The Travel Retail Business’ Global Annual Travel Retail Survey 2012 reflects the opinions of senior executives working for several retail, airport and supplier companies from all four corners of the globe, with many expressing concerns over the future of the Eurozone and some European economies in the year ahead.
 

Meanwhile, many were also equally very positive about the growth prospects for the Asia Pacific region and Mainland China, the BRIC countries and parts of the Middle East and Africa. In this short excerpt from the 10 questions asked, Doug Newhouse charts the comments of many in relation to whether they think the coming year’s general travel retail trading environment will be better or worse than 2011.

As the biggest travel retail company in the business – and many believe it to be the best – DFS Group prefers to keep a low profile, although it makes no secret that it did enjoy another record year in 2011, coming off the back of an equally successful 2010 where it chalked up an impressive industry leading $3.5bn-worth of sales turnover.

All of which adds even more meaning to the comments from company’s Chairman and CEO Ed Brennan when he told our researchers that he is very positive about 2012: “We believe our strong momentum in 2011 will carry into the first half of 2012,” he said – as part of a series of responses – and this sentiment was also shared by many other retailers, although Brennan also believes that the impact of reduced travel and spending by Europeans will be felt by the industry as a whole this year.

Dufry Group’s CEO Julian Diaz agrees, although he also remains pretty positive about other regions, while cautioning that the short term may hold some challenges for the industry as a whole in Europe: “All signs indicate that in 2012 the general travel retail environment will be more volatile and Dufry has taken all measures to adapt to any scenario,” he said. “We remain positive for the travel retail in the middle and long term. For the short term, we may face turbulences in some parts of the world, especially Europe.”

More interest for unique propositions…

For his part, Lagardère Services’ Chairman and Ceo Dag Inge Rasmussen also believes that industry volume sales may not be as high as last year, but he still remains quote positive: “We believe the same macro-trends as in 2011 in terms of travellers’ demand will continue: Luxury and sophistication in duty free, but also more and more interest for unique retail propositions giving a strong sense of place.

“In News & Gift, extended convenience offer will be a must, whereas e-books will emerge as an important segment, offering interesting opportunities for players able to step into this market with original and title choice facilitating solutions.

“Volume will not be growing at the same pace as in 2011, as we can fear the impact of the financial crisis on global demand, in particular in Europe.”

Meanwhile, ‘flat’ is the expectation that Aer Rianta International’s former Director General Eamon Foley (now a company consultant) has, as he explained to The Business: “I expect the market to be flat with the exception of Asia, which should see some modest growth. It is difficult to see where growth will come from in the developed western countries against the background of sluggish economies.”

Foley’s remarks reflect the feelings of many that Asia and outbound Asian travellers are likely to be the focus of meaningful sales growth in the year to come, although some also point positively to other parts of the world, such as the Middle East and South America.

..some tough times coming our way?

Others, like Christian Sültemeyer, Senior Executive Manager, Fraport AG point to positive internal operational changes in Europe, such as the opening of the A-Plus programme at Frankfurt Airport this year: “We do have high expectations for next year – especially towards the opening of A-Plus. On the other side we have seen some worrisome downturn in cargo-development for several months now,” he said.

“That is usually an indicator for a general global economic downturn ahead. So there may be some tough times coming our way if the big governments will not find a way to manage the debt situation soon – and that is not only Europe, but also the USA.”

Wise words from Sültemeyer as usual and he was joined by more of the same from Brian Collie, Chairman of Airest Collezioni, who said he believes that it is ‘difficult to say which way 2012 will go..’ He said: “The Eurozone is still in a state of flux and the introduction of austerity budgets, tax increases and public-sector cutbacks in most European countries will continue to hit consumer confidence.

“On the other hand, new routes between the mature European markets and the high growth areas of China, India and the Middle East mean most strong airports are still looking forward to passenger growth. On balance I’d say 2012 could be a better year, but there’s a strong element of ‘wait and see’ in the coming months!”

World Duty Free Group Ceo José Maria Palencia also believes this year will be tougher, as he explained: “We think overall it will be more challenging, with continuing turbulence in the Eurozone and ongoing, low consumer confidence.

Markets outside the EU are more dynamic

“The Spanish economy continues to pose further challenges, which we will seek to overcome with our strong retail offer and service proposition. The UK will benefit as a result of [the] increased number of visitors for the London Olympic Games and the Diamond Jubilee, but we don’t underestimate the challenges ahead as the economic situation within the EU remains unstable.

“On a positive note, markets outside the EU are more dynamic and this is good for our business. Aside from economic challenges, the other ongoing challenge – and one which we embrace – is that of continuing to interest, surprise and engage the customer.

“We need to ‘re-invent’ ourselves and be innovative, to attract the interest of the passenger and continue to drive footfall and sales. We have many plans to ensure we achieve this during 2012.”

Dubai Duty Free – one of the few operators working at an international airport where sales exceed $1bn – is also very positive, as its Executive Vice Chairman Colm McLoughlin told The Business: “Despite the concerns regarding Europe, I do think that 2012 will be a good year ahead for travel retail. From our point of view, increasing passenger numbers and expanding routes by Emirates and Fly Dubai give us good reason to be optimistic.

“We will continue to focus on increasing penetration both for departing and arriving passengers and we are pleased to see that in 2011, the sales in our Arrivals has increased by a significant 17%.”

Growth and more growth….

Another ‘non European’ based operator also believes he is located in the right place at present. King Power Group Hong Kong Managing Director Antares Cheng believes the economic train in Asia still has a lot more track left yet: “For us, in this part of the world, we have some confidence that the solid economic growth here could more than compensate and cover the losses incurred from the other traditional markets that find themselves in dire economic situations.”

Back in the Middle East, Dan Cappell, Senior Vice President Commercial of the Abu Dhabi Airports Company is also very optimistic: “From an Abu Dhabi perspective, 2012 is lining up to be another record year. The ongoing success and growth of Etihad Airways, the national carrier of the UAE, forecast double-digit passenger growth and for any airport’s retail business this is a fantastic statistic. Our goal is always to be at least +5% ahead of traffic by driving penetration conversion and spend.”

There should still be some room for caution in Asia, according to Alessandra Piovesana, Regional Managing Director of Nuance-Watson Asia however. She said: “Growth is predicted to slow down in 2012, e.g: Hong Kong, China and the Singapore governments expect export declines, partly due to the fall out of the financial crisis/recessions in the US, EU and Japan.

“This is already reflected in several Asian airports’ cargo throughput [which has been] slowing down since Quarter 3, 2011. However, we remain realistically optimistic, as we continue to leverage our capabilities of turning around, adapting and understanding travellers and potential customers’ states-of-mind and aligning our store activities, offers and services accordingly.”

[Many thanks to all of the retailers who feature in this small extract from our survey and for their significantly larger contributions to the full 10-question Travel Retail Business’ Global Annual Travel Retail Survey 2012. This also includes multiple responses from supplier companies and others. For those interested in obtaining a copy of the full document, this is published in full in the Travel Retail Business January 2012 magazine edition. To obtain a copy, contact [email protected]].