CHINA. China Duty Free Group (CDFG) has embarked on a hugely ambitious makeover of its CDF-Sunrise Duty Free retail offer at Beijing Capital International Airport (BCIA) Terminal 3, while simultaneously preparing the inauguration of its stores at the new Beijing Daxing International Airport.
As reported, Beijing Daxing International Airport is set to be officially inaugurated on 30 September, with flights commencing late the following month [The Moodie Davitt Report is publishing a special eZine to celebrate the Daxing opening – details to follow soon].
“It’s pretty much a complete overhaul of the beauty, fashion, luxury, liquor & tobacco offer” – CDF-Sunrise Beijing General Manager Casey Lim
As revealed by The Moodie Davitt Report, CDFG and Sunrise Duty Free were awarded the BCIA T2 and T3 duty free contracts, respectively, in June 2017 after a highly competitive tender. That dual success prompted CDFG to complete the 51% acquisition of Sunrise Duty Free (Beijing) and, later, Sunrise’s Shanghai business, creating a new superforce in Chinese and global travel retail.
As also first reported by The Moodie Davitt Report, CDFG was officially confirmed on 13 March this year as the dual winner of Beijing Daxing International Airport’s two ten-year duty free concessions for a) liquor, tobacco and food/confectionery and b) beauty and fashion.
During a tour of BCIA T3 last month with The Moodie Davitt Report, CDF-Sunrise Beijing General Manager Casey Lim previewed the sweeping T3 changes and spoke of CDFG’s confidence in the new Daxing gateway. Lim is one of CDFG’s most respected executives, having worked for Sunrise Duty Free since August 2012 and before that in senior roles with DFS Group.
Terminal 3 – upscale ambition
CDF-Sunrise operates around 15,000sq m at T3, underlining both the scale and ambition of the refurbishment and expansion. “It’s pretty much a complete overhaul of the beauty, fashion, luxury, liquor & tobacco offer,” says Lim.
Major talking points include the addition of two luxury boutiques, positioned early in the passenger journey, from Gucci and Hermès (in the location that currently houses the Estée Lauder standalone store). The Gucci boutique opened on 11 August with Hermès due to open in January.
The presence of the two glamour houses underlines a much-enhanced fashion and accessories offer, including two clusters of six European brands and eight American brands that have been opened progressively over recent weeks.
“The visibility of fashion was quite bad in the past, so we wanted to create a real flow through this area,” says Lim, in a reference to the way the category has been repositioned to enhance shopper awareness.
Importantly, CDF-Sunrise is also introducing a small 15sq m pre-order collection point for purchases made by international customers at the retailer’s new 513sq m downtown duty free store, opened at Beijing’s Blue Harbor shopping centre earlier this year.
Chinese nationals currently cannot shop there but that may change soon, according to multiple sources (a view shared in a recent bullish report on Chinese travel retail by Morgan Stanley). All it requires is for the Mainland government to introduce legislation that offers its citizens the same downtown duty free shopping rights as, say, South Korea, allows for Korean travellers. If, or when that happens, the 15sq m area can be expanded to fulfil increased demand. CDFG already has a pick-up point in T2.
The key beauty category is receiving an appropriately ambitious makeover. Whereas in the main store, the biggest brands currently have a three-metre back wall and a gondola, CDF-Sunrise is to create island-like, shop-in-shop-style offerings in the new-look shop for the four biggest brands: Estée Lauder, Chanel, Dior and Lancôme.
More space for colour and fragrances
The product range and depth within sub-categories will also be expanded considerably as CDFG aims to enhance its status as a key player and thought leader in the vital beauty category.
Lim admits that the approximate 3,000sq ft main beauty space (which, with the exception of a couple of major colour brands, is almost entirely dedicated to skincare) is insufficient for such a booming and diverse product sector. “A lot of brands cannot come in because of the lack of space, so we’re going to take the space behind the store that used to be dedicated to fashion and convert it to beauty,” he explains.
Power brands such as the big four, plus Shiseido, Clinique, La Mer, La Prairie, SK-II and others will all feature prominently in the main store, while a secondary beauty shop will house popular and emergent colour, fragrance and lifestyle brands such as Jurlique and Origins. A much broader colour range will include the likes of Nars and Make Up For Ever.
Lim noted that CDF-Sunrise will open up the beauty area, helping lead passengers seamlessly into the other retail zones (particularly the expanded fashion department), a contrast with the current tightly confined environment. The main beauty store is expected to be finished well in advance of Chinese New Year in 2020 (25 January). That will mean the closure of the current facility from this month with the second beauty shop operating as a transition store over coming months. “By the end of the year we should finish the entire beauty shop offer,” says Lim.
Another store area will be dedicated to popular fragrance brands such as Hermès, Jo Malone (from The Estée Lauder Companies) and L’Oréal Group’s 2016 acquisition Atelier Cologne. An adjacent pop-up will allow new brands to be trialled, which if successful will be added to the main offer.
“We believe that right now in travel retail you need a lot of activities. In order to do that, you need to create pop-up stores,” says Lim. Again, the focus is on creating easily accessible, open space that allows not only a broadening but an integration of the retail proposition.
