Well over three-quarters (88.4%) of respondents to this year’s TRBusiness Global Industry Survey have optimism that travel retail’s operating climate will be ‘the same’ or ‘better’ this year than in 2017.

Only a small percentage (11.6%) believe the coming year will be ‘worse’ or ‘much worse’ than 2017.

Interestingly, just over three-quarters of respondents believed 2017 was a ‘good’ (57.9%) or ‘very good’ (22.1%) year, while only a small proportion (2.1%) stated it was a ‘bad’ year.

Unsurprisingly, Asia emerged as the most ‘important’ region for travel retail last year, followed by Europe and the Middle East/Africa.

REBALANCED CONCESSION MODEL

As is customary, the TRBusiness Global Industry Survey drew a broad cross-section of responses from the breadth and depth of DF&TR.

Fairer and more realistic concession terms emerged as a prominent theme, with an underlying thread pointing towards the need for strengthened supply chain relationships and more collaborative retail partnerships.

Julián Díaz, CEO, Dufry Group.

Dufry CEO, Julián Díaz [pg53] said: “If we want to put ourselves in an advantageous position against technology-driven channels, we need to adapt the way industry stakeholders, and in particular landlords and retail operators work together.

“We need more partnerships (e.g. joint ventures) as well as payments based on performance models and flexible compensation structures.”

Lagardère Travel Retail Chairman and CEO Dag Rasmussen [pg54] acknowledged travel retail’s dynamism but said some aspects need closer attention to yield further growth.

“The best (or worst) example today is when contracts include high and increasing minimum annual guarantee per passenger, which, in the context of the evolving passenger profile and mix, can lead to loss-making situations which are not sustainable and deteriorate the airport experience offered to the travellers.”

KOREA REBOUND

Of particular importance to this year’s Survey was the incredibly strong showing from Asia Pacific’s DF&TR community.

While acknowledging that 2017 served up sizeable operational challenges in a context of pronounced economic turbulence, not least due to the impact of THAAD on Chinese traveller volumes to South Korea,  Lotte Duty Free and The Shilla Duty Free remain upbeat that an expected turnaround will coincide with increased market growth in 2018.

“In order for the duty free industry to be stabilised, [the] Chinese government’s travel ban to Korea needs to be lifted first,” commented Lotte Duty Free CEO Jang Sun-wook.

“After that, the governmental restrictions such as [the] five-year licence system should be improved in order to minimise risks.”

Charles Chen, President, CDFG.

Elsewhere in Asia, CDFG President Charles Chen believes that global currency volatility represents DF&TR’s ‘biggest threat and challenge’ to growth.

Commenting on last year and prospects for this year, he said: “The number of outbound Chinese tourists reached 122m in 2016, which is the solid driving force behind the duty free industry.

“Overall, 2017 was a good year. We saw more Chinese tourists maintain strong growth momentum and purchasing power, therefore we are confident in 2018.

“We expect the global duty free and travel retail industry to continue to grow.”

‘ACTION, NOT REACTION’

Another prominent view was the need for DF&TR to more fully assess the needs of the travelling consumer.

A marked observation was that while the industry is enjoying steady growth [although not the same double-digit levels witnessed in previous years], there remains an over-reliance on international passenger growth.

As this continues to outstrip global DF&TR sales growth, some respondents viewed that more more concerted impetus with regards to innovation is required from everyone across the value chain.

Footfall and instore penetration levels which remain a challenge that requires industry solidarity and commitment to affect change, the Survey revealed.

Meanwhile, debate on the perpetual surge in e-commerce and m-commerce retailing drew a variety of interesting viewpoints, the general consensus being that the industry should distance itself from the idea that the digital age represents a ‘threat’ to future growth.

Conducted annually, the TRBusiness Global Industry Survey provides an unrivalled snapshot of the most pressing issues affecting DF&TR; from concession fees and operator/retailer margin debates, to regional challenges and opportunities, and the future of digital technology and its influence on the travelling consumer.

TRBusiness would like to extend is sincerest thanks to all who contributed towards this year’s Global Industry Survey.

We are always extremely grateful for your feedback, without which this survey would not be possible. If you’d like to share any further comments related to the survey contact: [email protected].

The TRBusiness Annual Survey was conducted from November up until the first week of January 2018, receiving responses from 95 DF&TR companies. Many, though not all respondents expressed that their views represented those of their entire organisation.

The survey is conducted without any personal bias or alliances. We simply ask a series of questions and publish the answers alongside the individual’s name, company and job title in the January issue of TRBusiness.

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