CHILE. South American duty free association ASUTIL officially opened its 20th conference at the Sheraton Hotel and Convention Center in Santiago today.
ASUTIL President Gustavo Fagundes welcomed the 259 regional and international delegates, praising the organisation attracting a significant attendance in a difficult trading environment.
Fagundes proceeded to give a detailed analysis of the Brazilian market, where the current political crisis and deeper structural issues are hitting travel retail just as hard as the general economy.
He did, however, indicate how much transformation has been undertaken in the travel retail sector, with the four leading airports now under private management and engaging more closely with commercial partners.
“We need to become more customer-centric, and have closer partnerships with airports,” he said.
ASUTIL Secretary-General José Luis Donagaray then presented a statement of the association’s affairs and the industry situation in 2016.
He noted that delegate numbers are -13.4% down on the previous conference, which reflects last year’s location in Panama City being easy to access and also the home of head offices for several major retailers.
In its survey of 12 countries and 15 retailers across Latin America and the Caribbean in the first quarter of 2016, ASUTIL found that sales in US Dollar terms were down -19% and the average ticket -10% compared to Q1 2015, despite a +3% increase in passenger numbers.
Donagaray hinted at closer cooperation with IAADFS in future, including the possibility of a joint conference, while acknowledging the differences in approach by the two organisations.
Participation in the Duty Free World Council, and lobbying for a consistent environment for tobacco, are other key areas of ASUTIL’s current activities.
Donagaray revealed Rio de Janeiro as the likely location for the 2017 ASUTIL conference, with the dates provisionally set for 7-10 July.
Peter Mohn, Owner and CEO of M1nd-set, laid out the results of it latest market research activities in the region in cooperation with ASUTIL, compiled from interviews with 3,000 people who had travelled in the previous month.
He prefaced his remarks with the observation that long-term economic and travel trends are positive for emerging markets, including Latin America, with intra-regional travel growing strongly.
New research tracking the path to purchase of the South America duty free shopper outlined where consumers gained their information – providing potential crucial intelligence for travel retail marketers.
Among an array of data that tracked key decision points for the travelling consumer, Mohn revealed that 39% of travellers gathered shopping information while booking, and 45% did so in the airport prior to entering a shop.
Online shopping continues to grow in importance – with 58% of Latin American travellers aged under 40 saying that their ideal shop would combine an online and physical presence.
Reviewing the situation for South American border retailing, Neutral CEO Enrique Urioste reflected on a perfect storm that arrived from March 2015 with Real devaluation, economic and political decline in Brazil, and flooding caused by El Niño weather patterns.
“Now we are seeing more stability: the Real is appreciating slightly, there is a widening price gap between domestic and border markets, and a lack of availability of imported goods in some Brazilian cities,” he said.
Neutral has responded to the crisis by reducing inventories, agreeing special payment terms with suppliers, and controlling payroll, rentals and other expenses.
Urioste noted that following Argentina’s 2002 economic crisis and the global financial crisis, the border business was able to recover to higher levels than before the crises.
New shopping environments such as the Melancia Mall in Rivera would assist in a strong recovery this time, he suggested.
Concluding the first day’s proceedings, Olga San Jacinto, Director of Google Latin America, profiled some of the key technological developments that are changing consumer behaviour.
Innovation is now happening faster than ever, with a new paradigm of technology based on dematerialisation (integrating functions into single devices), demonetisation and democratisation, she said.
Travel retailers will need to consider a future in which robotics, artificial intelligence and virtual reality play an ever greater role – with a balance of online and offline experiences integral to a good commercial offer.
A lunch sponsored by B+D followed the conference session, with delegates then proceeding into networking time.
The Pernod Ricard-sponsored opening cocktail is to follow in the evening.
