CHINA: CHINA DUTY FREE GROUP (CDFG)
A number of important strategic moves during the year will undoubtedly, as predicted, see CDFG climb the new global operator rankings when they are published by this publication in October.
TRBusiness
free space. CDFG also collected the arrivals
duty free contract at Guangzhou in 2017, alongside five others at Chengdu, Kunming, Nanjing, Qingdao and Urumqi airports. In June, CDFG scooped the
reliable sources at CDFG and discussions with other travel operators in China - Ed].
Above: Charles Chen, President, CDFG.
Guangzhou success During the Trinity Conference in Bangkok a month later, Chen revealed to TRBusiness that the company was targeting DF&TR sales of approximately RMB15bn ($2.2bn) in full-year 2017. CDFG was unavailable to confirm
the full-year result at the time TRBusiness went to press on this report, but a number of important strategic moves during the year will undoubtedly, as predicted, see CDFG climb the new global operator rankings when they are published by this publication in October. Chief among its late-2017 coups
was the Guangzhou Baiyun Airport T2 duty free contract in October 2017 for a period of eight-years. CDFG has been operating all the
departures shops at the airport since 2008 and adds T2 to its portfolio this year. The new terminal is expected to yield around 33,000sq m of duty
T2 and T3 duty free concessions at Beijing Capital International Airport (BCIA). This timely move followed
CDFG’s 51% acquisition of Chinese travel retail rival Sunrise Duty Free, as broken exclusively by TRBusiness. The merger ensures CDFG
possesses a presence across all three Beijing and Shanghai airports and boosts its 230-strong network of border, airport and downtown stores.
HK renovations In April last year, the joint venture CDF-Lagardère Company scooped the liquor and tobacco contract at Hong Kong International Airport, where it operates eight stores over 3,400sq m of space. A source close to the project
updates TRBusiness that an extensive renovation programme, which has been underway for some months, is close to concluding. “Next year is very interesting
in terms of e-commerce and downtown and there is a lot of opportunities, including on Hainan island, which we are preparing for,”
M1nd-set: Chinese top global spend rankings
As reported in the TRBusiness Top 10 Spending Nationalities report, Chinese consumers supplanted South Koreans at the top of the spend rankings in DF&TR.
Significantly, Chinese consumers account for a sizeable 21% of the global airport duty free market, exclusive research courtesy of m1nd-set’s Business Intelligence Service (B1S) reveals. What is more interesting is the
nationality’s share of international traffic stood at 6%, behind other top ten ranking passengers from the US (9%) and UK (8%), which clocked in at eight place and second place, respectively for spending. Globally, increasing in-store
penetration – and conversion – levels remains a perpetual challenge for retail
82 TRBUSINESS
operators, however m1nd-set’s data indicates that once Chinese visitors are within a duty free shopping environment, quality retail engagement really does count. While the purchase decision moment
veers heavily towards pre-departure to the airport (50%), a high number also decide to buy instore (31%). Purchase motivations centre firmly
on self-consumption (56%), closely followed by gifting (31%), sharing (8%) and purchases on request (6%). Price comparisons among buyers (78%)
edged slightly higher than that of non- buyers (71%), but more interestingly is staff engagement levels. According to the data, 77% of visitors interact with sales staff but 70% of buyers
that choose to interact are actually influenced by staff to purchase. Price advantage (41%) is the top reason
to visit a duty free store, while a lack of motivating promotions/sales (26%) ranked as the top purchase barrier.
Data courtesy of m1nd-set’s Business Intelligence Service (B1S) database, based on more than 55,000 interviews at around 50 airports from all around the world. Interviews are conducted at the
departure gates, just after finishing shopping (or non-shopping). Spend ranking based on amount spent
when shopping in DF&TR in association with international travel data from the B1S database.
MAY 2018
Strong growth momentum in Chinese tourism augers well for China Duty Free Group.
Chen told TRBusiness. Regarding
e-commerce
specifically, China Single’s day sales hit approximately $25bn on 11 November last year, a figure that Chen says is ‘far beyond people’s imagination’. “Online shopping indeed will
produce a considerable impact on street shopping, but we can look at this issue from another perspective, that is, the relationship between e-commerce and travel retail is not competitive but complementary,” he added. “Our Sanya store continues to see
a fast growth in sales. “In January to November of 2017,
five million people visited our store, a year-over-year growth of +24%, while duty free sales grew +32% year over year, which is in part attributable to offshore duty free e-commerce.” «
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