Day two of the MEADFA Conference in Bahrain began with the ‘Sustainability in action’ session, which spotlighted how brands and retailers are adapting their businesses to combine operational excellence with social and environmental responsibility.
Lagardère Travel Retail CEO Saudi Arabia Munif Mohammed raised awareness about the danger of sustainability ‘(in)action’, highlighting a quote from UN Chief António Guterres (speaking at COP 27 in Egypt) to illustrate his point as follows: ‘We are on a highway to climate hell with our foot still on the accelerator’.
MEADFA Conference 2022: Day one highlights
“The problem is huge, and we don’t seem to be making enough traction to make the change,” said Mohammed.
He brought the audiences’ attention to the ‘breakthrough agreement to provide ‘loss and damage funding for vulnerable countries hit hard by climate disasters’ at COP 27, while also underlining that the ‘global transformation to a low-carbon economy is expected to require investments of at least US$4-6 trillion a year’.
During the session, he revealed a foundational statement of MEADFA’s position on sustainability, in line with the belief that ‘business can do both good for our planet and people, while also receiving great results for our shareholders’.
Emphasising how the MEADFA Board believes that business in general and its members, in particular, have an ‘important part to play’, he outlined the new sustainability position paper as follows: “MEADFA is taking a leadership position to regenerative business, beyond ‘doing no harm’, to restore and nourish the environment and to enable our society to flourish.”
In addition, it outlined that: “MEADFA believes that the success of our member companies depends on responding positively to the challenges of sustainability of our planet and wellbeing of our society.”
He went on to discuss key environmental issues that MEADFA is taking a lead on, actions to be shared with industry stakeholders, and those which the association plans to follow its partners and suppliers on, providing a clear plan for making an impact, as well as the strategic imperatives for business.
Also contributing to the session was Mars Wrigley International Travel Retail Global Sales Director Marcus Hudson, who talked about the need to step-up communications on sustainability.
He highlighted some of the company’s key sustainability goals and achievements, including how 100% of the cocoa the company buys for its direct factory operations in Europe will be verified as responsibly sourced from 2023.
“Next year, we will communicate more proactively on the shop floor about the work we are doing around sustainability,” he promised.
In response to a question posed by John Rimmer regarding how companies can be hesitant to talk about their sustainability journey, for fear of being seen to be greenwashing he said: “We need to work with corporate affairs to ensure our communications are on point.”
Bahraini sustainability champion and Founder of the New Normal Consultancy Shivani Sathasivam talked about how we can build a more sustainable, equitable and prosperous society for all.
She set out her vision of what corporations would look like for a sustainable future: “The purpose of the corporation is to improve the welfare of all stakeholders,” she said, posing the question: “How much longer do we think we can sustain this current environmental framework?”
She highlighted how during the pandemic, the world showed that it is capable of change. “When push comes to shove, we found new ways of doing things and we found them quickly,” she said.
Tackling supply chain issues with greater transparency
The second session of day two of the MEADFA Conference in Bahrain focused on supply chain challenges, with a compelling presentation by Sharon Beecham, Senior Vice President Purchasing, Dubai Duty Free, providing an insight into stockout and recovery so far in 2022.
Statistics showed how the retailer’s top 50 bestsellers were affected, with the impact hammered home with photos of empty shelves.
According to figures, 32% of the retailer’s top 50 bestsellers were impacted by the stockout situation in January 2022 (decreasing to 11% in September 2022).
Beecham discussed the far-reaching impact that supply chain issues have had on the business, from the financial implications through to consumer inconvenience and low staff morale.
She described that predicting how demand will evolve continues to pose a unique challenge for the business, drawing on a number of case studies to underline how difficult it can be to align required stock levels.
Among the examples shared was how many more Rolex watches were sold in 2021 than in 2019, yet with only 33% of 2019 passengers travelling through the airport; and how sales of single malts from January to August 2022 were up 32% on the same period in 2019.
“From a supplier and brand point of view, we are probably working together more closely with them now than ever before,” she said, emphasising the retailer prerogative to keep up shoppers’ average spend by having availability of the products they want to buy.
She said that, generally speaking, consumers will try to seek out alternatives if they cannot find their first choice (although with some exceptions, such as those looking for a particular Rolex watch or Apple product).
In terms of the plan moving forward, quality communication with brands and suppliers is key, she stressed.
“When it comes to allocations, please speak with us,” she said. “Then at least we know we have shared that information.”
