“Tremendously Exciting Conference” Comes to a Triumphant Close in Sanya

 

With the suppliers’ exhibition in full flow, on day two of the event, the conference sessions today focused on airport behaviours and passenger research. 

In our first session of the day, Shanghai Hongqiao’s General Manager of Business Management, Ms Theresa Tam, explained that Hong Kong Shanghai Management is a proactive landlord. She described some of the measures they are taking to support retailers in the airport to maximise their opportunities with shoppers. 

In the session, she was joined by Ms LU Ping from Dehang Business Company, which runs the retail and communal areas of Sanya Phoenix Airport. Ms Lu’s presentation looked in detail at how a new programme of branding, design and redevelopment will employ local artisans and craftsmen to create ethnic details, with local music. 

She pointed out that Sanya is China’s only tropical city, so a key focus for the airport is to reflect that atmosphere, so that the holiday (an subsequent tourist spending) continues throughout the departure process. She said that a number of retail lines had been chosen or designed specifically to appeal to leisure tourists and that many products reflected key cultural elements   

She referenced many of yesterday’s sessions, saying that the conference had been both inspiring and timely for her, because of this process. Some of the ideas discussed are already part of the new plans for Sanya Phoenix, while others would certainly be put to good use. 

Meanwhile, Jason Cao, an independent Duty Free and Travel Retail industry consultant (following 12 years at Sunrise Duty Free), encouraged  Chinese companies to create their own international brands.  He recommended they try more methods of international branding and marketing, and increase investment in the travel retail channel.

The new “China PAX Focus” study by JMG-Research investigates the travel retail habits of flyers living mostly in Beijing and Shanghai, focusing on product category consumption, purchase planning, consumer attitudes and perceptions of the travel retail industry. Founder Jérôme Goldberg gave an excellent and data-rich presentation, offering insight into the shopping trends of these brand-target city dwellers. A few of the key facts were:

  • 25% do not enter airport duty-free shops, while 75% do
  • 58% looked at Perfumes & Cosmetics
  • 46% looked at Confectionery & Fine Food
  • 45% looked at Tobacco
  • 44% looked at Fashion & Accessories
  • 40% looked at Wines & Spirits
  • 53% of men visited Tobacco outlets, vs. 36% of women
  • 68% of women visited Beauty outlets, vs. 49% of men
     

Again, the message emerging from this research was clear; shoppers in China are generally untrusting of retail and are very aware of what constitutes good and bad value. The behaviour which unites savvy Chinese shoppers is planning and research before purchase; Mr Goldberg’s research found they research most or all of the following:

  • Which category they will buy
  • Which brand they will buy
  • Which product they will buy
  • Which specific styles they will buy (size, color, etc.)
  • At what price they will buy
  • Where they will buy
     

Next was a session of detailed presentations about domestic duty-paid retail opportunities. Domestic passengers account for around 80% of all air travel in mainland China, so catering for these passengers’ retail needs, without the benefit of duty-free sales, is vitally important for the commercial future of Chinese airports. 

Ms HE Dongmei, Manager of Chengdu Shuangliu International Airport’s Commercial Management Center,  XIE Bingxin, Chief Economist at Guangzhou Baiyun International Airport and Meng Qian, Sanya Phoenix Airport’s Vice GM of Operation Development discussed what they are doing to meet the needs of domestic passengers. 

Ms He spoke first, about the challenges for creating a retail environment in such a fast-growing airport (36m pax, 20,000m2 ), in such a thriving city. It isn’t just pandas – she said the GDP for Chengdu is around RMB 800Bn, with 300 of the world’s biggest companies running offices or factory facilities there. 

She said the airport is keen to act as an “ongoing support service for retailers” and they always “help those retailers to gain the necessary licences”, which is not always the case with domestic airports. 

She said because of the broad demographic mix, the airport retail strategy had to combine domestic and international brands, for high- medium- and low-end markets. Luxury brands are kept separate, with a central area 2000m2 (featuring brands such as Hugo Boss and Montblanc). 

A similar mix was applied to the airside food offering, with major food brands such as McDonalds and KFC, alongside local food outlets, such as hotpots and noodles.

The airport redevelopment has been well received, she said: evaluations from the public are very positive. They have 6000m2 allocated to local products – such as pandas, pyjamas, tea, crockery & Tibetan souvenirs. The aim has been to create an airport where people want to spend more time, to encourage them to arrive earlier for flights in the future.

Xie Bingxin spoke about the airport of another major Chinese business centre: Guangzhou. “In domestic airports in China”, he said, “hardly anyone will think to go shopping.” He outlined the three major steps they are taking to tackle this:

  1. Introducing more international brands, as each brand has its own consumption group. The strategy is to encourage high- medium- and low-end retail and food offering, tailored to meet the needs of all customers.
  2. Balancing aero and non-aero revenue is crucial. Guangzhou Baiyun airport is one of the top three domestic hubs in China, with 48m passengers (expected to rise to 51m this year). They are currently recruiting an authorised business agency to look at leasing out up to 50,000m2 of new commercial space.
  3. Launching new program for frequent passengers – there is a plan to launch a frequent visitor card, with VIP lounge access and other premium services for platinum members.
     

Echoing earlier points addressing perception of value for Chinese shoppers, Xie said “In Guangzhou airport, the media reported that the prices are quite expensive, so these brand introductions will enforce some control over the prices. We have imposed a price-control mechanism. For the food and beverage, biscuits for example have a price cap.” He also said that now the airport reflected the same prices as downtown – which is very important. 

Questions and comments from the audience during the day considered:

  • The importance of encouraging brands to participate properly in domestic airport travel retail – one comment suggested that many western brands “use Chinese airports as a 3D advertising opportunity”.
  • Destination travel: it was said that 50% of Chinese domestic travel retail are  destination-specific products, so airports need to learn how to do that better – it was noted that Chengdu have done that well, but most don’t.
  • Liquor: one delegate said that there are no legal restrictions on selling liquor, but the “law is open to local interpretation” in the various provinces of China. It’s not allowed at this moment.

This well attended conference was met with enthusiastic discussion of the most important issues affecting airports and duty free operators in China today. In Mr Moodie’s summary of the event, he said that this had been a “tremendously exciting conference” at a “pivotal time in the Chinese travel retail industry’s evolution”.