TR Consumer Forum 2024: Unlocking the new Chinese travel retail shopper

By Benedict Evans |

The first of two ‘Rising Giants’ panels took a deep-dive into the new Chinese travel retail shopper.

Following a keynote interview with Dr. Munif Mohammed, CEO of Lagardère Travel Retail KSA and Middle East, the first panel session of day three covered the ‘rising giant’ that is the Chinese travel retail shopper, where they are headed, and how GTR can innovate to influence the shopping decisions of this high priority segment.

John Rimmer, Director, JCR Consulting, moderated the session alongside panelists Peter Mohn, CEO & Owner, m1nd-set; Lilly Choi-Lee, General Manager, TravConsult; Michael Schmidt, Senior Vice President – Retail, Dubai Duty Free.

Following a keynote interview with Dr. Munif Mohammed, CEO of Lagardère Travel Retail KSA and Middle East, the first panel session of day three covered the ‘rising giant’ that is the Chinese travel retail shopper,  where they are headed, and how GTR can innovate to influence the shopping decisions of this high priority segment.

 “If you think Chinese or Indian travel is only emerging, I suspect you haven’t been paying much attention,” commented Rimmer wryly, before handing over to Mohn, who walked delegates through insightful data points as to the challenging and diverse segment of Chinese travel retail shoppers.

m1nd-set data

 The Chinese are one of the most diverse and challenging nationalities for those in travel retail, and we know air traffic we will take some time, with a full return to pre-covid levels by 2026, based upon the last historic data compiled in February 2024,” said Mohn, who touched upon Chinese shoppers’ favoured destinations, which largely comprised APAC and Europe.

Mohn also explored the influence of Hainan in forming traveller opinions of other experiences within travel retail, noting the likelihood of return trips to the shopping complex in Hainan were incredibly high, as it is perceived as a safe, familiar and easy destination for Chinese travellers.

“Groups with ten people or more have seen a massive decline,” noted Mohn, adding: “Many plan to travel fully independently, which is a big change to habits five and ten years ago.

There are also several barriers to Chinese long-haul travel: language; food preference; health & safety; cultural differences; and visa & entry requirements.”

Mohn also made note of the top drivers in destination: landscapes; cultural icons; shopping; food; and whether the location was trending on social media.

Finally, Mohn displayed data points which traversed shopping KPIs for Chinese travellers across entry into duty free shops, conversion, and purchase rate; Chinese travellers also had the highest footfall and conversion rate of any nationality.

“There is much more planning of what they’re going to buy, so it’s really important to engage digitally and offer a platform where Chinese travellers can inform themselves,” commented Mohn, as he detailed significant changes in purchase drivers and category choices such as gifting, prestige and luxury products.

MEA

Schmidt offered a perspective from the Middle East; prior to the onset of the pandemic, Chinese travellers accounted for 4.6% total passengers across Dubai Duty Free (DDF) airports, but contributed 18% of sales.

“In 2024 recovery of pax was about 50% and sales increased to 8%. 2024 year-on-year traffic almost doubled, but sales only increased 25%. Levels are almost back to normal, but sales are down 50% on pre-pandemic,” said Schmidt.

Schmidt did however note the importance of continuing to expand its cultural relevance to Chinese travellers, with the goal of employing 500 Chinese staff in the near future (DDF currently employs 360 Chinese staff).

“There’s been a significant shift in category share, cosmetics has come down from 35% YTD and fashion is now the leading category, because we put a big emphasis on bringing fashion boutiques into our concourses, and the same has been seen with top brands shifting from skincare to fashion,” commented Schmidt.

He emphasised the importance of partnerships, especially digital, in enhancing their commercial appeal: “We’ve created a virtual reality map of all our stores so travellers can familiarise themselves with the layout. If you look at AliPay we have promotions running with them on cashback, and we currently have 70,000 views over 2 months for our account on WeChat. We also accept Chinese Yuan if you pay in cash, and we’re active on social media with daily/weekly posts.”

“We celebrate Chinese New Year every year, including celebrations with the Council General for China, Golden Week, and an Appreciation Ceremony with the Chinese Consulate,” continued Schmidt.

New face(s)

This is the face of the new Chinese traveller,” began Choi-Lee, who continued: ” They’ve travelled in small groups, with friends and family, and as couples. They are FiT’s in the truest sense.”

“It’s easy to say they’re westernising. They’re not, they’re modernising. They still want hot water to drink, and Chinese food, but to also be connected by genuine stories to place, and they’re looking at things through a very different lens,” noted Choi-Lee.

Choi-Lee used camping as an example, which became a phenomenon in the region during the pandemic.

“From a western lens it’s about going somewhere to be away from the crowds. Through a Chinese lens, you go with your friends to the local park, local river or waterway and you pitch your tent with your friends, along with hundreds of others.

Businesses in China capitalise on these trends immediately by updating their décor to appeal to this trend and the young Chinese consumer.”

Choi-Lee referenced brought the conversation back to Hainan, noting: “I don’t know many people who haven’t either been there or ordered from there. Hainan is seen as a destination and is the benchmark when they travel overseas.

They will compare everything from the products to the services, so the question is; how can you appeal to them through that cultural lens? Trends come and go but cultural keys which drive behaviour, they do not.”

Choi-Lee noted one of those cultural keys was the notion of the Chinese being “born to bargain, if we can get a great deal it’s a sign of cleverness and we gain face (status & hierarchy). Even bigger face when served by a Westerner. Limited-edition products work. In a nation of 1.4 billion people, if you have something others don’t then that’s great face.”

Over to you

Rimmer then fielded questions from the floor, the first of which concerned the spirits category and the relative minority of female buyers across the category.

Schmidt opened the discussion: “There’s a lot of work to be done to address this. Great efforts have been made by perfumes and cosmetics, but in liquor in terms of assortment and staff that needs a bit of attention to be honest.

We saw a big shift from cosmetics from 37% down to 17% of total Chinese pax spend. We were the first to employ dedicated Chinese staff, but the shift is definitely towards fashion.”

“Traditional Chinese Medicine sees liquor as bad for the body, but I think this attitude is changing. What I found amazing was how much Chongqing women can drink. Within certain provinces it’s acceptable, so I think there is room for more research and a way for the liquor market to appeal to the Chinese female consumer,” noted Choi-Lee.

The second major audience question concerned Chinese domestic brands in fashion, perfumes and cosmetics, the impact therein on duty free sales, and the emergence of social media influencers promoting domestic brands.

The second major audience question concerned Chinese domestic brands in fashion, perfumes and cosmetics, the impact therein on duty free sales, and the emergence of social media influencers promoting domestic brands.

Choi-Lee said: “During covid, the rest of the world got really poor, but in China many people had suddenly gotten rich. Chinese local brands really invested into improving and trying to catch up. There was a rise of the small business, funded by the government and startups from Millennials/Gen Z.

The big word among older women and men is ‘organic’ within skincare. Also, e-commerce in China is massive, think the 618 festival in June, which is second in size only to 11/11.”

Choi-Lee also made mote of the impact of macro-political shifts following the pandemic: “It’s political, so I can’t speak to much, but China wants to keep its money in China. The President and Chinese Communist Party want to make sure their country continue to prosper, and after covid they did lose a lot of money.

The average Chinese consumer doesn’t care about all that, but the Chinese are being told to remain isolationist. Money is spent more on experience of travel and maybe not things along the way as much when Chinese do travel.”

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