Addressing a packed auditorium today on day one of the TFWA World Exhibition & Conference (3 October), Erik Juul-Mortensen – making a welcome return to the summit as President since being elected in December 2021 – reminded delegates that while business is improving, duty free and travel retail still faces significant challenges.
“After two years in which cross-border travel was almost in halve, our business often receives less corporate attention forcing duty free and travel retail teams to fight for the investment and resources they need,” he said.
“To counter this, we must all act as ambassadors for our industry, helping to rebuild global travel retail’s share of voice within our organisations.”
Adapt and react, industry told
In typically insightful fashion, Juul-Mortensen offered a measured and timely appraisal of the pressure points and opportunities affecting the trade.
He acknowledged the continued evolution of consumer profiles, sharpened by changing attitudes towards sustainability and immersive activations.
At the same time, the nationality mix has shifted, typified by the ongoing strangulation of Chinese passenger volumes and fewer Asian international travellers in general.
“Travelling shoppers are getting younger, with the proportion of generation Z and millennials who purchase in duty free and travel retail rising from 19% in the period before Covid to 30% in 2021-22, according to a recent study by travel retail research specialist, m1nd-set,” he continued.
On sustainability specifically, he stressed: “Sustainability is not just about products, it’s about our society. Our industry serves customers from all nationalities, backgrounds, beliefs, but do our management teams include members from a broad range of cultural backgrounds and regions? Are there enough women in senior roles within our companies? In short, does the duty free and travel retail industry today reflect the people we sell to?”
In addition, market forces are shifting conceptions of shopping, powered by Dufry’s takeover of Autogrill; the launch of the Lagardére Travel Retail Extime Duty Free JV, and Gharage from Gebr. Heinemann.
Passenger numbers are beginning to increase, delegates heard. India in particular is enjoying a surge in connectivity as new routes open up.
However, after a positive 2021 with sales increasing outstripping pax growth, spend per head declined by more than one third in the first quarter of 2022.
While welcoming rising passenger demand, the scale-up has proven challenging, leading to delays, disruptions and cancellations over the summer, he outlined.
“Despite recovering traffic, delays and cancellations are negatively impacting DF&TR sales,” said Juul-Mortensen, drawing on figures from the European Travel Retail Confederation’s (ETRC) Business Performance Index.
“Airports in Europe, the Middle East and the Americas are busy again, some of them rather too busy with cancellations and queues at check-in or security as everyone competes for staff, as well as flight delays and missing baggage. Overall, ACI World forecasts that global air passenger traffic will return to more than three-quarters of its 2019 level by the end of this year.”
Supporting ‘legitimate visitors’
From an association perspective, Juul-Mortensen went on to describe a difficult few years.
“As an association, we have not got everything right over the last two years but we are confident that we can and will play a constructive role by helping companies in duty free and travel retail prepare for a brighter future,” he promised.
While praising TFWA’s members and visitors attending this year’s TFWA World Exhibition as legitimate visitors, he took aim at the ‘small, but persistent minority’ of companies seeking to prosper from TFWA’s events by choosing to take hotel suites around the vicinity of the Palais des Festivals and benefitting from its footfall during the event week.
“I hope retailers in the audience will focus their attention this week on the many brands and distributors present with a stand in the Palais or one of the official boats, rather than those that try to drag them away from the event.”
Juul-Mortensen also urged attendees to get behind the ‘Duty Free, Trusted, Transparent, Secure campaign’, in the battle against illicit trade, counterfeiting and intellectual property theft that causes reputational damage to the industry.
Concluding, Juul-Mortensen confirms that plans are progressing well for a ‘full scale’ Singapore event from 7-11 May 2023.
“We may soon have news of some other TFWA events in the coming months,” he teased.
“As we embark on our second post-pandemic industry summit is heartening to see passengers returning in such strong numbers across much of the world.
“But that world has changed fundamentally since 2019 and our ability to adapt will dictate whether duty free and travel retail embraces change and prospers or fades into irrelevance for tomorrow’s travellers. Let’s choose the first of those two outcomes.”
More to follow…