The TFWA Asia Pacific Conference took place this morning at Marina Bay Sands, with a rich programme designed to deliver an insight into the region’s business and economic landscape, including the forces shaping the duty free and travel retail (DF&TR) industry and its prospects in Asia.

In his opening address, TFWA President Erik Juul-Mortensen brought delegates up to date on the current state of play and spoke about the challenges and opportunities of navigating the way forward during times of change.

During his speech, he talked about the region’s dynamic growth and recovery story, as well as key concerns on the radar, including the lack of industry data sharing, stating that “DF&TR’s failure to collaborate on this crucial point leaves our market intelligence stuck in the digital dark ages”. Another hot topic was the importance of sustainability.

“Passengers are travelling again, with outbound traffic from China set to accelerate as the year progresses,” said Juul-Mortensen.

“Asia is destined to become another major source of travelling shoppers. With the mix of passenger nationalities evolving and their preferences changing, we must adapt our offer accordingly and create more engaging activations to better reach travelling shoppers.

“As an industry, we must try to grip on our market through data sharing and show travellers a more serious, coherent approach to sustainability.”

He also highlighted an important professional milestone, stating: “This is my last year as TFWA President, making this the last TFWA Asia Pacific Exhibition & Conference I will be attending in that capacity.”

Asia headed to new heights

Juul-Mortensen described how Asia Pacific DF&TR is rapidly gaining momentum over the past three years.

“The region is returning to strength and headed to new heights,” he said.

“While this region’s dynamic potential is undoubted, the current market presents a more nuanced pictured.

“The rate of post-pandemic recovery varies widely across Asia Pacific. Last year, passenger traffic at both Hong Kong and Macau International Airport reached just 55% of 2019 levels.

“In Malaysia, 2023 pax volumes returned faster at 78%, while Changi fared even better seeing 86%.

“Mumbai International Airport in India leads the pack, however serving 10% more pax last year than in 2019 – an indication perhaps of India’s future significance.”

He also described how beyond pax number duty free shopper habits in the region are evolving, with a shift from gifting towards buying for self, and from planned purchases towards a more impulsive approach.

In addition, the reduced participation among younger age groups is something that “should ring alarm bells for us all”.

Previewing data being revaled at the Decoding Today’s Dwell Time workshop on Wednesday morning he said: “49% of Asia duty free shoppers spent between 20-40 minutes in duty free and 56%, the largest proportion are buying for themselves.”

China a DF&TR industry powerhouse

Delving more into China, Juul-Mortensen said economic conditions in the country “are a concern for many DF&TR professionals”.

“With a troubled property sector, weak consumer confidence and lower GDP growth than in recent years, the country’s shoppers are understandably cautious when it comes to spending.

“The return to international travel after Covid restrictions has been slow so far. ForwardKeys quotes that Chinese outbound traffic bookings in Q1 2024 are down 32% compared to 2019. By contrast, duty free sales in Hainan rose over 25% last year, but measured against visitor growth of around 60% that equates to lower spend per head.”

He also addressed the impact on sales of the crackdown on the daigou market, particularly in South Korea.

“Focus on genuine travellers rather than traders who buy on behalf of others is vital to ensure a healthy duty free market that is viable in the long term.”

Looking at China overall, the TFWA President pointed out how the government’s target of around 5% GDP growth in 2024 still would beat most other leading economies, and quoted a Bain & Company forecast that China will account for a third of luxury spending by 2030 – up from less than a quarter in 2023.

“Visa-free travel to other Asian countries is boosting Chinese visitor numbers in Bangkok and Kuala Lumpur and this trend will spread to other cities during the year,” he added.

“China’s recovery may be taking longer than some anticipated, but this major market will remain an industry powerhouse.”

India also took a turn in the spotlight as “another regional giant driving DF&TR across Asia Pacific” over the coming years.

As outlined, India currently has 149 civil airports – twice the number it had a decade ago. There are nine more approved or under construction and many more planned. Delhi and Mumbai are gaining second airports and there’s even talk of a third airport for Mumbai.

He quoted data by consultancy KPAC that projects outbound international departures by Indian residents to increase from 17.4m in 2019 to over 50m in 2030.

“The outlook for DF&TR elsewhere in Asia positive too,” he added. “ACI World predicts the region’s passenger traffic will be back above 2019 volumes by the end of this year.”

“The indications are for plenty of footfall into airport terminals,” he continued. “Our collective job is to keep the retail offer for passengers fresh and relevant. Travel expectations are continually evolving and it’s proving harder to raise spend per head.”

He noted the current trend for travel retail exclusive products, limited editions, and more personalisation as key opportunities.

“Passengers’ desire for experiences, rather than just shopping, is a chance to create more engaging activations – one that some brands and retailers are seizing in impressive style,” he affirmed.

Juul-Mortensen also talked about how AI may have an important role to play in CRM and tailoring DF&TR marketing more closely to traveller preferences.

He also noted the impressive growth of the cruise industry in the region as an opportunity to watch.

Addressing the DF&TR industry data deficit 

The TFWA President was unapologetic about once again raising some pressing concerns on the radar.

“My first worry is the continued lack of reliable consistent market data accessible to all, that we can use to measure our individual and collective performances, spot emerging trends and plan for the future,” he said.

“There is plenty of data within the industry but there is also a deep reluctance to share it widely.

“DF&TR’s failure to collaborate on this crucial point leaves our market intelligence stuck in the digital dark ages.

“This data deficit robs us of credibility when we lobby to defend our industry we cannot quantify the market and show how it underpins the travel ecosystem.”

He called upon retailers to share headline metrics, even with a two or three year lag.

“TFWA and DFWC will again be reaching out with a proposed topline model to which we hope everyone will contribute,” he said.

He also discussed the importance of sustainability – “an issue that continues to top the list of traveller pre-occupations, especially among the Gen Z passengers who will increasingly dominate the market in years to come”.

Of course, progress has been made, he said, but that initiatives can be be isolated.

“There is, at present, no coherent labelling or in-store communication that shows we understand and share travellers’ strength of feeling on this fundamental point.”

He also spotlighted the Duty Free: Trusted, Transparent, Secure campaign and urged more stakeholders to sign the declaration.

Finally, he mentioned the World Health Organisation moving forward with an evidence-based research study on illicit trading in the tobacco sector.

He concluded: “It provides us with an opportunity to show we are partners in the fight against illicit trade, not contributors to it.”

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