The
global duty free and travel retail industry is well on course to
achieve projected annual sales of US$64 billion by 2015 with Asia
Pacific leading the way, according to Erik Juul-Mortensen,
President TFWA.
Making
his ‘State of the Industry’ address at the opening plenary
session of the TFWA Asia Pacific Conference & Exhibition on
Monday 13th May, he said that sales totalled over US$49
billion in 2012 according to preliminary results from Generation
Research. The Asia Pacific region remains the powerhouse of growth
with sales of US$18.6 billion in 2012 with the strongest growth shown
by the fashion & accessories category at 18.9%,
Developing
the conference theme of ‘Striving for Perfection’ he said that
the most important word is ‘striving’ as having a sense of
achieved perfection can bring complacency. The industry has to ask
itself ‘what if?’.
He
identified five opportunities going forward: the use of digital
technology which has the power to be truly transformational; the
human factor of having the right staff in the right locations at the
right time and targeting customers by nationality and destination;
the supply chain to achieve 100% stock on shelf at all times; the
retail design to ensure our shops are as appealing as they should be;
the product offer which is the brand owner’s contribution to
perfection.
Juul-Mortensen
also drew attention to issues which the industry cannot control and
on which a concerted effort is required, hence the need to support
regional associations and TFWA’s support of the development of a
new single unifying body to coordinate efforts to defend the
industry.
Sunil
Tuli, President APTRA, developed this theme. “To succeed
together, we need to work together to iron out all those
imperfections that are still too apparent in our customers’
journey. That means we have to care, not just about our own business
and our customers, but also about our retail partners, our suppliers,
our airports, our airlines – the entire chain.”
Outlining the recent
campaign and research activities of the regional association, Tuli
said that the next initiative is training. APTRA is spearheading the
campaign to get the industry in Asia and elsewhere to retail alcohol
and other products responsibly and to be seen to be doing so.
In
a candid and often humorous address, Dr Mahathir bin
Mohamad, Former Prime Minister of Malaysia, gave delegates a
snapshot of the recent economic and political development of
Malaysia, a multiracial country which, he said, has been peaceful and
stable since 1969. Key to its progress were rubber and tin exports,
subsequently replaced by minerals and palm oil, and the development
of the infrastructure including roads and airports. “The more we
build infrastructure the more the country grows.”
Referring
to the potential threat of its increasingly powerful neighbour, he
said that Malaysia had been doing business with China for 2,000 years
without ever being conquered. “We look upon China as a potential
market.”
“China
benefits more from trading with a world that is rich,” he
concluded. “It is far better to help others to become prosperous
so that they can buy more goods from China.”
In
a question & answer session, moderated by TFWA Conference,
Research and External Affairs Director John Rimmer and Trevor
Lai, Presenter Thoughtful China, Dr Mahathir explained the
thinking behind his government's decision to create a new airport in
Kuala Lumpur, now KLIA, one of Asia's leading hubs. Dr Mahathir's
address was the undoubted highlight of a packed opening session.
Outlining
the perspective of the world’s leading premium drinks company,
Gilbert Ghostine, President Asia Pacific, Diageo identified
four qualities which would be essential in exploiting the growth
potential of the Asia Pacific region: leadership in the building of
categories and brands with the emphasis on creating a brand
experience; adaptability and the will to exceed the expectations of
customers; partnership; reputation and the social obligation to
invest in the societies in which we operate.
Explaining
the need to create high quality experiences for customers, Ghostine
described the Johnnie Walker houses – the first "embassies for
Scotch’ outside Scotland - which have been created in Shanghai and
Beijing and said that Diageo is planning to develop the concept in
key airport locations.
Dr
Fan Gang, Director, China National Economic Institute and
Chairman, China Reform Society addressed the principle concerns
relating to the recent growth in the Chinese economy and its impact
on international business. He confirmed that growth in China is
slowing down from its ‘over-heated’ rates of the period 2004-2007
but said that double digit growth rates lead to inflation; the
current 8% growth rate may be the ‘magic number’ for stable
development of the economy.
He
suggested that the key problem in China is achieving a balance
between savings and consumption because at present Chinese people and
the Chinese economy save too much. He predicted that in the next 30
years we will see the middle classes achieve real growth with more
travel and higher spending.
Workshop A –
Perfect Journey – saw Faizah Khairuddin, Senior General
Manager Commercial Services, Malaysia Airports Holding Berhad,
Lorenzo 'Enchong' Formoso, Chief Operating Officer Duty
Free Phillippines, and Ian Taylor, Global Marketing Manager
William Grant & Sons discuss how airports, retailers and brands
can better engage the traveller.
Khairuddin gave an
insight into the planning of the new KLIA2 terminal, with its unique
retail proposition: ELITE – Experiential, Liberating, Innovative,
Thrilling and Ever-changing. Formoso explained how DFP caters for the
varying needs and aspirations of its very diverse customer base. “We
bridge them all together by turning the shopping experience into a
perfect journey,” he said, using video clips to show how all
travellers are reached via the 'More Fun in the Phillippines' theme.
