TFWA APAC: ‘Tax free shopping has been fractured’

By Luke Barras-hill |

Tax Free World Association President (TFWA) President Erik-Juul Mortensen.

Tax Free World Association President (TFWA) President Erik-Juul Mortensen.

Fragmentations in the way governments across the world are approaching tax free shopping regimes means the DF&TR industry must restore trust with resurrecting travellers, according to Tax Free World Association President (TFWA) President Erik Juul-Mortensen.

Addressing delegates in a keynote address on the opening day’s conference at TFWA Asia Pacific Live, the returning TFWA President acknowledged that while the travel unlock across much of the globe is a positive development, travellers’ needs and expectations have changed.

“The Chinese authorities’ policy of championing offshore duty free sales on Hainan Island has given rise to a thriving sector that generated 9.47 billion US Dollars in sales last year,” said Juul-Mortensen. “Compare that with the British government’s baffling decision to scrap tax free shopping for all passengers leaving UK airports from the start of 2021.

Citing statistics from Global Blue, the TFWA President said the decision is costing the UK economy US$8.2 billion of lost tourist spending every year across Britain’s high streets and airports.

“The return of duty free alcohol and tobacco sales after Britain’s departure from the EU will offset some of the loss, but the globally accepted norm of airport tax free shopping has been fractured.”

The TFWA Asia Pacific Live networking and conference event takes place 9-11 May at the Marina Bay Sands Convention Centre in Singapore.

The TFWA Asia Pacific Live networking and conference event is taking place 9-11 May at the Marina Bay Sands Convention Centre in Singapore.

AVERAGE SPEND ENCOURAGING 

Juul-Mortensen stressed how the pandemic has forced the industry to consider and adapt to a still-changing environment with TFWA delighted to play its part alongside the other associations in helping the industry reconnect.

He said: “Our priority in duty free and travel retail is to keep pace with, even to anticipate, those new expectations. They will continue to evolve, and so must we.”

Encouragingly, retail revenue per passenger is showing encouraging signs of growth with Heathrow reporting a 5.8% rise in retail revenue per passenger for 2021.

"Our priority in duty free and travel retail is to keep pace with, even to anticipate, those new expectations. They will continue to evolve, and so must we."

“Our priority in duty free and travel retail is to keep pace with, even to anticipate, those new expectations. They will continue to evolve, and so must we,” said TFWA President, Erik Juul-Mortensen.

“While the public health situation is improving here in Singapore, difficulties remain elsewhere,” he commented. “The absence of some colleagues from mainland China is a blow, but I’m heartened to see so many at the MBS today from other parts of Asia Pacific and beyond.”

Heightened SPH was echoed by Asia Pacific Travel Retail President (APTRA) Sunil Tuli: “Around the region we have reports of increased spend per pax. Every day there are more people travelling – for instance here in Singapore, Changi pax traffic more than doubled in April from March, approaching 40% pre-pandemic levels, just one month from when borders were fully re-opened to vaccinated travellers.”

However, significant pain points exist across the supply chain with stock shortages, security delays in product screening, partial retail space re-openings, low staff levels, a reduction in airline capacity hitting pax, recession, the Russia-Ukraine crisis and inflationary-led cost rises.

"Around the region we have reports of increased spend per pax.

“Around the region we have reports of increased spend per pax,” said Asia Pacific Travel Retail President (APTRA) Sunil Tuli.

THE ‘FUSION ERA’

In a thought-provoking keynote address, renowned futurist and Fourth Industrial Revolution expert Charlie Ang spoke about an ‘inflection point’ that has taken place across the industry.

He questioned how new technologies and modes of consumption are changing the way we conduct business and the megatrends shaping the future of consumption.

He said in the last decade, the focus was on the convergence of physical and digital worlds built on cloud, social and mobile. Today, technology is the foundation of customer services.

Referencing the fourth industrial revolution, he went on to describe the fusion of technologies blurring the boundaries between the physical, digital and biological spheres.

 

In an on-stage conversation with TFWA (Tax Free World Association)'s Managing Director, John Rimmer, Charlie Ang says: "There is high tech and there is high touch. Your talent [shop floor staff] can do the high touch stuff." He refers to the balance that must be struck between digital and physical interaction with customers instore.

In an on-stage conversation with TFWA’s Managing Director, John Rimmer (left), Charlie Ang says: “There is high tech and there is high touch. Your talent [shop floor staff] can do the high touch stuff.”

The shift from information to intelligence sharing characterises the ‘Technology 4.0’ and ‘fusion era’.

“The only obstacle or bottleneck preventing this is us as people. Everything will be reinvented.”

Speaking to duty free specifically he cited the potential for digital box-ready duty free shops, with products delivered with virtual avatars offering demonstrations.

He said this has the potential to increase the SKU number five times over, with airports offering warehouse space to house products.

Concluding, he said: “More and more businesses will fail, not because of failures of execution but failures of imagination.”

Delegates were delighted to meet each other in person once again at the TFWA Asia Pacific Live event, the first for some in over two years.

Delegates were delighted to meet each other in person once again at the TFWA Asia Pacific Live event.

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