Asociación Sudamerica de Tiendas Libres (ASUTIL) President Gustavo Fagundes is urging the industry in the region to be more innovative and to think-out-of-the-box as he believes this is ‘the way to survive’ in the post Covid-19 era.
Fagundes, who also serves as COO South America, Dufry Group joined a strong panel of speakers during the association’s second webinar of the year which took place yesterday (28 July 2021). The first webinar took place in June.
Other speakers were José Luis Donagaray, Secretary General, ASUTIL, Carlos Loaiza-Keel, Secretary General of the Chamber of Free Shops in Uruguay, Gonzalo Yelpo, Legal Director and Counselor, Latin America and Caribbean Air Transport Association (ALTA); Alvaro Neto CEO, Nicaragua & Mexico, Dufry Group; and Arnaud de Volontant, Vice President of Conferences, Tax Free World Association.
“All industries, especially ours must be resilient,” Fagundes remarked. “We have been learning a lot and I am sure we are different people and companies as a result.”
He added: “We must really look for flexibility. Harmonisation is becoming more and more important in terms of regulation and is important for the survival of the DF&TR industry.”
KEY POST-COVID-19 TRENDS
Fagundes then highlighted several key trends which he believes will be prevalent as the recovery progresses. These include the importance of duty paid business, digitalisation, premium products and supply chain pipelines.
Regarding digitalisation Fagundes said: “If anyone had any doubt whether digitalisation was key, it is now clear that it is even more important than before the crisis. Reserve and collect is booming. We have tried executing pre-order and VIP lounges in Argentina, which have been successful whenever there has been traffic. This is because some people are unwilling to interact with sales staff. Home delivery is also a must.”
Staying with Dufry Group, Alvaro Neto revealed the alcoholic beverages category has taken over from beauty as the category comprising the highest share of total business in Mexico. “The change is in line with the [purchasing] behaviour of US customers and of those travelling on cruises.
“Overall, the Mexican business is recovering well. Over the last two months, locations such as Cancun and Los Cabos have experienced positive performance compared to 2019.”
He concluded: “We think we can end 2021 in Mexico about 12% or 15% lower than 2019. We are expecting a huge recovery in the second semester and for performance in 2022 to be better than 2019.”
Offering further projections, this time in terms of passenger traffic, ALTA’s Yelpo said: “Last year, we predicted recovery for the Latin American region would come in 2024. For the US, it is now clear the recovery will be in 2023. In Latin America, the recovery is still expected to take until 2024.
“In 2020/2021, traffic correlated with the number of Covid-19 cases, but it is not the virus that prevents traffic. It is the measures implemented by the governments.
“Brazil and Mexico, for example, never stopped operating international flights and borders for international passengers remained open.”
On the impact of quarantines, Yelpo is unsurprisingly adamant that they deter people from traveling and believes they should not be implemented to handle the Covid-19 situation.
“Governments in the region have different approaches. Mexico and Brazil as mentioned have never closed their borders during the course of the pandemic and Colombia has recently decided that PCR tests are no longer required to enter the country as long as passengers have completed the vaccination process.
“Measures must be adopted which enable people to keep healthy and do business in the process.”
MARKET DEVELOPMENTS IN URUGUAY
Speaking of commercial business Loaiza-Keel presented an overview of market and regulatory developments since the reopening of border duty free shops in Uruguay.
“The most important piece of news obviously was the reopening of our border duty free shops in May.
“We are experiencing a very good evolution in terms of the pandemic. The numbers are very good. This is mainly because of the share of the people vaccinated in Uruguay. We are still down on 2019 sales figures but doing pretty well overall.”
The increase in average-spend-per-passenger, a common trend in DF&TR environments worldwide is a significant highlight, emphasised Loaiza-Keel. “If we focus on average ticket, there is a promising trend. We are observing the slow return of tourists with high purchasing power which we have not seen for many years.”
Much like in Mexico, liquor has taken over from beauty as the top-selling product category in Uruguayan duty free shops. “There is an important difference in the category mix between 2019 and 2021. Spirits now lead the way with 35% of the basket, followed by fragrances (22%), clothing (20%), electronics (19%) and others (4%).”
A HOLISTIC APPROACH
From a regulatory standpoint, the Chamber of Free Shops in Uruguay tries to adopt a holistic approach. Loaiza-Keel explained: “We are always ready to use the low and high beam lights. The low beam lights are the short-term matters that we are continuing to discuss with the government.
“This month, for example, we successfully ensured border duty free shops in Uruguay are now referred to as tourist operators by the government. This gives us immediate access to certain benefits.
“Last month, we also achieved some important tax exemptions, which is a huge relief for DF&TR companies in terms of social contributions, corporate income tax and network tax.
“In addition, we are working with the Ministry of Economy and Labour to extend the special unemployment benefits that were implemented when the government decided to close our border duty free shops.”
More to follow…