Note: This is an edited version of the full article about Mountain Glory [峰尚荣耀], which can be viewed in the launch edition of 穆迪达维特中国旅游零售报告 – The Moodie Davitt China Travel Retail Report. The digital magazine is dedicated to our industry’s hottest market and to the travelling nationality that has dominated the travel retail sector for much of the 21st century.
CHINA. Welcome to Mountain Glory [峰尚荣耀], a retail proposition that is targeting surging interest among Chinese consumers in winter/summer and alpine sports, a dynamic spurred by the successful Beijing Winter Olympics and Paralympics held earlier this year.
Mountain Glory has attracted heavyweight Hainan government backing as well as the involvement of some of the most-respected names in travel retail worldwide.
The company behind the concept is Hainan Zhihuo United Culture & Sports Industry Co, an entity founded in March 2021. Key focus areas include an Expo dedicated to imported sports goods, sporting-themed duty free retail, a sports industrial park and even a sports town.
The company, established under the guidance and support of relevant government departments of Hainan, is focused on the development of sports resources in the island province – a key tenet of the province’s far-reaching Free Trade Port Programme.
On 27 December 2021, the firm created a subsidiary called Zhihuo Culture & Sports Technology (Hainan) Co. Ltd with sport-focused duty free retail as its core business. As the chart below reveals, China’s sport retail sector is booming, spurred by a key government programme called Health China 2020 launched in 2015 which was designed to boost national fitness and wellbeing.
Since last December, things have moved fast. An agreement has already been signed with Shenzhen Duty Free Group to open a four-floor standalone 4,000sq m store in a new building at the retailer’s acclaimed operation at Mission Hills, Haikou, in
time for Chinese New Year in 2023.
The company will also showcase the Mountain Glory concept in a 60sq m exhibition area at the China International Consumer Products Expo (Hainan Expo) that is being held this week from 26-30 July. The event is considered an ideal high-profile opportunity to promote the sports retail concept together with Shenzhen Duty Free Group. Discussions are also well-advanced with other Hainan duty free retailers.
The stakeholders involved in the project believe it has huge potential. Today, some 50% of Chinese people regularly take some form of regular exercise while an estimated 100 million serious sports enthusiasts generate an estimated consumption value
of RMB60 billion (US$8.9 billion). And that is where Mountain Glory enters the scene.
“The boundary between sport and fashion has been broken,” says Zhihuo Culture & Sports Technology (Hainan) Co General Manager Jessica Lan, a highly experienced travel retail executive and formerly Operations/Marketing Director of HTDF, who also
held several senior positions with the Hainan Duty Free company.
“Luxury brands and high-end sport brands are pursuing this key opportunity. Ice and snow sports, and camping and hiking are becoming more and more popular in China and camping’s upsurge will turn into a more representative ‘mountainous’ lifestyle.
This evolving consumer dynamic is creating big opportunities both for famous international brands and more niche labels which are reaching out to a fast-emerging customer base.
“Last year the government hosted an exhibition for imported sports merchandise. It was the first one in China and it was held in Hainan,” says Lan. “The Hainan government wanted to attract all the international sports brands to come to China. Following the exhibition they had the idea to develop this sports duty free shopping concept. And after a lot of research, we realised that this category could be a ‘blue sea’ – there is a lot of potential.
“Today, the middle class people and the rich in China care much more about their health. This trend had started earlier but then we had the Winter Olympics which accelerated things and winter sports became really popular in China. Also, since COVID, outdoor activities have become very popular and people want to show others that they are using or wearing some internationally famous brand. So, for example, very expensive camping equipment has become popular while a lot of businessman and middle-class people are now much more into these sport activities and they want the most professional equipment.
“That’s why we realised that imported sport brands have a very high demand in China,” she adds, noting that duty free retail can also benefit from consumer faith in the integrity of the channel – in contrast to a high degree of fakes on the local market. “Duty free is a very good channel because everybody knows there is no fake product in it.”
Lan points out that many luxury brands have begun to focus more in recent years on the casual wear market, identifying a big incremental growth opportunity in China. “Another interesting phenomenon is that a lot of high-end sport brands want to become a luxury brand – they want to be the next Lululemon or next Canada Goose,” she says.
“There are a lot of sports retail companies but we believe we have the only team with such a luxury retail background. We know how to protect and promote the image of luxury brands and also how to help high-end sports brands come luxury brands.”
So far, reaction from the island’s duty free retailers has been extremely encouraging, says Lan. “The retailers on the island are realising that there is not enough differentiation. Everyone is selling the same products and competing on price. But since we approached them with this new concept, they have realised that high-end sports merchandise has a future in China, so the response has been very positive.”
Lan says that while many luxury brands have sports-focused lines, such ranges do not tend to command much space in local market shopping malls and tend to be bunched with other sports brands in less prime positions.
“So we want to create an environment where we put the spotlight on the sports brands. We don’t want to be like a normal store and just put the merchandise on the rack – we want to elevate the environment and experience to show the character of different sports merchandise from different luxury brands. They cannot get this kind of opportunity downtown.
“Sport has a very big future in China, but I don’t think the luxury brands have such an opportunity in their flagship shops because they cannot make their stores too sporty. Whereas we can help position these lines to a Chinese audience and in a different kind of retail environment.”
