USA. On the opening day of the Summit of the Americas leaders of the main duty free and travel retail organisations in the region – International Association of Airport Duty Free Stores (IAADFS) and Asociación Sudamericana de Tiendas Libres (ASUTIL) – voiced their key concerns about market trends.
In Monday’s executive conference session, at the Hyatt Regency Orlando, CEO of Motta Internacional, and Chairman of IAADFS, Erasmo Orillac, told the packed room: “Our customer base is changing substantially. People younger than 30 work everything off their phones from hotel reservations to shopping. These are our buyers of the future.”
Orillac said that the growth in e-commerce was worrying, especially in the consumer electronics category.
“These young people are our passengers of the future”
“In our own business we see an age gap. About 45% of traffic on our (Attenza) website comes from people 34 or younger. But when it comes to buying most are in the over 34 age group. Only 0.5% of our transactions come from the online business, and we need to see how we can improve that online performance because these young people are our passengers of the future,” Orillac suggested.
He said that consumers want convenience when ordering online including information on allowances, a wider product showcase, and easier pick-up. “But the main thing they ask is: what is the saving?” he pointed out. “It’s a substantial change we need to make to cater to this new generation.”
CEO of Dufry do Brasil and Bolivia, and ASUTIL President Gustavo Fagundes took a look at the market fundamentals in Latin America showing, in particular, how exposed the region has become to currency fluctuations.
The key markets in the region – Brazil and Argentina – both had contrasting GDP development with the latter market contracting at a fast rate towards the end of 2018. Other markets did much better: 2.7% for Colombia, 4% for Chile and for Peru.
“But there has been a weakening of local currencies against the US dollar,” said Fagundes. “Argentina has had a significant drop of 100% and Brazil also had a devaluation. This is important because our buying is pegged to the dollar so the purchasing power of citizens across the region is much lower and that makes industry growth very difficult.”
Border business down by 21%
As an example Fagundes cited the border business in Uruguay and Argentina falling by 21% last year. Meanwhile at his own company of Dufry, growth in Latin America was positive in the first quarter of 2018 before turning negative in subsequent quarters to end the year 3.5% down.
On the positive side, he was optimistic about the rounds of privatisation that had brought new airport operators to the region such as AENA, Vinci and Fraport. He told the audience that another round is expected from 2020 to 2022 including the main domestic airports.
Looking ahead, Fagundes outlined five main areas that ASUTIL will focus on:
– increasing the duty free allowance at airport arrivals stores and border shops
– ensure travel retail is a tool for economic and social development including infrastructure and job creation
– the modernisation of the industry including the use of technology to simplify customs clearance and speed up time to market
– guaranteeing the full assortment of products in the light of regulatory pressures
– the consolidation of relationships between all parties in the travel retail trinity to strengthen the overall business.
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