Border DF operators embrace digital ahead of anticipated ‘surge’ in traffic

By Andrew Pentol |

Americas border duty free operators are preparing for a surge in business as the recovery from the coronavirus (Covid-19) pandemic continues.

The impact of Covid-19 on border businesses across the US and the Americas was among the topics discussed during a webinar entitled “Rebuilding the Border store Business from North to South, which took place on day three of the virtual Summit of the Americas (5-9 April).

An expert panel consisted of Marcelo Montico, CEO, Neutral by Luryx Duty Free Shop, Jerome Falic, CEO, Duty Free Americas and Justin Guay, Vice President. IGL Duty Free Shop. The session was moderated by Dermott Davitt, President, The Moodie Davitt Report.

Located at the Canadian land border between Montreal and New York City, IGL is striving to ensure it can capitalise once traffic normalises.

Guay commented: “I believe that when we had SAARS there was a bit of a boom at the border as the disease was going away. This is because people were still a little apprehensive about taking an aeroplane. We are expecting to have a bit of a surge when this is over and for people to really going to start hitting the border.”

EXPECTED SURGE IN BORDER TRAFFIC

With a potential surge in border traffic on the horizon, IGL is carefully managing its inventory which only servicing commercial traffic and those travelling for essential purposes.

Clockwise from top left: Dermot Davitt, President, The Moodie Davitt Report; Marcelo Montico, CEO, Neutral by Luryx Duty Free Shop; Justin Guay, Vice President, IGL Duty Free Shop; and Jerome Falic, CEO, Duty Free Americas.

“I guess one of the biggest challenges we have is our inventory,” emphasised Guay. “What we are doing right now is avoiding any expiration and trying to avoid that out of stock scenario. Our commercial customers are not all of our customers we must plan for that surge.”

He added: “We don’t really know when that surge is going to happen, but we also don’t want to have any out-of-stock situations when it does take place.”

In the meantime, IGL is preparing to launch a new website offering a curbside pick-up service. Transactions must occur at the border right before crossing and customers will have the opportunity to pre-order from the website.

“In Canada, the curbside pick-up concept has become the norm for a lot of stores,” Guay remarked. “Digital marketing and digital sales are going to be at the forefront. These are elements which have become very important.”

Managing its inventory is one of the biggest challenges for Canadian land border duty free operator IGL.

Digital initiatives such as the curbside pick-up service may also serve another important purpose. He explained: “We have a lot of difficulty in Canada with the customer not understanding how duty free works and if they are allowed to purchase.

“Concepts like this may even open up an opportunity to educate customers on that particular issue.”

Another company investing in new technology is Neutral by Luryx, which was acquired by Top Brands International Group in mid-2019.

Last year, the company, which operates 15,000sq m of commercial space across nine stores and six cities reported a 45% sales decrease compared to 2019. Stores were closed for 45 days in March following the start of the pandemic, but eventually opened with reduced hours and less staff. Currently, seven of its nine stores are trading across a total space of 11,000sq m.

Montico said: “Neutral is investing in new technology, not to replace face-to-face sales, but to complement consumers’ behaviour in this new context.

Neutral by Luryx was forced to close its stores for 45 days in March 2020 following the start of the pandemic.

“Before the pandemic, customers were spending an average of 37 minutes in our shops. During the pandemic the number dropped to 16 minutes. This have given us less time to sell and drive that non-planned purchase.

“Last year, we launched a new pick-up contactless platform, enabling customers to order through the website and indicate the date and time they want to collect their purchases. This gave us a huge opportunity to demonstrate our creativity as a retailer and find new ways to interact with customers.”

‘NEW WAY OF GOING ON VACATION’

Duty Free Americas, which runs UETA border duty free stores on the US/Mexican border and across Latin America, along with border outlets in various other locations, believes most people are ‘trying to shy away’ from flying.

“It is a lot easier for the customer to shop at the border,” Falic acknowledged. “In the US in particular, sales of recreational vehicles have gone through the roof. Many families are taking road trips. This is like a new way of going on vacation.”

Duty Free Americas believes it is easier for customers to shop at the border than it is in other DF&TR locations such as airports.

Regarding the current border situation and what this means for Duty Free Americas he added: “Every border has its own restrictions and dynamics. On the Canadian border, for example, we have a handful of stores that are able to open but can only service commercial traffic There is no other travel in-between.”

Keeping staff and customers safe and implementing the various measures to do so has been among the main challenges for Duty Free Americas. “The market has also become much more competitive, especially with online shopping coming back much stronger. People have become used to sitting at home, ordering and not going out.”

Asked to gaze into his crystal ball and discuss recovery prospects on the border, Guay suggested that the Canadian and US governments will most likely compare infection and vaccine rates before re-opening the border for non-essential traffic.

“As vaccine rates increase and infection rates decrease, they will probably start making some judgments on that. There is probably going to be some sort of vaccine verification required at the border, but in terms of opening it up to non-essential traffic, I think there is a threshold which must be hit for infection rates on both sides.”

 

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