While being candid about ‘not having all the answers’, she referenced how DDF now knows its suppliers’ businesses better than before (Covid) and vice versa, stressing once again that: “Transparency is the only way to solve the problem.”
Alasdair Dickinson, Director, Asia and MEA Travel Retail, Beam Suntory, brought a supplier point of view to the session, saying that supply chain issues affecting the industry has given the company cause to pause and reflect.
He pinpointed ‘transparency’ and ‘data’ as the two key areas that will help to improve the flow between brand/suppliers and retailers moving forward and that the company is heading into Q1 2023 re-energised.
Capitalising on the untapped potential for cruise in MEA
Following the networking coffee break, the ‘Cruising to success’ session drilled down on how the cruise market in the Middle East & Africa is relatively untapped – and one that has rich potential.
James Prescott, CEO, Harding+, talked about how the cruise industry has been ‘fundamentally’ reshaped by Covid and how the company viewed the pandemic as a time to ‘reinvent’ and to be ‘more commercially minded’.
To set the scene, he first gave an overview of the cruise market, noting how cruise capacity is set to grow by more than 50% by 2024, from 28 million guests and 560k berths in 2022.
What’s more, the new wave of cruise ships will be bigger, with an average passenger size of 3,200 (for the ships on order), compared with 1,500, which is the average of all the ships out there today.
In terms of the retail opportunities, he described how data is the ‘differentiator’ between cruise and airports.
“The amount of data we have on passengers is phenomenal,” he said, pointing out how cruise shoppers are a high dwell audience spending typically around seven days onboard, with ample time to browse and buy.
He explained how the MEA region isn’t getting its ‘fair share’ of the cruise market. Out of the 100+ ships in operation currently, only 10-15 of those are coming to the region, he said.
“The potential of cruise in the region is significant,” he continued. “The region has incredible tourism to showcase and there are big opportunities for local brands to create a sense of place on board.
“There are opportunities to try new experiences and activations because we know so much about our guests. If we align our objectives and share data, we can deliver a transformed traveller experience.”
Harding+ is aiming to double cruise retail revenue from US$2 billion to US$4 billion by 2025.
Rebuilding tourism in East Africa
The penultimate session of the day, titled ‘Rebuilding tourism in East Africa’, looked at look at current travel to and from the region, outlining traveller profiles and retail trends.
Surafel Saketa, Country Manager, Ethiopian Airlines shared how during the pandemic, inbound tourism decreased by 87%.
“We are now 85% of where we were pre-covid,” he said. “So we are growing really fast, but we didn’t take advantage of this.”
Ongoing work to create a ‘cost effective’ and ‘flawless’ travel experience within Africa is a key driver for making the most of the region’s tourism potential, according to Saketa.
He stressed how there is a focus on improving connectivity to Southern Africa, in particular, as a key part of the strategy to bolster intra-Africa travel.
Saketa said that the airline has started working directly with suppliers and distributors since March 2022 (as opposed to enlisting the services of specialist consultants), and started incentivising inflight crew at the same time – a strategy that appears to be paying off.
“From March to now, sales have increased,” he said. “We are also working hard on pre-orders.”
Baptiste Duguit, Vice President Business Development, Lagardère Travel Retail, discussed the company’s strategic commitment to growth in Africa and spoke of the optimism it has for opportunities in East Africa in particular.
A key part of how the company is aiming to help ‘rebuild tourism’ through ‘world class travel retail and business standards’ is on providing authentic, local products in the retail mix.
Testament to this is how sense of place represents over 20% of all the company’s duty free sales in Africa. Furthermore, in Tanzania, the company works with 30+ local producers – that’s over one in two with a social purpose.
Venturing into the metaverse
Concluding the MEADFA Conference in Bahrain was the ‘Meta-retail’ session, which unpacked how the merging of the physical and virtual worlds is set to bring new life to shopping.
Kevin Alderweireldt, Co-founder and CEO of creative tech company and metaverse specialist Bureau Béatrice, described how staging experiences means that brands are now competing against the world for the consumer’s time, attention and money.
“If you are thinking of doing something in the metaverse, investigate,” he advised. “Take the time to get to know it and start to experiment.
“But whatever you do, make it matter,” he said. “It is becoming increasingly hard to make a meaningful connection to the consumer.”
He spotlighted a VR brand activation by KLM, which gave Korean people the chance to take a virtual trip to Amsterdam as an example of the types of experiences that can be delivered.
He described how grabbing the consumer’s attention and making sure they have an emotional experience is key.
Above all, he stressed that: “When you do something [in the metaverse], it has to provide added value for your brand.”