Moodie Davitt STUDIO* is proud to introduce the premiere of Moodie Davitt CHECK-IN, a quarterly video series in association with William Grant & Sons-owned Hendrick’s – a most unusual premium gin.
In this series, The Moodie Davitt Report gets in behind some of our biggest stories, offering not only the facts but that critical element missing from so much travel retail industry journalism – voice.
Each episode zeroes in on stories that have stood out to us in recent weeks.
In the premiere edition, The Moodie Davitt Report Founder & Chairman (and Moodie Davitt STUDIO Founder) Martin Moodie takes viewers to South Korea and China, the two great North Asian travel retail heartlands, for a highly personalised take on recent market developments.
Having visited South Korea every year since 1990, Moodie draws on his experience to put the duty-free sector’s current restructuring in historical context. He details the channel’s glorious rise and rise from 1980, courtesy of the respective Japanese, Korean and Chinese consumer waves, before things started to go wrong from around 2015.
“Five-year licences, too much competition, excessive commissions – has Korea’s golden duty free egg cracked?” Moodie wrote in 2017 amid an almost crazed proliferation of duty-free retail licences and a relentless surge in the ultimately debilitating reseller business.
“Cash cows killed off; chickens coming home to roost; golden eggs cracking, the metaphors were flying as South Korea’s duty free sector plunged into crisis – not of revenue but of profitability,” Moodie recalls, citing the devastating double blows of the 2017 THAAD crisis between China and South Korea, which saw the collapse of Chinese group tourism, and in 2020, “the mother of all crises, COVID”.
Those desperate challenges saw the transformation of the Korean market from one where people bought goods they desired to ones they wanted to resell. The term daigou – both in small guest and bulk reseller form – became a critical element of travel retail parlance – and sales. During COVID, some 90% of business was being done with almost the volume resold into China.
Moodie contends the world’s biggest duty-free market had become a “one-trick” pony, an over-reliance on a sector that left retailers perilously exposed when the Korean authorities cracked down hard on the daigou business in 2024.
Take such an over-sized chunk out of the market and where does the trade go, Moodie asks? “Koreans mainly buy at the airport, and today, many Chinese prefer to buy at department stores or from boutiques in Seoul’s buzzy streets alongside locals rather than in the artificial environment of a duty-free store.”
Moodie quotes LVMH North Asia Group President Michael Schriver, who says, “I truly think the downtown duty-free model as we once knew it driven by group tours is becoming – if it isn’t already – obsolete.”
So, as Korea’s duty-free industry navigates a profoundly challenging transition, reinvention is the name of the game, Moodie contends. And that is already being seen in a blitz of highly creative ‘K-culture’ campaigns unveiled by leading travel retailers.
He concludes on an optimistic note that Korean duty free has always been world leading in creativity terms, a quality that should serve it well in a much-changed market and world.
Seismic change as China Duty Free Group acquires DFS business in Macau and Hong Kong
Moodie then turns his attention to China Duty Free Group’s recent blockbuster acquisition of the DFS retail network in the Special Administrative Regions of Hong Kong and Macau.
“I broke that story and I have been very close to it before and since,” Moodie relates.
“I have been a huge admirer of DFS down the years. From the early days of Co-Founders Bob Miller and Chuck Feeney selling liquor and cars to the American fleet based in the Mediterranean, to their latter-day retail empires built first around the Japanese consumer and then, from the early 200os, the Chinese, DFS were always just best in class.
“For a long time they were also the biggest, towering above all rivals in both airport and downtown duty-free worlds. No-one for years could live with DFS’s power, standards or allure to the Japanese. And those that tried were quickly crushed.”
As with Korean duty free, the initial Japanese wave was followed by the Chinese equivalent, a wave DFS rode triumphantly in its extraordinarily successful Macau expansion.
Perversely, as in the late 1990s with the Japanese, what hurt DFS and ultimately prompted the break-up of its erstwhile empire was its intense focus on that single consumer group, the Chinese.
Throw in the impact of COVID from 2020, the general softening of Chinese travellers’ overseas spending, their growing focus on experiences rather than shopping while travelling; and intense competition from online and cross border ecommerce and you had the perfect storm looming. And eventually, alas, it blew into town, Moodie notes.
While it all represents an anti-climactic, in fact sad, ending for DFS, for China Duty Free Group and its parent China Tourism Group Duty Free, the deal is excitingly transformational. It builds on the state-controlled, publicly listed retailer’s domination of an encouragingly resurgent Hainan offshore duty-free sector, myriad Mainland China operations, and already strong presence both on- and off-airport in Hong Kong and Macau.
Based on his discussions with China Duty Free Group leadership, Moodie says the retailer’s mission is not simply to sustain the DFS legacy but to build on it. “It’s going to make for compelling viewing,” he concludes.
And, so, we hope, will Moodie Davitt CHECK-In. Please enjoy our premiere. ✈
*ABOUT MOODIE DAVITT STUDIO
Moodie Davitt STUDIO, the acclaimed video content creation arm of The Moodie Davitt Report, recently relocated from Hainan to Shenzhen, China, as part of our Asia Pacific expansion plans.
Moodie Davitt STUDIO creates high-quality film content tailored to brand owners, retailers and airport partners, adding a critical dimension to our multi-format storytelling for the global aviation and travel retail sectors.
The team is led by The Moodie Davitt Report Founder & Chairman Martin Moodie in Hong Kong and Shenzhen-based Videographer, Editor and Director Alexander Roux.
Alexander will be filming at the forthcoming TFWA Asia Pacific show in Singapore. If you would like to talk to us about an on-location shoot, please contact Irene Revilla at Irene@MoodieDavittReport.com
{Above: In this striking 2024 Moodie Davitt STUDIO production, we bring you highlights from House of Suntory’s Kogei Collection whisky masterclass at TFWA Asia Pacific in Singapore; Below we visit Hamad International Airport and Qatar Duty Free in our acclaimed Airport Wonders of the World series and discover Zhuo Zhou Shanlan Rice Wine in Hainan}