Excitingly, Mountain Glory won’t simply be about selling merchandise. “We are not just creating a shop but a place where you can experience the real sports activity,” says Lan. “You will be able to gain knowledge of the various sports and also have fun exploring the whole concept.”
“We believe that we can meet the requirements of the n meet the requirements of the top luxury brands and also the top sports brands. We will combine them in a very nice way.”
Respected international partners
Zhihuo Culture & Sports Technology (Hainan) Co and Mountain Glory are benefiting from the involvement of psc development, a Swiss company which supports investors and entrepreneurs in developing and executing new concepts with a particular focus on the duty free sector.
The company is headed by René Dafflon, the long-time head of what was then the world’s second-biggest duty free retailer, The Nuance Group, and a much-respected figure in the travel retail community.
“We dream and deliver ambitious concepts, courageous brand purpose, guiding values and a sustainable brand mission,” says Dafflon of psc development’s philosophy. “All members of the psc development team are united by one vision: They want to contribute to the success of visionary concepts and are willing to invest their rich know-how, experience, and enthusiasm in
every project.”
The psc development team combines over 100 years of experience in the global duty free business, covering the brand side from a purchasing and product range design perspective, while also helping their clients with operational, financial, communications and other services.
Dafflon is supported by Michel Mignot, a renowned figure in the travel retail beauty sector who spent over 40 years with Dior and Chanel, much of it focused on the duty free market. Their colleague Lorance Dutreux Filler has held influential senior roles with Benetton, Nuance and others during a long and successful career (including guiding the launch of 22 shops at Hong Kong
International Airport in a partnership with A.S. Watson).
The company also includes Michael Egloff, a seasoned expert in brand management and corporate communications. Pertinently, he is also a sinologist, well-versed in the study of Chinese language, literature, history, and culture.
Dafflon is hugely enthusiastic about the Mountain Glory concept, one which adheres closely to a principle he holds dear. “Customers should leave the store with a smile, even if they have not bought anything,” is how he sums it up. While full details are still under wraps, when the customer visits Mountain Glory, “they will experience a trip to the world of the Alps, be it in Europe, the Americas, Japan or Korea”, he pledges.
“He or she can not only consume passively but be actively involved in the events – be it through a ski and snowboard simulator, a climbing wall, a snow tunnel which stimulates the senses or simply through the surrounding images.
“Hainan is the best place to develop duty free sports retail” – Jessica Lan
“Customers deserve better products than they so often seen in the monotony of this retail age,” Dafflon contends. “The concept is that while some 30-40% of the brands that we show might have a lower initial consumer awareness value, we compensate for this by showing the brands with their stories. That might be the basic idea of the founder, the history of the brand, a special recipe, an original application, details about their production quality or effectiveness.
“In the field of skincare – a useful complement to sports activities in the Alps, whether summer or winter – we emphasise sustainability, organic and the avoidance of animal testing.”
Dafflon adds, “With Hainan Sports Tourism Development Center and especially Zhihuo Culture & Sport Technology (Hainan) Company led by General Manager Jessica Lan, I and my comrades-in-arms at psc development have found a partner who shares and supports our vision and strategy.”
Dafflon says that contrary to the traditional approach of many international duty free retailers, the Mountain Glory approach is customer-driven rather than margin-driven. Given his lengthy experience in one of travel retail’s most senior roles, his overview of the duty free sector carries particular weight.
Dafflon believes that a traditional duty free store makes its sales based on three pillars – liquor, tobacco [not a factor in Hainan downtown -Ed] and perfume & cosmetics. “A significant increase in alcohol and tobacco is difficult,” he says. “These are usually habitual customers and it is more a matter of convenience and saving money and are subject to increasing restrictions.
“In perfumes and cosmetics, the power of money dominates the assortment. The business models are such that only the big groups can afford to have a strong presence with the result that all stores around the globe are alike and have more or less the same offer. And shop-penetration is globally around 15-20%. That means around 80% of departing passengers do not see any interest in the offering.”
[Click here to read Dafflon’s comments in full from the original article].
While holding some details back for now, both Lan and Dafflon promise that the consumer experience will bring a new dimension to Hainan duty free shopping. Customers will enter through a fog wall, for example, navigate an ice tunnel, view some stunning panoramas, enjoy ski and snowboard simulators, and be able to browse an eclectic range of goods.
From the ground floor, which offers sports equipment, sportswear, accessories and skincare within an upscale ambience, visitors traverse the store to the ‘Top of the World’ on the top floor. This is likened to Swiss luxury alpine resort town St. Moritz, representing the mountain sports hot spot through a combination of lifestyle, glamour and elegance on the top floor.
The luxury sports brands on display there are supported by appropriate design and merchandising and an almost intimate environment. The luxury floor will feature a dedicated reception area, a catwalk where the brands on display can hold their own fashion shows, a podium with piano, bar and semi-open but separated stores – all set amid appropriate alpine ambience and decoration.
All of this, says Jessica Lan, will create a shopping and experiential zone that is unique not only in Hainan but worldwide. “Hainan is the best place to develop duty free sports retail,” she insists. And based on the calibre and commitment of the stakeholders that may well turn out to be a prophetic remark.
