China Duty Free Group President Charles Chen tells TRBusiness that as more Chinese travellers emerged from quarantine during the May Labour Day holiday period, their strong propensity to spend was evident in Hainan.

 

This news from China’s leading travel retailer could not come soon enough, as large parts of Europe, the Americas and Asia Pacific continue to remain in lockdown.

 

“At present, domestic airlines and traffic in China’s airports are recovering rapidly, however, as we all know the worldwide pandemic has not been controlled effectively, so international passenger volume has not yet increased,” Chen tells TRBusiness.

 

“Based on the performance of our stores, there is an obvious uptrend for the Hainan tourism market and the traffic has also increased significantly. We also hope that the cross-provincial tourism in China can restart as soon as possible and we are well-prepared for the arrival of the sales peak.”

 

SALES REACH $28M ON 1 MAY

In February, China Duty Free Group (CDFG) made the bold decision to reopen its sprawling Haitang Bay store in China’s premier holiday destination of Sanya on Hainan Island, sending a clear message to the global duty free and travel retail industry that a recovery is possible.

Chen reveals that the company conducted a number of marketing activities in Hainan, which were very successful; considering the trading environment.

 

“Our sales grew year-on-year in Hainan during the Labour Day holiday and on 1 May reached CNY 200 million/$28m; much higher than our expectations.

 

“It is a very encouraging result and signal to us. Offshore duty free has become a popular choice for Hainan tourists, whose purchasing power remains strong.”

 

Chen said he would like to pay his gratitude to CDFG’s partners around the world who have shown their support during the pandemic.

“As the major customers of global duty free market, Chinese tourists have shown a great appetite for shopping in duty free, and they also bring us great confidence for the future.”

 

TOUGH TIME FOR THE AIRPORT BUSINESS

While Chinese residents are feeling more comfortable travelling within the country, the dearth of international passengers at the country’s airports is still worrying for CDFG.

 

“It’s very bad in the airports in China,” Chen told TRBusiness in an interview for the May issue of TRBusiness (conducted in April). “I’m worried about the airport business. Arriving stores are closed and very few passengers are passing by our departures stores. It’s a really tough time for the airport business.”

 

While Chen is reluctant to make meaningful forecasts right now, he maintains that the resurgence of traffic will depend on how the virus can be contained outside of China.

 

“I think in May not much will have changed for international traffic, but in June if other countries can control the virus, maybe gradually the government will permit more flights again.”

During the peak of the virus, over 130 stores were closed, according to Chen, but since then around half have reopened. Many of those that remain closed are located at the airports.

 

LANDLORDS ENCOURAGE THE OPENING OF MORE STORES

“We have had some meetings with our airport partners to discuss our rent fees,” reveals Chen. “We are in conversation with a lot of them now and there is a mutual understanding between us.

 

“The fact remains: there are so few passengers in the airports. At Hong Kong Airport in particular we have no customers from Mainland China and no international passengers.”

Chen also reveals that the company’s airport partners in Mainland China are actually encouraging CDFG to reopen more stores. However, Chen explains that at the moment this just isn’t feasible.

 

“The airports actually encourage us to open more of our stores, but the problem we have is that there are not enough passengers.

 

“By opening stores it does give passengers more confidence that the environment is safe and perhaps opening one or two stores is ok, but if all the stores are open, it would cost us a lot.

 

“In Beijing and Shanghai our departures stores are still open, for example, but I still have a solution to find: how do we reduce the cost of operating our stores right now? It’s not affordable to open and staff all our stores.”