The first conference session of day two of the 2023 Summit of the Americas (Tuesday 18 April) delivered an update on some of the key developments in the region, from stores across the US/Canada border battling back to health with the help of the advocacy efforts of FDFA to the impressive growth that’s being experienced by Lagardère Travel Retail Peru.
John Rimmer, Managing Director, Tax Free World Association hosted the workshop style session, titled ‘Regional Recovery, Global Context’, which drilled down on the regional challenges and opportunities facing the duty free and travel retail (DF&TR) industry in the Americas, as well as global issues that impact the region, including important advocacy issues.
One of the best soundbites of the session came from Barbara Barrett, Executive Director, Frontier Duty Free Association (FDFA), who stated that “duty free may be a small industry but we have proven our mightiness”.
Barrett’s FDFA colleague, Tania Lee, Vice President of Sales, Blue Water Bridge Duty Free, and President, FDFA began the session by recapping on the impact that the pandemic has had on Canada’s land border duty free landscape, which comprises more than 30 stores.
“The closure of the Canadian/US border, which stretches 5,535 miles across 120 land border crosses, lasted for over two years with some of the most stringent restrictions put in place by the Canadian government,” said Lee.
“Our border crossings were ghost towns. We were tested in ways we’ve never seen before. So we advocated to the Canadian government and anyone who would listen to get our stores back open.”
Barrett delved deeper into the story, emphasising how in March 2020, the land border business came to a “screeching halt”.
“Store sales were down around 90-95% and stayed that way for 20 months,” she said. “We had no way to pivot our business we couldn’t do online sales or even donate products reaching their best before date to the local market. Our core advocacy methods became our survival.”
She went onto give a detailed insight into the unflinching advocacy efforts of the association, which generated a huge amount of media exposure.
“We ran 14 different advocacy campaigns just for survival,” said Barrett. “So we formed a coalition of the hardest hit businesses, which launched in August 2020.
“The liberal government made good on their commitment to provide support, but the border remained closed until, almost 20 months later in November 8 2021, the border opened for non-essential traffic but travellers were required to have a PCR test.”
On 22 November it was announced that the PCR test would be dropped but the story wasn’t over yet. Stores were still 50% down “at best”, compared to pre-pandemic, due to ongoing restrictions and measures such as the ArriveCAN app.
“We gathered our allies again and pressed on and found new ways to make them listen. We didn’t let up,” said Barrett.
The FDFA continued to lobby the Canadian government – in time, the ArriveCAN was dropped and the border stores could begin the recovery journey with gusto.
“We learned that leveraging the media and social media is a very powerful tool,” said Barrett. “It’s important to seek likeminded stakeholders and allies to make your voice louder – and don’t take no for an answer. Importantly, we learned that the duty free industry is strong and resilient.
“Duty free may be a small industry but we have proven our mightiness.”
Lee provided a glimpse of the future, with Canada stores setting a standard for luxury shopping on the border. She highlighted the importance of having good relationships with suppliers to drive the business forward by removing barriers to doing business and fostering a mutually beneficial relationship.
“Without meaningful collaboration on both sides, this industry cannot exist,” she said.
Next in the spotlight was Cyril Letocart, CEO, Lagardère Travel Retail Peru, who took the audience on a journey, describing the retailer’s progress in the country so far, including its growth from 10 employees in September 2201 to 400 in December 2022.
The retailer currently has 13 shops and restaurants in the country and a “good pipeline” of new openings.
Among the most high profile on the radar are the 12 F&B units in Chile opening this year and the 4,000 sqm of duty free and duty paid shops launching at Lima Airport’s new terminal in 2025.
“We are already working on selecting the best brand partners to make something new in the region,” revealed Letocart.
“We’ve had quick growth, but a lot of surprises along the way,” he added, describing some of the major challenges the retailer had faced over the past couple of years.
These included clearing customs for duty free goods during Covid when people were working remotely, and working amid a fast-changing political landscape (in terms of ministers appointed), among other factors.
He also talked through the forecast for the coming years.
“Tourists are coming back, which is helping a lot – we have one of the quickest recoveries in the region – and inflation is ok,” he said. “Plus, it’s quite difficult to find some good products downtown in Latin America so people usually go to the duty free to find these items, such as great Champagne and great wine.
“We need to utilise the exclusivity of products to make sure we have something different to the downtown stores,” he continued. “We have lost the duty free promise of price over the past few years as it is difficult to compete with supermarkets and online shopping, so in this sense we need to offer something different to what people can find downtown.”
Cameron Gray, Manging Director, Penta Group took to the stage to talk about advocacy efforts across the globe, including an update on the Duty Free: Trusted, Transparent, Secure campaign.
He discussed the economic and reputational damage to the duty free industry posed by counterfeiting, intellectual property theft and illicit trade.
Gray also reinforced the campaign rationale, and how that the industry needs to collaborate to stop illicit trade, counterfeiting and intellectual property theft.
“We need to amplify our existing credentials as an authentic and trusted industry, and demonstrate our commitment to combatting criminality wherever it occurs – and to be seen to do so.”
He described how this is being achieved by taking a zero tolerance approach, and through connecting with global players.
He mentioned how the efforts were especially crucial with the upcoming Illicit Trade Protocol MOP3.
“The Americas are an important region for MOP3 over the course of this year,” he said. “The ongoing support we receive from the industry in this region is very welcome and we ask for your continued support in the months ahead.”