SINGAPORE. Asia Pacific Travel Retail Association (APTRA) President Sunil Tuli has hailed the steady recovery of travel in the region and highlighted trends that will reshape travel retail in coming years as new consumers enter the market.
His comments come ahead of the TFWA Asia Pacific event in May where the association will be organising two events. As reported, it will host a networking lunch on 7 May and an APTRA Exchange conference session on 8 May.
Tuli said: “The region is forging ahead in recovery mode and the latest forecast from APTRA research partner ForwardKeys, in research produced for APTRA members, points to an overall recovery of international departures from Asia-Pacific of 53% of 2019 volumes in Q2 2023. As such, a steady, solid progression is clearly apparent – including highly positive spending patterns – and, ultimately, this should materialise into a solid, manageable and stable base for the region’s full recovery.”
He added: “These figures are encouraging and clearly demonstrate the extent of recovery in major markets in APAC. The Chinese traveller recovery is still in its infancy largely due to earlier capacity constraints, but this is easing week on week, with tour groups starting to travel again to key destinations including New Zealand and Thailand where China was the largest market before the pandemic.
“In late March CAPA Centre for Aviation reported that, after nearly three years at very low levels, China’s airline capacity has been rising steadily since January 2023. In the week of 20 March 2023, weekly international seats reached 25.9% of 2019 levels in comparison to a 9.7% recovery rate at the end of December 2022.”
Travel retail in 2023
For the travel retail industry in the region, APTRA said that 2023 kicked off on a positive note, notably as China opened its borders after three years of pandemic-related restrictions.
Tuli said: “Across the region, APTRA is receiving reports from our members of positive trading with examples of ‘revenge shopping’ now from Chinese travellers. While other nationalities may have reverted to more typical purchasing behaviours, with more people generally travelling in 2023 the prospects for travel retail in the region are highly positive. At least two markets (Singapore and Australia) have actually exceeded their 2019 duty free revenues for the same period.”
The rising middle class in Asia Pacific
APTRA also identified a positive trend for travel retail – the continuing rise of the middle class in Asia, a segment that generates the majority of consumer growth. Citing October 2021 figures from the World Data Lab, the middle class population in China and India is expected to increase by +6%, exceeding the +0.5% anticipated growth this decade in the West. More than one billion Asians – 75% of whom live in India and China – are expected to join the middle class category by 2030.
This significant shift offers the travel retail industry an opportunity to engage and serve these eager consumers, APTRA said. It added that this change would demand innovation and personalisation in products, categories, retail experience and customer service, to maximise the luxury USP of the travel retail market.
Additionally, APTRA predicted a demand for prime space for new retail categories such as wellness and athleisure and in new cross-category partnerships and collaborations – all as part of the reinvention of travel retail across both physical and digital touchpoints.
As the largest market for duty free products, Asia Pacific should surpass pre-pandemic levels in late 2023 or early 2024 amid the return to normalcy and increase in customer demand.
Advocacy and regulation
APTRA again highlighted the need for a collective representation within APAC to influence the region’s 45+ governments as the association promotes its advocacy work.
APTRA remains vigilant on regulatory matters that may impact the travel retail industry, with issues ranging from new sales restrictions on tobacco to increased sustainability standards in packaging and product sourcing.
Tuli said: “To help the industry make the most of the recovery period, APTRA is working on several advocacy campaigns to support the case for increased allowances in priority markets and, although this type of influencing can be a slow process, it is an important priority.
“It is worth noting that many governments have returned their attention to regulatory reforms and this is a particular focus for APTRA. In fact, this is the busiest time in the history of APTRA. We are currently working on a record 11 campaigns spanning advocacy, regulation and issues.”
Meanwhile, APTRA will also will also host its Annual General Meeting online on 3 May between 3pm and 4.30pm Singapore time. The meeting will include the biennial board election. ✈
