Here, we highlight the key takeaways from yesterday morning’s TFWA World Conference. The Conference took place in-person in the Grand…
Here, we highlight the key takeaways from yesterday morning’s TFWA World Conference.
The Conference took place in-person in the Grand Auditorium of the Palais des Festivals, as well as being streamed live on the TFWA 365 digital platform.
Delegates heard from five leading figures and experts: Jaya Singh, President, Tax Free World Association and Managing Director, Mondelez World Travel Retail; Jane Sun, Chief Executive Officer, Trip.com; Benjamin Vuchot, Chairman and Chief Executive Officer, DFS Group; Rafael Schvartzman, Regional Vice President, Europe, International Air Transport Association (IATA); and Jay Richards, Co-founder and CEO, Imagen Insights.
“Uniting as an industry is the surest way for duty free and travel retail to emerge from the current crisis”
The TFWA World Conference was opened by TFWA President Jaya Singh, in his first address to the industry in Cannes. Jaya – with a little help from industry leaders around the travel retail world – shared his views on the steps travel retail must take to ensure a rapid and durable recovery.
“In this year of all years, we wanted to start the Conference a little differently and give a voice to some of the people and companies helping to make this event possible,” Jaya explained. “We asked a few friends in the industry to share their thoughts as the doors open on another TFWA World Exhibition, so let’s hear what they have to say.”
Contributing to a video compilation of views were: Lisa Bauer, Vincent Boinay, Charles Chen, Vinay Golikeri, Max Heinemann, Ségolène Audras-Verdillon, Colm McLoughlin, Christian Münstermann, Dag Rasmussen and Patrick Bohl.
“The last few months have convinced me that coming together and uniting as an industry is the surest way for duty free and travel retail to emerge from the current crisis,” Jaya said. “No single person, no one company has all the answers, but by closer collaboration, talking to each other and harnessing our collective efforts, we can remake our business for the post-pandemic era.”
He noted that international travel has changed, and so have traveller expectations. “To satisfy those, we shall have to be more agile and responsive, providing memorable experiences that are accessible across multiple channels, tailored to individual tastes by effective marketing based on shared traveller data. We must offer something exclusive that can’t be found outside travel retail, and we must do all of this in a framework that prioritises sustainability and social equity.”
Speaking as a brand-owner, Jaya drew three invaluable lessons from working though the pandemic. “Firstly, when traveller numbers dropped dramatically, making our usual market-intelligence benchmarks less relevant, we learned to cast the net wider for alternative information sources. Flight data from air traffic control organisations and passenger updates by airport authorities helped us make sense of who was flying where.
“Secondly, with fewer people shopping at airports, on planes, ships or in border stores, we learned to recast our product offer for this new reality, focusing on items we were confident of selling in a changed marketplace. This generated efficiencies in our manufacturing and supply chain that helped our bottom line, while boosting sales and cutting costs for our retail partners.
“Thirdly, we applied what we’d learned to our budget process, creating more accurate sales forecasts and matching investment to the revised traffic base. This more pragmatic, disciplined approach helped us perform better as a business, focusing resources where they could be used most effectively in a market that we understand more clearly.”
To succeed, access to accurate traveller data and insight will be crucial. “Until now, our industry’s record of sharing such data has been less than impressive,” Jaya said. “Companies have been reluctant to reveal information they regard as commercially sensitive to those they trade with. Yet this is the very moment when our industry has the most to gain from a clearer understanding of traveller needs and how they’ve changed since 2019. Now is the time for brands, retailers and landlords to build on the relationships forged in adversity during the darkest days of COVID-19. By pooling our knowledge of the post-pandemic traveller, we all stand to gain, developing products and brands that will appeal to these new shoppers, tailoring the retail offer to their revised aspirations and creating a fresh sense of excitement as people begin to cross borders again.”
TFWA’s mission is to provide a business platform for the global duty free and travel retail industry to prosper. “This week in Cannes is a central plank of that platform, and we hope that, by bringing the industry together in person for a few days, we are creating a space in which conversations can be held and a spirit of cooperation can develop that will power the recovery,” Jaya added.
“Tremendous volume will flow from China to the rest of the world once restrictions are eased”
Jane Sun, Chief Executive Officer of Trip.com Group, shared her unique perspective on the travel industry in China and beyond in a Q&A session with Stephen Sackur, journalist and presenter of current affairs programme HARDTalk on BBC World.
The Conference heard from one of Asia’s most influential and successful businesspeople. Jane Sun is the Chief Executive Officer of Trip.com Group (formerly Ctrip), a company which, since its creation in 1999, has grown to become the travel services partner of choice for over 400 million customers worldwide. Owner and operator of Trip.com, Skyscanner, Qunar and Ctrip, the company is the largest online travel agency in China.
Sun shared her unique perspective on the travel industry in China and beyond in a Q&A session with Stephen Sackur, journalist and presenter of current affairs programme HARDTalk on BBC World.
