CHINA. Earlier today, Dufry AG and Hainan Development Holdings (HDH), a fully state-owned company of the Hainan Provincial Government, announced that they have signed a strategic cooperation agreement to develop opportunities in Hainan’s booming travel retail market.
The agreement reinforces Hainan’s status as the modern-day epicentre of the global duty free channel, through the powerful combination of respected provincial government-owned entity (Hainan Development Holdings) and global travel retailer leader (Dufry) in an ambitious multi-phase retail project. Moments after the announcement, Dufry CEO Julián Díaz spoke to The Moodie Davitt Report Chairman Martin Moodie about the agreement.
The Moodie Davitt Report: Julián, the Hainan announcement represents Dufry’s debut in the key Hainan market. Talk us through the significance please.
The common understanding with Hainan Development Holdings to develop opportunities in the Chinese travel retail market is a key step as it allows combining the skills of two distinctive market players.
Dufry contributes its global experience in customer profiles, procurement network and access to brands, as well as shop design and marketing. Together with the strong positioning of our local partner Hainan Development Holdings, this creates a powerful offer and an array of great omnichannel shopping experiences for customers in China, Hainan and other Asian countries.
The Hainan market has seen tremendous growth over recent years, particularly so since the new offshore duty free policy was introduced on 1 July last year. How transformative for Dufry – particularly in Asia – is this development?
Hainan is a very interesting market not only for its growth potential, but also for the specific customer profile and shopping habits of its visitors.
I think that our worldwide procurement network and the access to famous global brands within the major categories such as luxury products and watches, as well as perfume & cosmetics and spirits, is a major asset, which will contribute to the development of this market.
On the other hand, I also expect to transfer to other parts of our business the learnings which we will make in Hainan and China with respect to the in-depth use of digital technologies to engage with customers along their complete travel journey. As Hainan will be a major destination for several Asian countries and nationalities, this know-how also positively impacts our other operations in Asia and the engagement with Chinese travellers around the world.
The Hainan offshore duty free will be particularly competitive from early 2021 on, with multiple new operations in place. How confident are you of growth prospects for your partnership in Haikou with Hainan Development Holdings?
Hainan Development Holdings is a well-known and established player in Hainan, already holding a respected retailing position on the island and in its capital city Haikou.
This is important, as the shopping destination itself is already a strong attraction for Chinese customers. The increasing wealth in China and Southeast Asia provides an immense potential for new customers over many years to come, thus allowing us to further develop our presence in Hainan and China. Moreover, as Dufry is present not only in Hainan but also in connecting destinations, this is a double opportunity to serve these customers on departure and arrivals on both ends of their journey.
Any other message for the travel retail sector after the toughest year in Dufry’s and the travel retail sector’s history?
2020 has clearly shown that the key to success for our industry is the tight cooperation and the close relationship we have with our landlords and suppliers. This collaboration needs to be further intensified through new forms of collaboration adapted to the new environment.
The need to find common new solutions to overcome the 2020 crisis has shown the additional potential we have to evolve the offering and the customer access of our industry. But to be successful in serving the customer in a profitable way for all players, we need to reform the contractual relationships and increase the flexibility of the forms of collaboration.
This is ultimately a great opportunity to take key learnings out of the 2020 experience and use them to develop new win-win collaborative approaches for the future.
Hainan Island: Travel retail’s global hotspot The Moodie Davitt Report will publish a Hainan Island Special Report with the China edition of The Magazine in February 2021. Written by Martin Moodie and Dermot Davitt, it will explore how the offshore duty free business in China has become critical to the world’s leading brands across many categories. 海南：旅游零售业的全球焦点 穆迪戴维特报告（Moodie Davitt Report）将于2021年2月随The Magazine的中文版发表《海南特别报道》。该篇由马丁·穆迪（Martin Moodie）和德莫特·戴维特（Dermot Davitt）撰写，将探讨中国的离岸免税业务是如何变得对跨类别的各大全球领先品牌至关重要。 报告将覆盖以下内容：
The report will feature:
Contact Irene@MoodieDavittReport.com to partner with The Moodie Davitt Report for this special edition. |