Fashion statement
The European fashion brands (Bottega Veneta, YSL, Balenciaga, Burberry, Moncler, Ferragamo), which were introduced progressively through May and June, have spurred a double-digit rise in fashion sales at T3. “So far we have been very happy with the business, as we used to underperform in fashion,” says Lim.
The European line-up is complemented by a strong portfolio of US brands, including Michael Kors (opened the day before our visit), Marc Jacobs, Tory Burch and Coach, while other top labels across fashion, jewellery, watches and accessories include Chloé, MCM, Lacoste, Montblanc, Calvin Klein Jeans, Samsonite, Omega, Furla and Chopard.
CDF-Sunrise hasn’t just boosted the range of fashion on offer but placed more acute focus on how it is sold. The category requires staff with a passion for it, Lim says, and so the recruitment policy has followed suit. “I always say that managing a fashion business and managing, say, liquor, tobacco and beauty is totally different.”
The burgeoning fashion line-up is being complemented by high-end jewellery brands Tiffany and Bvlgari; fashion jewellery names such as Pandora, Swarovski and APM Monaco; and a generic sunglasses boutique.
“It’s a long time since we [as Sunrise Duty Free] renovated the stores and I want to bring CDF-Sunrise to an international standard in our look and feel,” says Lim. “So we decided to sacrifice some beauty space at the front, for example, in order to give fashion a better visibility.”
Next stop on our tour takes us behind some temporary barriers and into a beauty store under construction that, as mentioned earlier, will feature colour, fragrances, beauty tools and lifestyle brands. This shop was due to open earlier in the year but CDF-Sunrise decided to upgrade the flooring to high-end marble, complementing the luxury brand image it seeks to convey.
When completed, this stylish store will feature a range of big colour brands, including YSL, MAC, Tom Ford and Bobbi Brown, Gucci and Burberry. There will also be a special focus on CDF-Sunrise exclusives as the retailer seeks to differentiate its proposition from international rivals.
Wines, Champagne, single malts and Chinese spirits excel
CDF-Sunrise is also revamping its liquor and tobacco zones. Brand personalisation is key to the new look and, reflecting growing popularity, a single malt whisky concept is being introduced. Lim and CDFG are also working hard to convince BCIA to allow in-store tasting, which has traditionally not been allowed in Mainland China.
An impressive focus has been placed on Chinese spirits, notably the Baiju brands of fast-growing Luzhou Laojiao Company, Luzhou Laojiao and Guojiao 1573 (Luzhou Laojiao last year became an associate sponsor of the Australian Open, one of the Grand Slam tennis tournaments – the largest Chinese sponsorship deal in the tournament’s history) and Kweichow Moutai.
CDF-Sunrise plans to introduce a dedicated zone called House of China, which will offer a diverse range of Chinese tobacco and liquor brands. The platform for success is certainly there – Chinese spirits sales grew by +200% year-on-year in June, driven by the introduction of a much wider product range and Baiju’s inherent popularity with Chinese travellers.
“It’s now my number one category,” says Lim, “close to Cognac and whisky combined. Unlike the southern part of China, such as Shanghai or Hong Kong, where Cognac is very popular, here we are focusing more on malt whisky and wine. The Macallan, for example, is doing fantastically well and Champagne and wine are also growing fast.”
CDF-Sunrise is working closely with Australian wine producer Treasury Wine Estates to develop a high-class cellar concept, anchored by the popular Penfolds brand. Other planned developments include a new food concept within the liquor and tobacco store; a walk-in cigar humidor; and a white spirits corner. Lim is convinced that if CDF-Sunrise can offer white spirits tastings, the multi-category will flourish.
“A lot of people challenged me about white spirits, saying they are not big in China. But I say that white spirits is a fun thing and don’t forget that our passenger profile is getting younger,” he points out. “Look at what the Bacardi group is doing in Shanghai… you can follow their WeChat account and every Friday they do white spirit-mixed cocktail tastings in a lot of pubs in the local market.
“So, sooner or later this way of drinking will rise up. I’m gearing for the future… this to me is additional business, which means that we capture a different customer base. We cannot just stick to saying, ‘Chinese drinkers only like spirits such as whisky and Cognac [and Baiju]’.”
All in place for Daxing opening
CDFG has worked around the clock to have its stores ready at the capital city’s new Daxing International Airport. With the airport set to be formally inaugurated on 30 September, it was critical to have the stores (in departures and arrivals) looking good for what will be a huge public occasion in China.
CDFG will operate some 5,000sq m of space at Daxing, a retail footprint that has the considerable benefit of being close to the boarding gates, thanks to the design of the airport. “Even the furthest gate is only about eight minutes away from our shops,” says Lim. “So it’s very conducive to retail.”
These are intensely busy but hugely exciting times for CDFG and CDF-Sunrise with multiple development projects in high-profile locations underway. Lim admits the pressure is relentless but says the company’s commitment to raising the quality bar makes every day rewarding. One thing is clear, the great Chinese capital will soon have an outstanding retail offer across not just one, but two magnificent airports.
PICTURE GALLERY – ARTIST RENDERINGS AND PRE-OPENING IMAGES COURTESY OF CHINA DUTY FREE GROUP
[The Moodie Davitt Report will bring you dedicated coverage of the Daxing International Airport opening and commercial offer in a special report in coming weeks].