“The travel business is among those most impacted by COVID-19,” Sun began. “However, because of the effective controls implemented by the Chinese Government and the collaboration of the whole community, the domestic travel business in China has been recovering quite nicely. We’re very hopeful that, with increasing vaccination rates, we’ll be able to control the virus well and look forward to more collaboration with other countries.”
In terms of international travel, Sun explained that Trip.com Group is optimistic that demand will recover once borders reopen. “We have seen nice improvement in people’s mentality to travel. This time last year, people were very concerned. Today, if you look at the general population in China they feel very safe travelling around the country. Our search results show that Chinese travellers are very interested in visiting Europe, the Middle East, etc.”
Sun noted that there is strong pent-up demand for exploring the world, particularly among affluent customers and the younger generation. “Tremendous volume will flow from China to the rest of the world once restrictions are eased – we’re very optimistic. We just need to make sure our infrastructure, service team and platform are ready to go once borders reopen.”
There has been a discernible shift in Chinese travellers’ approach to planning and booking their trips. Sun highlighted three major trends:
- “First, people are paying more attention to safety measures. We advise our partners – local tour operators, hotels, airlines, rental car businesses, etc – to offer protection to customers, such as face masks, hand sanitiser and temperature checks, so customers feel well-protected.”
- “Second, people now prefer to travel within a much smaller group. They prefer to travel with close family members and friends, rather than a tour bus of 50 people.”
- “Third, people prefer to make bookings with partners who offer certain flexibility, for example free cancellation or change policies.”
In terms of services, Trip.com Group works very hard with its local operators to make sure they offer Chinese-friendly programmes – for example Chinese-speaking staff.
Trip.com Group has also grown massively in recent years. “We believe in organic growth,” Sun explained. “Our philosophy is customer-first – we always want to make a long-term investment in technology and service to offer the best product to our customers around the world. Our strategy is a local focus and a global vision. Local focus means, before the border opens, we need to deeply explore opportunities in domestic China. Our global vision is long-term, because travel itself is global and people want to travel to different countries.”
Meanwhile, the 2022 Winter Olympic Games take place in Beijing, meaning the country will welcome a huge number of visitors. “Chinese people are very hospitable,” said Sun. “We have an old saying that it’s better to travel 10,000 miles than to read 10,000 books. In Chinese teaching, travelling is learning and making friends around the world.”
“Travel will resume, and we must be ready to engage our customers in new and exciting ways”
Benjamin Vuchot, Chairman and Chief Executive Officer, DFS Group: “The desire to travel and explore is universal and timeless. Borders will reopen, travel will resume, and we must be ready to engage our customers in new and exciting ways.”
The Conference heard from the head of the leading luxury travel retailer – Benjamin Vuchot, Chairman and Chief Executive Officer of DFS Group. Despite the challenging environment for travel, 2021 has been a groundbreaking year for DFS, culminating in the opening of a new landmark in duty free: La Samaritaine, in the historic heart of Paris. Vuchot addressed the future for the industry at a time of flux, touching on the ways in which travel retail can reinvent itself to meet the evolving expectations of travellers.
His key message was simple: “The desire to travel and explore is universal and timeless. Borders will reopen, travel will resume, and we must be ready to engage our customers in new and exciting ways.”
Commenting on La Samaritaine, Vuchot said: “Our aim with every new store is to create a destination within a destination. La Samaritaine has transcended this goal. In reclaiming its place as the epitome of ‘la joie de vivre à la française’, it also guarantees its future as a must-visit attraction for tourists.”
The pandemic has accelerated the evolution of consumer expectations that was already underway. “Customers will want to shop in a way that matches the digital experience that they’ve become so used to by being at home,” Vuchot explained. “They will place a higher value on authentic and personalised experiences, and they will expect the brands they shop with to articulate purpose and meaning in alignment with their own values.”
In terms of trends with regards to the restart of international travel, Vuchot noted a ‘three-speed world’: “Greater China will rebound once mainland China travel restrictions are relaxed, with proximate destinations like Hong Kong and Macau set to benefit the most. Elsewhere, Japan, USA, Europe and Oceania will see a pick-up in domestic and intra-regional travel – the increase in activity in North American airports is encouraging. The rest of the world will recover more slowly, picking up later in 2022. In terms of travelling demographics, younger people and higher spenders will travel first as they will rationalise the inconvenience of quarantine with the reward of shopping and exploring.”
The importance of harmonisation and cooperation
IATA Vice President Europe Rafael Schvartzman: “If the crisis has shown one thing, it is the importance of harmonisation and cooperation. Airlines and travel retail are more than linked, yet there is room for improving our dialogue and partnering for mutual benefit.”