Taylor gave a lively
presentation on the WGS approach to travel retail and how the company
brings 'brand essence' to life through travel retail exclusives and
innovative airport activations. “'We have to act differently,
create some theatre, jolt people out of their standard ways by giving
them something they are not expecting,”' he said. The session was
moderated by Dermot Davitt, The Moodie Report.
Workshop B -
Perfect Pitch –
assessed the partnership-based approach to engaging the customer with
contributions from Monet S. Aluquin, Assistant Vice
President, Airside Concessions Division, Changi Airport Group,
Steffen Brandt, Chief Executive Officer, Heinemann Asia
Pacific Pte Ltd, and Eva Yu, Managing Director, L’Oréal
Luxe Travel Retail Asia Pacific and moderated by John Sutcliffe,
Travel Retail Advisor.
Aluquin advocated
working with concessionaires to give customers the best airport
experience possible, an experience which is “personalised,
stress-free and positively surprising”. Steffen concluded that
“partnership is the basis of success” and all stakeholders should
agree common solutions. Overbids will not succeed anymore and
one-sided contracts belong to the past, he said. Yu highlighted the
success of Incheon which is number one worldwide in travel retail
sales and yet ninth in passenger numbers. She urged the industry to
invent a unique concept to win the hearts of global shoppers.
Workshop C –
e-Perfect – analysed the opportunities which digital
and social media represent to premium brands and retailers with
Stephenie Rodriguez, CEO, Sticki Digital Media, Jens
Thraenhart, Co-founder & President, Dragon Trail and
Publisher, China Travel Trends, John McDonnell, President,
International and Chief Operating Officer, Patrón Spirits
International A.G, Sang J. Ahn, Head of Consulting, Incheon
International Airport Corporation and Youngwook Yoo, Associate
Partner, McKinsey & Co. The workshop was moderated by Amanda
Felix, DFNI.
McDonnell
provided several examples of how modern technology has changed retail
but commented that “the internet may have opened the door but it is
up to us to walk through it”. Rodriguez recommended a three-pronged
approach: align your business goals, foster a culture of
collaboration and create a converged media strategy aimed at reaching
‘Generation C’ – the connected generation.
Thraenhart
said the internet is the most important communication medium in China
today and if you are not online then you don’t connect. Four of the
top five social networks in Asia are in China and in fact “if you
are not on Weibo, you are not in China,” he said. Ahn and Yoo
provided examples of how airports are changing from transportation
hubs to destinations and they agreed that new media are the means to
engage with customers but it has to be a two-way communication.
Workshop D –
Perfection Personified – majored on the importance of customer
service in any retail or inflight operation with Andrew Gardiner,
General Manager Retail, Sydney Airport, Rachael Green,
Recruitment and Employee Development Manager, Dubai Duty Free, John
Garner, Group Deputy Chairman and President Asia Pacific, DFASS
and Trevor Lee, Managing Director, TravConsult.
Green outlined the
various schemes DDF uses to train, incentivise and reward staff
including Electi (leadership development), Eureka (product knowledge)
and Gotcha (customer service). “It's about catching staff doing
something right and rewarding them,” she said. Similarly, Garner
gave examples of programs DFASS employ to incentivise inflight crews
such as Singapore Airlines, including top sellers award dinners, in
order to encourage them to provide service that “goes beyond
expectations”. He used an Air Canada video, created for a
competition run by industry event ISPY, to illustrate just how
enthused crew can become about onboard sales.
Gardiner emphasised the
importance of understanding customers, particularly the increasing
numbers of Chinese passengers, while Lee highlighted the rapidly
evolving nature of the Chinese traveller. Airports need to be “China
friendly, internationally ready”, he said. Retailers need to treat
all travellers equally well – not over-engineer for Chinese
customers at the expense of other customers but, at the same time, it
is crucial to understand and cater for different nationalities and
needs. The session was moderated by Doug Newhouse, Travel
Retail Business, and Trevor Lai, presenter Thoughtful China.
Why don't 52% of
regular international travellers enter travel retail shops, let alone
purchase? Counter Intelligence Retail's Managing Director Garry
Stasiulevicuis opened the Closing Plenary with highlights of the
TFWA commissioned global study on 'non-shoppers'.
Stasiulevicuis
identified a number of ways in which the 'trinity' of airports,
retailers and brands could work together in order to drive shop
penetration, including improved communication prior to travel and
during the various touch points within the journey; more value offers
and greater promotion of travel retail in other areas, such as food
and beverage, with linked promotions. The three main barriers for
non-shoppers were lost relevance, other activities at the airport and
value perception. “More than 90% of Asian non-shoppers identified
these three things as the biggest barriers,” he said.
The final speaker was
Anson Bailey, Principal, Business Development, KPMG (Hong
Kong) who gave a spirited summary of its Global Reach of China Luxury
study. Outlining the massive growth in Chinese travel he said by 2020
there would be 200 million overseas trips – with luxury goods
continuing to form a major purchase incentive. He described the new
Chinese digital consumer, with some 70% researching products online
at least once a month (and often more than once a week), and
predicted that the growth in omni-channel retailing would have “a
profound effect on retailers and brands”.
A full review of the
TFWA Asia Pacific Conference & Exhibition will be available on
www.tfwa.com
soon.
Ends
For further
information please contact
TFWA Press Office
