USA. From worries over “e-commerce invaders” to “challenging ourselves to do better”, a top panel of speakers, moderated by The Moodie Davitt Report Founder & Chairman Martin Moodie, gave their views on the industry’s current state and future direction at the Summit of the Americas on Monday.
The session was entitled ‘Plotting a Positive Travel Retail Future in An Uncertain World’. The four speakers were: L’Oréal Managing Director Duty Free & Travel Retail Americas Yannick Raynaud; Brown-Forman Beverages Worldwide Senior Vice President and Managing Director Marshall Farrer; JT International, Worldwide Duty Free Corporate Affairs and Communications Manager Mariana Stangl; and Dufry Americas Divisional CEO Latin America & Caribbean Rene Riedi.
There was consensus that the global travel retail business had performed well last year and that the signs were also positive for 2019. However for the Americas region, the outlook was much less certain.
Penetration, digital and alternative channels
“Traffic is up but spend is down in this region so we have an issue with penetration,” said L’Oréal’s Raynaud. “In our zone, Americans are the biggest share of travellers but only 2% of them are consuming duty free. The region is also challenged because of currency.”
E-commerce was a key concern for Marshall Farrer at Brown-Forman. He said: “Latin America is challenged by so many dynamics but the potential way forward is to capture the wave of e-commerce in travel retail.”
While the domestic markets of Brazil and Mexico were “on fire” for the company “we’re having trouble converting some of that to growth in travel retail”.
JT International’s Mariana Stangl said that the tobacco shopper was “a big opportunity for the industry”. She maintained that one in four shoppers are smokers, that 90% of them have pre-planned their tobacco purchases and that 77% of them do actually purchase. “This is the highest conversion rate among the categories,” she said.
Digital was a core theme for Riedi at Dufry. “For us the digital transformation is something we are looking into very deeply,” he said. Alternative channels such as cruise and border were also cited as important diversifiers from airports in a volatile region.
Performances seemed to be improving the further north one travelled in the Americas. South American countries remain a “mixed bag” held back by economic headwinds in Argentina and to a lesser extent in Brazil. The central zone and the Caribbean were doing significantly better, while the North American market remains generally solid.
Wish lists
Speakers also vocalised their wish lists for travel channel. Farrer cited the lowering of tariffs in China and Europe which were currently costing his company US$125 million a year, “an enormous number that has implications for our ability to further invest in travel retail”.
Regulatory pressure on her category prompted Stangl to call for the industry “to protect defend and champion the duty free concept” against any legislative threats.
Building on this theme, Riedi added: “We must be aware of the regulatory threats (such as) Mercosur border shop restrictions on products that can be sold. I can’t praise enough the work the associations are doing in this respect.”
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