TFWA president: online ‘crucial’ to TR recoveryBy Nicola Carruthers
The online space will be “crucial” to the development of the travel retail industry, the president of the Tax Free World Association (TFWA) said during the virtual China Reborn event.
Taking place between 1 and 3 December, the China Reborn event is the second instalment in a series of digital workshops announced by the TFWA to help the duty free and travel retail industry bounce back from the impact of Covid-19.
Alain Maingreaud, president of the TFWA, kicked off the online event with an opening speech yesterday (1 December).
Despite the Covid-19 pandemic, Maingreaud said travel retail sales have continued to rise in recent years.
He said: “It seems an age ago, but 2019 finished on a positive note for duty free and travel retail, with total global sales reaching US$86.4 billion based on the latest data from Generation Research. That represents an uplift of +9.9% versus 2018.”
“The extent to which our world has changed would have been unimaginable 12 months ago. The disruption to international travel brought by the pandemic has already been covered extensively in the trade press, and the resulting impact on our industry is something we have all faced directly since March of this year.
“The International Air Transport Association recently revised downwards its passenger traffic forecast for this year, predicting a drop of 66% versus 2019. That seems entirely possible based on the Airports Council International assessment that international passenger traffic fell by 64.5% year on year during the first half of 2020.”
Maingreaud also highlighted “new possibilities” emerging from the travel retail sector, with China at the centre of the industry’s development. The country, where the outbreak began, has ‘seen the fastest economic recovery of all global regions since the start of the pandemic’.
He continued: “China’s duty free and travel retail market is a prime example of what can be achieved when stakeholders proactively embrace change in a supportive, regulatory environment.
“The Chinese government’s success in bringing the pandemic under control and the strength of the subsequent economic recovery has helped fuel the substantial rise of sales to Chinese travellers in off-shore and downtown duty free stores.”
He also pointed to the new duty free policy for Hainan island, which has helped to boost footfall. In July, the annual shopper allowance was more than tripled to around US$14,000 for purchases made on the island. The range of goods available has also been expanded to include wine and spirits.
‘Essential’ digital tools
Maingreaud noted the importance of the digital space: “Interactivity, virtual reality and live streaming, have all served to boost shopper engagement on the ground and, just as importantly, extend the reach to wider audiences of potential travellers online. While not new to travel retail, these digital tools have become essential at a time when our global industry urgently needs to attract and inspire shoppers. Brands and retailers operating outside China will be keen to learn from this experience.”
However, Maingreaud said bricks-and-mortar stores will continue to play a vital role in the industry’s development.
Furthermore, Maingreaud said operators must continue to adapt and “not retreat from the progress made over the last decade” in order to be successful when passengers start to travel again. He said: “The increasing use of technology is creating a more engaging shopper experience. Our appeal to travellers when international traffic resumes depends on our ability to generate excitement in store. We must harness that ability to emerge stronger than ever from the pandemic.”
Maingreaud added that a combination of physical and digital elements will likely be used for future TFWA events, including the Asia Pacific Exhibition & Conference on 9 to 13 May 2021. The show will move from Singapore to Hainan for the first time.
He said: “Given the present uncertainty affecting international travel, we are keeping an open mind about the format of this event. We will take into account the wishes of our own members and the wider industry, as well as local conditions throughout the region as we make our plans. Yet Asia Pacific’s importance to duty free and travel retail makes a regionally-focused event essential, whatever shape it takes.”