African duty free and travel retail poised for growth

By Andrew Pentol |

Zarza-for-web

Isabel Zarza, CEO, Dufry Africa has been based in Africa for nearly three years. 

The growing importance of duty free and travel in Africa was the main theme on day two of the recent (24-26 November 2019) Middle East and Africa Duty Free Association Conference in Oman, Muscat.

A joint presentation from Peter Mohn, Founder and CEO, m1nd-set and Anna Marchesini, Business Development Manager, m1nd-set, discussed highlights from a new study commissioned by the Tax Free World Association and conducted by m1nd-set.

The aim of the study was to explore traveller behaviour among key African nationalities and the latest travel trends across the continent. Isabel Zarza, CEO, Dufry Africa also provided a retailer’s perspective on travel retail in key African markets.

Zarza, who revealed Dufry has a strong African presence in Morocco, Mozambique, Kenya and Ivory Coast said: “I always think of Africa, which currently represents just 1% of the travel industry, as the next boon in our industry after Asia. By 2050, a quarter of the world’s population will be living in Africa.”

She added: “In the year 2100, there will be 4.3 billion people living in Africa, an increase of 230% on today’s number.”

(Click here and here for the main highlights from Day One of the 2019 MEADFA Conference in Muscat, Oman. Read the first part of our interview with Bassam Al Wardi, General Manager, Bahrain Duty Free)

AFRICA TO INCREASE TRAFFIC SHARE

Emphasising the importance of the international passenger in DF&TR, Zarza said: “Europe and Asia are the continents with the higher share of international passengers. Africa represents just 4% of international passengers, but will increase its share moving forward. Europe and Asia will lose passenger share in the future.”

Zarza-slide-2

By 2050, it is estimated that a quarter of the world’s population will be living in Africa.

According to Zaza, there are two elements impacting traffic in the region: “The first is connectivity. If you are travelling from Morocco to Kenya, for example, it is sometimes easier to go through Europe than direct to Kenya. This makes the trip longer and more expensive.

“Another important element is visa restrictions. It is hard for African passport holders to enter some African countries. Currently, Africans do not require a visa to enter 25% of African countries which is an improvement on the previous year. African’s can obtain visas on arrival in 24% of African countries, but still need a visa to travel to 51% of African countries.”

African travel retail may be in its infancy, but Zarza, who called for the next MEADFA Conference to be held in Africa, suggested general cross-category conversion rates among African consumers are quite high. “In the perfumes and cosmetics category, the conversation rate is 67%. For alcohol, it is 72% and confectionery 66%. These numbers are really promising.”

The joint presentation from Mohn and Marchesini shed further light on the buying habits of African consumers. The aforementioned m1nd-set study comprises testimony from 1,500 African travellers living in 40 of the continent’s 54 countries. Data was collected in September/October 2019.

Mohn said: “In the last 12 months, there have been 130 million international flights from Africa to different parts of the world and also in Africa. What nationalities are departing on international flights from African airports in 2019? Egyptians (15.9 million), French (13.5 million) and Moroccans (8.5 million) dominate.”

He added: “There are currently 1.3million Chinese people travelling from African airports and around 200,000 Chinese people working in Africa.”

Marchesini revealed that around half of African passengers asked browse duty free shops (47%) and 53% actually purchase. “The most purchased category is perfumes (48%) followed by fashion and accessories, electronics and alcohol. Chinese shoppers tend to focus more on beauty including skincare and make-up and alcohol.”

m1nd-set-Role-of-Promotions-new

54% of shoppers interviewed purchased on promotion in Africa, according to a new m1nd-set study commissioned by the TFWA.

Promotions are key drivers and motivations to purchase and among the top-five reasons for doing so, emphasised Marchesini. “54% of shoppers interviewed ended up purchasing on promotion and seven out of 10 considered promotions the key reason for purchasing a specific product.”

The role of sales staff must not be underestimated.  “In terms of interaction with sales staff inside duty free stores, 61% of interviewees said they interacted with staff, which is higher than what we have seen elsewhere in the world with the exception of China.”

“Around half of the interviewees who interacted with sales staff actually approached them. The other half were approached by staff members,” Mohn remarked.

Offering further insight, he said: “Around half of shoppers interviewed wanted to learn about prices and special offers from staff (46%), while 46% were seeking information on where they could find particular products.”

‘INSTAGRAMMABLE MOMENTS’

Other standout presentations included an entertaining speech from leading social media strategist Andrew Davis who had some important advice for airports.  “Finding those ‘instagrammable’ moments is important. If you can understand what people are doing online and offline you are on the way to understanding the customer journey.

“Data, however, is pointless if you cannot do anything with it. Using monitoring platforms to discover more about consumer buying habits and creating some form of content to break that habit, or get into what consumers are doing is the way forward.”

Andrew-Davis-MEADFA-2019

Social media strategist Andrew Davis said airports must search for those ‘instagrammable moments.’

The second and final day actually kicked-off with presentations from John McDonnell, Managing Director International, Tito’s Handmade Vodka and Karl Marnane, Director of Sales, Butlers Chocolate. McDonnell and Marnane outlined what their respective brands are doing to remain relevant. Marnane said: “Sustainability is big news. Awareness around sustainability is becoming part of our mainstream consideration due to increasing environmental pressure. Gen Z consumers are driving these concepts which are good for the environment.”

