Friday, 17 May 2013

TFWA ASIA PACIFIC CONFERENCE & WORKSHOPS PRESENT VIEW OF DYNAMIC REGION


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


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