By Marco Passoni
Asia Pacific is one of the most talked-about regions in our business and this week, the eyes of the travel retail sector will be on it as we touch down for the TFWA Asia Pacific Conference & Exhibition.
I, for one, am delighted to be back in the city to discuss the future of travel retail and how both Asia Pacific and all of us can and will shape it. However, the truth is that Asia Pacific’s impact on travel retail is not the same as it once was. It has changed forever. Before the pandemic, the Chinese shoppers were the most sought after in the world – they travelled widely and spent highly. That outlook has changed. Despite constant hopes from many corners, this travelling group has still not recovered and data suggests that even if they do, their spending habits have changed forever.
But into this gap have stepped the shining travel retail light of Hainan which has dominated China’s new domestic focus, the incredible potential of the Indian market and the growing importance of places such as Vietnam. And, for all this, Asia Pacific still, for me, has much to show us about the future of our market.
As we begin our meetings in Singapore, I would like to share with you my key talking points for the APAC market:
Retail experiences
The move away from travel retail and international spend especially has come in line with a growing focus on domestic spend in China. This hangover from the pandemic has become a major trend in the region and is leading to the creation of some incredible bespoke branded experiences in the country. Just recently, we have seen Jacquemus’ coffee and flower shop pop-up inside a handbag, alongside Louis Vuitton’s book and gift shop, all showing how successful innovative and branded use of space can be. It is a lesson travel retail must learn from.
Shopper demographics
The demographics of those shopping in Asia Pacific have shifted, with the dominant outbound nation, China, not having fully recovered, and those who are travelling seeming to be increasingly younger, solo and in search of experiences over products. This change highlights the vital importance of not only truly understanding our shoppers in every location, but also tailoring our offer to them. Young Chinese shoppers, like their counterparts in Europe, Australia and around the world, have become used to a brand and retail experience which speaks to their personal needs and interests – if travel retail cannot deliver then they will go elsewhere.
The bigger picture
It is not just about China today. While Hainan remains a hot topic, and the Chinese will always be an important part of the market, the look of the APAC business in travel retail has changed. India is a huge potential market, with a young population which outstrips that of both China and the US. Hong Kong has seen impressive recovery as a luxury market, after being written off in recent years, while Western Australia’s Perth is emerging as a hotspot for luxury investment and locations such as Vietnam are emerging as real players on the luxury stage.
Digital Engagement
Recently, Alipay+ announced plans to move into Saudi Arabia to entice Chinese shoppers in the market. This is just one example of how important not only digital is in Asia Pacific, but getting digital right. Shoppers in parts of this market especially have become used to interacting directly with brands across their digital outlets and they expect that same, unfiltered experience from all platforms. These are consumers who will demand more than just simple tricks, they want true newness.
A new world order
Asia Pacific remains one of the true leading markets in travel retail, but this industry is arguably even more global now than once it was. Alongside India, Africa is beginning to show its potential to the market and recovery and growth in both Europe and the Americas continues. Meanwhile, Asia Pacific is beset by the challenges which often befall fast risers, as regulations and other challenges hamper brands’ continued growth. This is a market which continues to show us the way in some areas, but this global industry should never make the mistake of getting tunnel vision again.
I look forward to seeing many of you in Singapore over the days ahead, and if you would like to catch up please email me on marco.passoni@20partners.com.
