SINGAPORE. The global duty free and travel retail business grew at a healthy +8.1% to reach $68.6 billion last year, according to preliminary figures unveiled at the TFWA Asia Pacific Conference in Singapore, themed #TRevolution.
In his opening address, TFWA President Erik Juul-Mortensen revealed that the channel expanded more than three times as fast as in 2016 (based on Generation Research data). Asia Pacific was the driver with a rise of +11.6% to top the US$30 billion mark, outshining other regions.
“With this performance Asia Pacific continues to lead the world with a 45% share of global sales,” noted Juul-Mortensen.
Europe was up by +6.1% to US$20 billion, the Middle East +5.9% to US$5.9 billion, the Americas +4.4% to US$11.3 billion, while Africa trailed, growing at +1.6 % to reach US$0.8 billion.
From a category perspective, beauty led the way with growth of +13.8% to US$24.5 billion, pushing its already dominant market share even further ahead of the number two category, wine and spirits, which was up by solid +9.2% (also ahead of the channel average) to US$11.4 billion.
The influence of beauty was even more noticeable in Asia Pacific where the growth was just shy of +20% to US$14 billion and followed again by wines and spirits at +12.9% to US$3.9 billion.
‘At a serious disadvantage…’
These generally strong results were presented with a call for action by Juul-Mortensen, as he also did at the TFWA World Exhibition in Cannes last October. He said: “The data is not infallible. There are markets where we know a lot, and others where we know very little – and there is still a debate as to what constitutes duty free.
“As an industry we are putting ourselves at a serious disadvantage if we cannot define what we are and what we are not. The lack of reliable global industry data is of increasing concern.
Despite previous efforts by the association, the reluctance of industry stakeholder to share data is holding the business back, said Juul-Mortensen. He said that TFWA “will not walk away from this issue” emphasising that “it is too important and our future depends on it.”
Joining the digital ecosystem
Moving on to the conference title, #TRevolution, Juul-Mortensen touched on themes such as digital engagement and mobile payment which would be discussed in greater depth during the course of the day.
He cited some the rise of m-commerce as a key emerging factor: 67% of mobile commerce sales today are conducted by Chinese consumers, underlining the size of the opportunity for travel retail to invest in mobile payment solutions. [For more on this subject see a special feature on mobile payments in the May Interactive Edition.]
“China is far ahead in online payment systems,” says Juul-Mortensen. Alipay and WeChat are the two key online payment platforms in the country which allow Chinese shoppers to enjoy cash- and card-free purchases.
Juul-Mortensen urged the travel retail industry to embrace and introduce smartphone and digital payment. “It is essential,” he says. He added, that as the passenger journey between home and the airport becomes ‘always connected’ the channel “needs to be part of that digital ecosystem”.