The Asia Pacific Travel Retail Association (APTRA) has told TRBusiness of the ‘significant challenges’ the industry continues to face in shaping the approaches of regional governments through persistent advocacy efforts on behalf of the industry.
Speaking to TRBusiness as part of the Global Industry Survey 2023, APTRA President Sunil Tuli calls on industry stakeholders to meet what is an evolving travelling shopper mix with a comparably strong retailing offer.
In candid fashion, he stresses that the pandemic and its continuing repercussions should not distract DF&TR from addressing long-standing issues, such as the fundamental problem of stagnant conversion levels.
What are your expectations for your business in travel retail in 2023 and what are the major challenges you anticipate?
Asia Pacific has long been the engine room of travel retail growth and China is, of course, the pivotal factor in its prospects in 2023 and beyond. Currently, the Covid situation within China – and its potential regional and global implications – remains uncertain. Outside China, most airlines are not currently expanding their capacity in readiness for the return of the Chinese and ‘wait and see’ seems to be the dominant approach. Overall, this suggests that it will be the second half of 2023 before we might see a significant shift in the travel markets.
Alongside the continuing threat of a global recession, a series of other factors will continue to impact on our industry, including supply chain challenges, staffing issues and energy prices. But these have all begun to ease to some degree and, as an industry, we are gradually adapting our operations to address their effects.
Within APTRA’s region and focus, we continue to face significant challenges in influencing the region’s governments (45 governments and no collective representation) through APTRA’s advocacy work on behalf of the industry, including serious threats from new regulations in everything from tobacco sales to packaging.
This year’s major focus for the tobacco category, for example, is its response to the planned ‘next generation’ policy that will impose major new restrictions on the sale of tobacco products, with regulators in New Zealand well advanced in planning the strategy and with Malaysia and Hong Kong building their agendas.
This year’s major focus for the tobacco category, for example, is its response to the planned ‘next generation’ policy that will impose major new restrictions on the sale of tobacco products, with regulators in New Zealand well advanced in planning the strategy and with Malaysia and Hong Kong building their agendas. As the industry’s collective advocate, APTRA will continue to lobby the region’s governments to promote and protect the interests of travel retail and support the post-Covid recovery in 2023 and beyond.
How do you anticipate inflation and the risk of global recession affecting your business and the consumer appetite to spend in the travel retail channel in 2023?
The OECD predicts global annual GDP growth of just 2.2% in 2023, but the past month or so has seen a degree of optimism that the global economy, while weakened, will not decline to the level of the most doom-laden forecasts seen in 2022. Additionally, five of the top 10 countries in 2023 are here in Asia Pacific and are forecast to outperform the global figure.
China’s economy and its travellers remain the biggest factors but Asia Pacific has already hosted several strong post-Covid recovery strategies. India, for example, has powered forward with its airport ambitions, such as the fantastic developments at Hyderabad and Bengaluru and the initial phase of the major new airport at Noida planning the first terminal completion in 2024.
Whatever the pressures – and, let’s face it, our industry has faced everything from global recessions to volcanoes and global pandemics – we must maximise our response to travellers. All around the world there are hundreds of millions who have that added passion to travel in 2023; they are eager to make up for those Covid-inflicted lost journeys and missed experiences. Travel retail can play a valuable part in their rediscovery of the sheer joy of travel.
We have already seen encouraging signs of growth in ATV vs 2019 and APTRA is optimistic that the region will get back on track to lead industry growth and that key Asian nationalities will shape the future of the industry.
How has the shift in passenger demographics as a result of the pandemic/travel restrictions affected your product portfolio and growth plans?
Feedback from APTRA members shows that the shift in passenger mix remains a challenge and this is further exacerbated by the long-standing delays in logistics and supply chains, making it difficult for suppliers and retailers to implement evolution and consistency in their offer. Alongside this, the continuing rise of e-commerce demands a response too.
APTRA members fully appreciate the omni-channel opportunity facing the industry and the need to step-change dynamics away from the 100% focus on physical retail. However, it’s a challenge to develop and enhance the shopper experience while faced by this combination of sustained pressures that make even day-to-day operations difficult.
Despite this, as the recovery develops, we are certainly seeing a degree of ‘freedom shopping’ whereby shoppers are enjoying their post-Covid liberty by shopping at airports on high ticket items and driving a general increase in basket spend. Again, this is a small but valuable sign of industry optimism in that the range of global and local pressures are at least partially countered by the post-Covid enthusiasm of many travellers to get out and travel – and spend – again.
Stagnant conversion rates continue to pose a challenge for DF&TR. How should the industry be addressing this in a post-pandemic environment?
The Covid crisis and its continuing repercussions should not distract the industry from addressing long-standing issues such as the fundamental problem of stagnant conversion levels. The crisis has certainly accelerated the evolution of shopper behaviour – it’s changing faster and more radically than ever before – and our industry needs to respond with an equally radical evolution in the travel retail experience.
This means welcoming product innovation from suppliers and helping them maximise the brand-building potential of travel retail, giving prime space to new retail categories such as wellness, and confidently reinventing travel retail as an omni-channel marketplace, optimising collaboration along the extended consumer journey; a hybrid future blending digital and physical worlds.
Asia & Pacific,
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