Citing research from data analytics and consulting company GlobalData, Marnane said consumers in the Middle East and Africa were highly receptive to purchasing products which support environmental protection among other ethical and sustainable issues.

McDonnell, focused on three ‘new priorities’ for younger consumers — digital convenience, social responsibility and sustainability. He said “At airports, we are glued to our phones and do you know why? It is because the industry is not communicating with travellers through that device for a a call to action to go into the duty free shop. We as an industry have not come up with a global duty free app and it drives me crazy.”

Karl-Marnane-MEADFA-2019

Karl Marnane, Director of Sales, Butlers Chocolate said sustainability was big news in duty free and travel retail and that Gen Z consumers were driving concepts which are good for the environment.

The audience was then treated to some interesting insights from Rob Marriott, General Manager, Muscat Duty Free (Stay close to TRBusiness for an extensive interview) and Deema Anani, Commercial Officer, Airport International Group. Marriott and Anani presented in-depth focuses on Muscat and Amman International Airports which have both been subjected to commercial revamps.

As reported, Muscat Duty Free opened its shopping facilities at the $1.8bn New Muscat International Airport in Marchlast year and hosted a grand unveil of its 32,000sq m commercial facilities in November. Last year, Queen Alia International also opened an enlarged arrivals shop (November 2018), which was inaugurated in February. Additionally, work was undertaken on a new 2,800sq m Dufry Next Generation departures shop which is now open.

Marriott said: “We have moved into three-times as much retail space and the offer has increased by 50%. The increased fashion and jewellery space has worked well. It is a breathtakingly facility, especially in departures where we give a lasting impression of Oman.”

Speaking more generally, Marriott said communicating with passengers when it came to selling was important. “The challenge is probably the same for the brands as it is for the retailers. We know there are a lot more passengers from different carriers so it is about communicating with them through travel retail exclusives and limited editions. This is really important.”

In addition to working with Dufry on new arrivals and departures stores, Airport International Group now wants to work with the retailer on customising offers. “At the moment, we are not utilising data collected from passengers during trips in the best possible way. If customers are going to Africa or Jordan, for example, we know what they buy when they are there, so we can tailor the offer accordingly.”

MEADFA-Panel

MEADFA 2019 Co-Moderator Dermot Davitt (left) chaired a panel discussion featuring Deema Anani (middle) Commercial Officer, Airport International Group and Rob Marriott, General Manager, Muscat Duty Free.

LEGISLATIVE FOCUS

Finally, this year’s MEADFA Conference urged industry stakeholders to work together to combat various threats relating to issues such as labelling, allowance changes and duty free tobacco. Rita Chidiac, Board Member, MEADFA and Julie Lassaigne, Secretary General, European Travel Retail Confederation (ETRC) called for a united front.

Chidiac said: “The challenges facing the duty free industry in all categories are very serious. We are moving from zero regulation to 100% regulation in a short period of time. Unless we do something we will suffer. MEADFA is doing its bit through the creation of an advocacy group to engage the industry.”

Lassaigne, who assumed the role of Secretary General, ETRC on 1 February 2019 commented: “Ever since the World Health Organisation launched the Framework Convention on Tobacco Control, they have wanted to ban duty free tobacco and are trying to use the illicit trade protocol to do do that.

“We need you to talk to governments about the importance of duty free to airports and to show how regulated and serious we are in terms of fighting the illicit trading of tobacco.”

Julie-ETRC

Julie Lassaigne, Secretary General, European Travel Retail Confederation urged the industry to address challenges together.

Another key topic was hand-baggage restrictions imposed by airlines. Lassaigne recalled: “This started in Europe about 10 years when Ryanair imposed the one-bag policy. At the time, the sales impact was dramatic. It was so bad we decided to try and secure the right for passengers to bring their shopping on board at no extra cost in addition to their cabin baggage allowance. We had some success and airports have been talking to airlines to try and resolve the issue.”

On the topic of labelling, Lassaigne said labelling requirements across different categories and regions were impacting DF&TR sales. “This is a growing issue. It is impossible to meet local language requirements on labels, for example.”

In a final rallying cry, she urged the industry to invest in the various trade associations.“We are here to support you, but need your involvement. We represent every single category and if we address challenges together, we can convince regulators to provide adequate solutions to protect the future of the duty free and travel retail industry.”

Click here for the main highlights  from Day One of the 2019 MEADFA Conference in Oman, Muscat.

ETRC-tobacco-MEADFA

The European Travel Retail Confederation will continue fighting against a ban on duty free tobacco sales, which the World Health Organisation believes contributes to illicit trade.

 

 

 

Europe

Heinemann anticipates another €1bn year at IST

Retail has boomed at Istanbul Airport (IST) and the momentum is set to continue this year, even...

Europe

MAN 'very sorry' after power spike cancels flights

Manchester Airport (MAN) Managing Director Chris Woodroofe has issued an apology to passengers...

International

Vantage rebrands as airports manager and investor looks to the future

Vantage Airport Group (Vantage) has announced a corporate rebrand to Vantage Group. The...

image description

In the Magazine

TRBusiness Magazine is free to access. Read the latest issue now.

E-mail this link to a friend