Inside this year’s Global Industry Survey TRBusiness presents the industry’s appraisal of 2019 along with its views and opinions on the most pertinent issues and defining characteristics of the DF&TR industry as it enters a new decade.

While 72% of industry respondents believed that 2019 was a ‘good’ or ‘very good’ year, almost 10% described it as ‘bad’ or ‘very bad’; an increase on the percentage from 2018.

Interestingly, almost 30% said they experienced a ‘very good’ year in 2019, much higher compared to 2018 when just 13% of respondents said the same thing.

Respondents to the 2020 Global Industry Survey weighed in on topics such as intensifying competition in South Korea; escalating trade wars; civil unrest; the outcome of Brexit, the continued evolution and influence of technology and last but by no means least, sustainability.

In last year’s survey (published in January 2019), just under 60% believed the trading environment in 2019 would be better than 2018.

To read the the industry’s individual survey responses; including those from Dufry’s Julián Díaz, Lotte’s Chang-Young Park, Shilla’s Taeho Kim among many, many more, click here.

INTENSE COMPETITION

Indeed, many forecasted correctly. External pressures, including political tension between the US and China, violent pro-democracy protests in Hong Kong, the collapse of Jet Airways in India, continued socio-economic problems in parts of South America, uncertainty surrounding Brexit among others, adversely affected the bottom line of many companies in 2019.

For the world’s largest DF&TR market of South Korea, it was not only macro-economic pressures that were to blame for the softening of trade for some companies in the region – Doota Duty Free being the biggest casualty in 2019 – as the leading operators complained of intense competition.

“2019 was a miraculous year for the Korean travel retail industry in spite of disruption due to the entrances and retreats by players, economic environment changes thanks to the diplomatic row between Washington and Beijing, and the introduction of China’s new e-commerce law,” revealed Lotte Duty Free’s Vice President Head of Global Business Headquarters Chang-Young Park.

Shilla Duty Free’s Korea Executive Vice President, Taeho Kim said that competition would only intensify in 2020.

“2020 will be a lot more competitive because there are several important events, such as bids for Incheon International Airport duty free concessions and new business operators,” he said.

SUSTAINABLE PRODUCTS AND PRACTICES

Aside from trade wars, military disputes, unfavourable FX rates and economic uncertainty, respondents were most concerned about the industry’s ability to respond to the growing consumer demand for more sustainable products and practices.

Prompted by a survey question on the topic, DF&TR stakeholders spoke loud and clear about the need to act now before losing loyal or potential customers. Some even described 2019 as the ‘year of sustainability’.

Via its Travel Retail Sustainability Forum and TR Plastic Pledge launched in July last year, TRBusiness observed the collective will of companies to start implementing small or large changes to their respective businesses.

We are delighted that so many companies responded in such great detail to this particular question in the survey concerning their efforts to introduce greener procedures or more ethically sourced ingredients, cutting their waste production, or simply to reduce, reuse and recycle single-use plastic.

Click here to see the industry’s responses to the sustainability question here.

We encourage companies to continue communicating with TRBusiness about their endeavours for the monthly TRSF column inside the magazine or for the website, where we frequently publish exclusive interviews on the subject. [January’s TRSF column will appear online soon.]

GIVING CONSUMERS WHAT THEY REALLY WANT

Another theme that emerged from your answers to this year’s survey questions was the growing concern that the channel was not accurately identifying what products consumers actually want. There were numerous respondents who criticised retailers for assigning the multinational organisations vast swathes of retail space, leaving little room for independent or ‘smaller’ brands and companies.

Some believed the outcome would leave customers unimpressed with a clearly undifferentiated offer at each location. While some believed the answer to this was introducing niche or new-to-market brands, others believed it was introducing more local and destination-specific merchandise. Others believed the answer was simply down to price differentiation compared with the online marketplace and the High Street.

In order to arrive at these varying conclusions, many referred to their own customer data and research that they had conducted. However, what almost all of you agreed on was that the availability of the right sort of industry data, along with its accuracy, was a hindrance to progress and success. While some assigned the blame to retailers, others to the airport authorities or airlines, Julián Díaz, CEO of the leading global duty free and travel retailer offered his thoughts.

“Travel retail is a very opaque industry as every location has unique conditions and business realities, which are hard to replicate.

“This makes operators very concerned about the public disclosure of information, which can provide location specific insights to competitors. This concerns all travel retailers whenever they want to add a new location to their portfolio, as there is no direct access to dedicated performance data.”

DATA: THERE IS STILL A ‘MISSING PIECE’

Anthony Kenny, Chief Commercial Officer and Deputy CEO, Aer Rianta International admitted the quality of data was questionable: “Travel retail [data] does lag behind the quality of that in downtown retail.

“There needs to be a forum for better sharing between operators, airports and suppliers. Decisions will improve based on better data.”

Lalitha Sivanaser, CEO of AirAsia’s Ourshop said that the ‘missing piece’ was still airline input. While we know that this is a request (or demand) which has been asked of the airline industry for many years now, Sivanaser believes that a couple of carriers have finally identified the opportunity in travel retail.

“As it stands, industry data is missing a key piece. The airline data is crucial in completing the end-to-end picture. The airline brings so much more depth to retail data, especially if the airline is like AirAsia where data is digitalised across the entire eco-system, including payments, loyalty, mobile, insurance, inflight wifi and so much more.”

Sivanaser said that with airline input, the industry can ‘increase the accuracy of targeted marketing through data optimisation’.

INDIA ‘IS ONE TO WATCH’
It was not surprising when TRBusiness asked which region could be classed as the ‘most important for global travel retail in 2020’; an overwhelming majority replied with Asia as their top choice.

In a similar vein, many commented on the continued importance of Chinese travellers to the growth of our industry in response to question four: ‘The Chinese have long been the highest-spending travellers in our industry. Which demographic do you see emerging on a similar scale in 2020 and beyond?’

However, TRBusiness was interested to read about the growing significance of other emerging nationalities such as Thai and Vietnamese customers. Other companies mentioned the rebound in Russian travellers, which was actually providing an unexpected boom in sales for some. But above all others, it was Indian customers who appeared in the majority of responses to the above question.

“Chinese and Indians are the ‘super spenders’ in travel retail and will continue to outperform other nationalities,” said Lindt’s Global Duty Free Division Head, Peter Zehnder.

Industry veteran Keith Hunter, now Partner of consultancy firm Hunter Palmer – Global Retail Solutions, added weight to this argument in his responses.

“While no single demographic looks set to usurp the Chinese dominance, India is the region to watch. Growth continues apace and the middle class is on a sharp increase (estimated to be 32% by 2025).

“Recent double-digit passenger growth shows an impressive increase in air travel, especially domestically, and that has given rise to significant investment in airport development and expansion. This focus has seen the retail offer and the customer expectations evolving to become more inline with the rest of the world. LCCs have made air travel more accessible and affordable than ever.”