our top line, the Balmoral handmade cigars.

“At this moment we are introducing our new line of premium handmade cigars, the Balmoral Añejo XO, to the travel retail segment and we will launch them during TFWA Asia Pacific in Singapore.”

Travel retail is a focus for the company, and Agio offers considerable support in this area. Stormink says, “For our travel retail partners and their staff we organize product trainings. We assist them with innovative instore travel retail gondola’s and shelf presentation systems to engage the consumers and stimulate sales.” She adds that the Balmoral Añejo XO is an exceptionally quality cigar, and that cigar aficionados worldwide appreciate its presentation in a beautiful wooden box. This box and the quality makes this cigar perfect for gifting.

Agio and the Chinese traveler appear to be a good match, says Stormink.

“We have seen that Chinese passengers love cigars, especially when it

The cigar selections for the Year of the Monkey gift box were selected in tribute to the characteristics of those born under this sign

54

CHINESE TRAVELER MARCH 2016

comes to gifts or special editions like the Balmoral Year of the Monkey gift box, to treat themselves and others. They look for high-quality tobaccos and attractive luxurious packaging.”

Balmoral has recently released a Year of the Monkey edition of the Dominican Selection sampler box in celebration of Chinese New Year. “People born under the sign of the monkey are witty, intelligent, and have a magnetic personality.

Agio Cigars has chosen a special edition of the Balmoral Collection box in tribute to those characteristics.” The Balmoral Collection Year of the Monkey box contains 12 cigars with 4 Small Panatelas, 4 Panatelas, 2 Coronas and 2 Corona Tubos cigars. The Year of the Monkey edition is available in selected Duty Free markets.

Balmoral cigars are made in the family-owned factory in San Pedro de Macoris, a small city in the Dominican Republic. The cigars are made with a premium blend of tobaccos from South America and the Caribbean and are crowned with a shade-grown wrapper from Ecuador.

Growing the wrappers from Ecuador in natural shade ensures that the Balmoral cigars have a mild, rich flavor. It also guarantees the beautiful golden color of the wrapper.The master blender personally selects these tobaccos, which provide the perfect body and balance to the cigars.

CHEN RAN 陈燃 Actress & Model Beijing, China

It fits everything and more.

I always keep this in my makeup bag.

These scents remind me of my last trip.

My shortcut to beauty sleep.

Something new I found along the way. -L ove!

The Traveler’s Luxury Department Store ANGKOR · AUCKLAND · BALI · CAIRNS GUAM · HAWAII · HONG KONG · MACAU · OKINAWA SAIPAN · SINGAPORE · SYDNEY TGALLERIA.COM

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