Of all the many stakeholders working to ensure a bright future for travel, airlines have arguably the most crucial role to play. Airline association IATA has been pivotal to efforts to ensure a swift and coordinated response to the challenge posed by the pandemic, notably through the IATA Travel Pass. The Conference heard from IATA Vice President Europe Rafael Schvartzman on the progress of its efforts, and on the short- and mid-term future for air travel as uncertainty persists.
One of his key messages was that, if the crisis has shown one thing, it is the importance of harmonisation and cooperation. “Airlines and travel retail are more than linked, yet there is room for improving our dialogue and partnering for mutual benefit,” said Schvartzman. “Government COVID-19 travel restrictions are wildly inconsistent and needlessly stalling the recovery of air travel. Governments should use simplified risk management and known best practices, and to help reopen borders, they must ensure to make vaccines widely, easily and quickly available; remove barriers to travel for vaccinated individuals; and facilitate testing for non-vaccinated people by making it affordable, using antigen for cost-effectiveness and convenience.”
IATA has been working relentlessly since the start of the crisis to help the industry restart before focusing on recovery. “We have been advocating for solutions designed to help safely reopen borders, enabling a seamless, contactless travel,” Schvartzman explained. “Some of these solutions include the IATA Travel Pass and the EU Digital Covid Certificate, both of which we would like governments to adopt and implement across the globe. A standardisation and harmonisation of measures to eliminate travel restrictions and boost passenger demand is critical for industry recovery, and we will continue to advocate for this to happen.”
Global forecasts set 2024 as the time where we will likely get back to 2019 traffic figures, but while aviation is a global industry every region has its intricacies, and the recovery is and will be disparate. “The limited number of borders in North America can almost give it a sense of one enormous domestic market and can explain why this region is the least impacted and should be the first one to rebound, followed by Latin America,” said Schvartzman. “This is clearly not the case of other regions such as Asia-Pacific or Europe, which are much more fragmented.”
Domestic travel, particularly in large markets, has already taken off and will be the first one to recover, ahead of international and long haul. “Leisure, including the visiting friends and relatives (VFR) segment, will rebound much quicker than business travel, which may take much longer to return with technology lending us a hand to maintain our business needs when travelling was not an option,” Schvartzman commented. “But technology cannot, and will not, replace the need and will to meet in-person. We cannot take the human out of the human being.”
Indeed, people want to recover the freedom to travel. According to IATA’s latest passenger surveys, they think that governments can do more and are frustrated with current restrictions.
“The latest announcement of the US market reopening for Europeans and the booking surge it spurred is further proof that there is a pent-up demand for air travel,” Schvartzman added. “The entire industry is eager to enable and facilitate travel. However, governments will need to reduce or eliminate travel restrictions in order to materialise these ambitions.”
How to authentically engage Gen Z as a brand or company
Jay Richards, Co-founder and CEO, Imagen Insights: “Gen Z’s spending power is set to increase to $4.4 trillion and they’re the largest population to ever exist. Gen Z have grown up with easy access to their favourite celebrities, they’re one DM or great piece of fan-content away from meeting their idol and they expect the same from their favourite brands – accessibility is the new currency.”
When international travel restarts in earnest, the travel retail industry will need to cater to consumers whose perceptions and expectations will most likely be quite different. Appealing to younger, ‘Gen Z’ shoppers will be especially important to brands and retailers alike. Jay Richards is the co-founder of Imagen Insights, a company that helps brands tailor their offer to Gen Z consumers around the world. In yesterday morning’s TFWA World Conference, he shared his thoughts on how the duty free & travel retail industry can ensure it is relevant to the next wave of travelling consumers.
Richards’ key messages were:
- How important Gen Z are as a generation
- Gen Z’s desire to travel differently
- Gen Z’s unique love for luxury fashion
- How to authentically engage Gen Z as a brand or company
“Gen Z’s spending power is set to increase to $4.4 trillion and they’re the largest population to ever exist,” said Richards. “Gen Z have grown up with easy access to their favourite celebrities, they’re one DM or great piece of fan-content away from meeting their idol and they expect the same from their favourite brands – accessibility is the new currency.”
Commenting on how the duty free & travel retail industry can remain relevant to the all-important Gen Z shopper, he highlighted three essential elements:
- Be brave – “Don’t be afraid to take risks! Gen Z wants you to try new ways to engage them and grow your business.”
- Conversation – “Talk with your fans, they want to hear from you! Gen Z wants to engage with your brand in lots of different ways, talk to them on your social media, ask them what they’d love to see from you, they’re a very vocal generation.”
- Transparency – “Make your values something you’re proud of and be honest about your shortcomings! Gen Z loves brands that are authentic and truly stand behind their statements, if you’re going to support a cause then truly support it.”
In terms of how brands can tailor their offer to Gen Z consumers around the world, Richards explained: “Ask them what they want to see from you, the way they will want to engage with every brand is different, ask them what they want and then provide exactly that.”
Video content is also important. “Gen Z love video content, whether that’s behind the scenes of your brand or your consumers talking about their love for the brand, they want to see it all.”
