Introduction: August has been a landmark month for Hainan Tourism Duty Free Shopping Complex, the downtown Sanya travel retail store run by licence holder Hainan Tourism Investment Duty Free Co (HTDF). Over the past four weeks, the retailer has introduced a wide array of fashion and high-end brand stores and added some 59 brands to its cosmetics and fragrance zone, ranging from niche cult favourites to high-end names. A senior HTDF spokesman told The Moodie Davitt Report Chairman Martin Moodie about the latest developments and also how the store has developed since it opened in late 2020.
The Moodie Davitt Report: Can you sum up the major achievements since Hainan Tourism Duty Free Shopping Complex opened on 30 December last year and also update us on the latest improvements?
HTDF: After intense preparations before the opening and continuous efforts since, Hainan Tourism Duty Free Shopping Complex has successfully attracted more than 700 international and domestic brands, covering 45 offshore duty free categories. Brand placement has been completed in 95% of the operating area and the remaining 5% is reserved for top luxury brands in accordance with high-end commercial investment practices.
How do you assess revenue performance?
After eight months of trading, the sales are relatively satisfactory. The store has been continuously improved in accordance with the company’s business plan and is currently in the leading position among the new duty free operators [in terms of sales].
This achievement is inseparable from the contribution of every employee of Hainan Tourism Investment Duty Free Co. From the preparatory period to the present moment, employees have been operating at full and even overloaded capacity. Everyone is working very hard, and we are building a team that is highly capable, efficient and dedicated.
In addition, the various government departments which provide multi-dimensional business environment assistance for HTDF, and the guidance provided by the Hainan Tourism Investment Development Co. Ltd to its duty free business, are all boosting our continuous growth.
HTDF has recently introduced a range of new brands. What details can you share?
First of all, we have introduced many brands that have entered the offshore duty free market for the first time, and currently they are exclusive to HTDF.
They include Tasaki, 13De Marzo, Mark M, Boy London, Joyrich, Li-Ning, Sensai, Ahava, Gellé Frères, Axxzia, Cellcosmet & Cellmen, Erno Laszlo and so on.
We hope to create the most comprehensive and richest fragrance brand portfolio in Hainan’s offshore duty free sector. In terms of apparel, we created a differentiated positioning around the concept of ‘trendy fashion space’, whereby we introduced a range of popular brands from Europe, America, Japan, Korea and China that young people love. This is part of our plan to better serve young consumers.
In addition to the introduction of more mainstream international brands, Hainan Tourism Duty Free Shopping Complex has also created a boutique fashion store with niche brands as the mainstay. This is an interesting and perhaps suprising move. What considerations and criteria do you have in terms of brand selection?
First, we fully investigate the level of market demand and consumer enthusiasm. Then we actively expand supply chain channel resources, and select brands that have dynamism, high growth, and brand confidence in terms of domestic market development. The two parties should also share a common market awareness in terms of negotiation and investment.
Travel retail has increasingly embraced digitalisation over recent times, accelerated by the pandemic. What progress has HTDF made in terms of digital transformation?
The concept of ecommerce and digital new retail is becoming more and more popular. In particular, the younger generation of consumers has grown up, and the post-90s and 00s have gradually become the core customer group in terms of luxury consumption. They are very accustomed to the online shopping model.
Operators must pay attention to the online business while simultaneously creating characteristic physical stores. We believe that to achieve true digital transformation, we must first understand our various communication channels and platforms and their positioning, and then customise the content according to the user attributes of these different platforms.
Secondly, from the perspective of user experience, the process must be simple and operable. We have launched our own app and WeChat shop, and we are still in the process of continuously optimising them.
Due to climatic factors, Hainan’s tourism market has obvious seasonality. How can HTDF offset this dependence on key seasonal business?
Actually, the off-peak season has not been so obvious in Sanya over the past two years, but the unpredictability brought about by the pandemic has greatly increased.
This year, due to a recurrent outbreak of COVID-19 in some areas, the number of tourists during the Spring Festival and summer holidays in Sanya dropped significantly year-on-year. We have been using such time to practice internal discipline and improve our own capabilities. We look forward to serving our guests with an enhanced spirit after the tourism environment improves.
Note: Every fortnight The Moodie Davitt Report publishes Hainan Curated, in association with Foreo, a selection of all recent stories from the offshore duty free sector in Hainan province.
Click here to view all back issues. Please email Sinead@MoodieDavittReport.com to subscribe free of charge.
