SHANGHAI — The evolving nature of the Chinese consumer and the importance of technology were major themes of the Tax Free World Association China’s Century Conference, held here earlier this month.
The three-day conference was attended by hundreds of delegates from China and around the world, including representatives from international luxury brands such as Calvin Klein, Chanel, Bally and Furla.
For TFWA president Erik Juul-Mortensen, the conference’s main points included catering to the changing needs of Chinese consumers with more unique and bespoke offerings and investing in technologically savvy marketing and promotional activities.
“The growing importance of experience, the individualization of the Chinese consumer, their growing sophistication and focus on quality in both products and customer service, as well as the need for an online presence to complement, but not replace, the traditional retail model. These are all important for our industry,” he said.
There’s little doubt that the Chinese consumer is a vital part of the international tax-free and travel retail sectors, with 2014 seeing the wider world inundated with more than 100 million outbound Chinese travelers who spent $165 billion, according to Chinese government estimates.
Though these numbers are already substantial, they are only expected to rise over the coming five years.
“Emerging Asia continues to grow at three times the pace of developed economies. Do not have China fatigue or Asia fatigue; there is still a long period of growth ahead,” said conference keynote speaker, Haiyan Wang, managing partner at the China India Institute.
According to research by M1nd-set, undertaken on behalf of the Asia Pacific Travel Retail Association and presented at the conference by M1nd-set chief executive officer Peter Mohn, more than two-thirds of Chinese duty-free shoppers surveyed said they were influenced in their purchasing decisions by interactions with sales staff on the ground.
Having said this, speakers were also at pains to emphasize that social media, and the utilization of major Chinese social media platforms, such as WeChat, is a good way to supplement those old-fashioned, basic retail precepts.
“I do think the international travelers are more advanced regarding technology, so they would expect technology from travel retailers,” Mohn said.
“If there was a way travelers could inform themselves using their smartphone at the airport of price advantages or specialized gifting services, that could be a focus of improvement.”
Though much has been made in recent years of the importance of international traveling Chinese consumers and the opportunities they present, as the Chinese government increasingly pushes domestic consumption, it makes sense for the travel retail industry to also look at ways in which it can expand its presence within China.
In 2014, China Duty Free Group opened a 45-thousand-square-meter duty-free store (484,375 square feet) as the world’s largest, in China’s Hainan Province.
The island holiday destination has been identified by the Chinese government as a haven for tax-free shopping within the country and Wang said she wouldn’t be surprised to see other Chinese destinations also become duty-free shopping meccas in the future.
“Many local governments are jealous of the duty-free outlets being opened in Hainan, and I would expect other duty-free centers to open in other places around China, particularly in border regions,” she said.
The new Beijing Daxing International Airport, which is due to open in 2018 and is expected to handle 70 million passengers annually by 2025, also will present a major opportunity for tax-free retailers, Capital Airport Holding Company vice-general manager Gao Shiqing told the conference.
Beyond China’s well-trodden Eastern seaboard are other fast-growing centers, such as Chongqing in the country’s West, where a new terminal is due to open in 2016, bringing the total passenger capacity at its international airport to 45 million people annually.
Commercial management department head for Chongqing Airport Group, Yali Gao, spoke about opportunities in China’s largest inland city, which has a population of 33 million people.
“We designed the display to have an emphasis on international luxury brands and have introduced some light [affordable] luxury brands as well as some domestic brands to push sales,” Gao said of their strategy.
“In the past, travelers would buy local specialty foods, and that would be it, but with rising incomes, passengers buy more branded products — more recently, unique and individualized brands are becoming more favored.”