VANUATU. Two months’ worth of business: that is the immediate loss that Cyclone Pam has left for travel retailers in Port Vila, the scenic capital of the sprawling archipelago that is Vanuatu.
On 13 March Pam ripped through the central islands of Efate (site of Port Vila), Erromango and Tanna, bringing winds of up to 300 kilometres per hour. In its wake: 16 deaths, thousands homeless and widespread damage to buildings.
Loss of roofs, downing of trees and flooding hit downtown Port Vila, causing water damage to some of the duty free stores at the heart of this tourism-driven economy.
Fortunately most concrete buildings in the commercial centre withstood the wind’s fury, and both Port Vila’s wharf and its Bauerfield International Airport suffered only minor damage.
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Cyclone Pam’s impact is evident in the April tourism statistics released by the Vanuatu National Statistics Office |
But with three of the major hotels out of action for the near future, and March passenger arrivals at Bauerfield down a third year-on-year, retailing has suffered.
Travel retail group Pacific Retailing kept all of its 45 staff on despite the drop in custom, helping with minimising the losses many had already suffered to their homes and livelihoods.
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Campbell Beeson, Managing Director of Pacific Retailing, at the group’s new Elysium store |
Insurance has not covered the group’s outlays, and Manging Director Campbell Beeson notes that it will be some time before tourism fully recovers – although signs are promising.
“A few weeks after the cyclone cruise ships began to return, but a higher proportion of passengers than before were remaining on board for the first couple of visits.”
The importance of getting tourists back to Vanuatu is emphasised by Kevin Fung, General Manager of downtown retailer Fung Kuei.
“Port Vila lives on tourism and duty free,” he says. “Tourism contributes upwards of 40% of GDP, and cruise ship passengers have doubled in the past five years.”
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Kevin Fung, General Manager of Fung Kuei, maintains the Fung family’s decades-long retail activity in Port Vila |
Where downtown duty free lives on
As in the halcyon days of Australian downtown retailing, Port Vila’s travel retail industry centres on sales made downtown, placed in sealed bags and collected at the wharf or airport.
Leading duty free retailers Fung Kuei, Pacific Retailing and Paris Shopping all have collection points at Bauerfield International.
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Liquor is a key element in the Paris Shopping portfolio in both Arrivals and Departures (pictured) at Bauerfield International Airport |
Paris Shopping also has held the Arrivals and Departures duty free concession at the airport since the early 1990s. Liquor is the main attraction in Arrivals, with liquor, fragrances, apparel and destination merchandise central to the airside Departures store.
Paris Shopping’s large downtown store leads on fragrances, with prominent displays of Chanel and Dior perfumes and skin care. It has a strong liquor selection, Polynesian pearls and jewellery, porcelain, travel accessories and tobacco including Cuban cigars.
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Paris Shopping’s main downtown store in central Port Vila |
Pacific Retailing incorporates some well-known retail names in the region. Campbell Beeson’s father established the business in Port Vila in the 1970s, and reacquiring it in 2005 led the younger Beeson to again control Prouds Duty Free, The Sound Centre and Downtown Duty Free.
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Prouds duty free store in downtown Port Vila |
Each retail brand occupies distinctive positioning. “Prouds is a mid-level fashion department store with a duty free focus,” Beeson says, “while The Sound Centre is mostly a domestic brand business.”
Downtown Duty Free, which adjoins The Sound Centre, targets the visiting tourist.
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Some of the friendly staff at Prouds |
Fung Kuei is the oldest of the duty free businesses. Established in the 1940s by Kevin Fung’s late father, Fung Kuei entered duty free in the 1980s after Vanuatu’s newly independent government authorised the business.
Duty rates in Vanuatu today range from 5% to 20%, with an additional 12.5% VAT.
From beginnings with fragrance, liquor and tobacco, Fung Kuei has steadily expanded into categories like Swiss watches and writing instruments. Liquor is the duty free mainstay, even more so with the recent tightening of customs restrictions in Australia and New Zealand having curtailed most tobacco sales.
Fragrances remain strong, led by the big brands like Chanel and Dior. “What’s popular in Australia and New Zealand is what’s popular here,” Fung says.
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A section of the extensive fragrances offer at Fung Kuei |
New attractions for growing cruise ship trade
Port Vila receives an average of three international flights a day, mostly from Australia and New Zealand. Tourists coming by air tend to be higher spending than cruise ship customers, but the volume business is from ships’ passengers.
“The duty free business was initially more reliant on air traffic, but the growth of the cruise industry has changed that,” says Fung.
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Annual cruise ship passenger visits to Vanuatu; each horizontal bar represents 50,000 passengers |
“People are going for shorter cruises of ten to twelve days, mostly from Australian ports but also from New Zealand, and a Vanuatu-New Caledonia cruise fits well into that timeframe.”
Annual cruise visitor traffic tops 260,000, while airport passengers number under 30,000.
Port Vila attracts most ships, with growing numbers calling at Luganville (on Espiritu Santo island), where wharf expansion is underway to accommodate larger ships. Smaller islands such as Pentecost and Mystery Island are also appearing on cruise routes.
Vanuatu’s government is seeking to encourage more passengers to disembark when in port, and the travel retail sector is playing its part.
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Cruise ships on the horizon: typically a visit to Port Vila sees a ship dock in the morning and depart by early evening |
In November 2014, Pacific Retailing added a further store to its segmented store portfolio: Elysium Fine Jewellery – Swiss Watches, a duty free boutique that brings many exclusive brands not previously seen in Vanuatu.
The 90sq m store, located on the Lini (Kumul) Highway in Port Vila’s commercial heart, showcases brands including TAG Heuer, Longines, Rado, Tissot, Oris, Victorinox, Ls, Allure South Sea Pearls, Swarovski and Gucci Jewellery.
“With Elysium we feel that we have taken duty free in Vanuatu up a notch,” Beeson says.
Strong growth in cruise ship tourism is underpinning the new offer. In 2009 there were around 60 cruise ship visits a year; now there are 120 a year, and today’s ships from the likes of Carnival and P&O have increased capacity.
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Prouds features an extensive jewellery and watch offer |
Further increases planned for 2016 are setting Vanuatu travel retail up for better times.
Part of that growth has been with cheaper cruise packages, attracting passengers with lesser disposable income. Profitability therefore depends on serving the higher-end consumer making a longer-stay holiday while continuing to see increased volumes of mainstream consumers.
Domestic demand looks likely to grow as well. Elysium, for example, has reached a higher than expected number of local residents.
“The importance of duty free is that it gives the local market access to brands they might not otherwise be able to enjoy,” Beeson observes.
Overall, a visit to Port Vila underpins what a key element travel retailing is in the economic prospects for this developing nation.
That role is doubly important as these scenic, friendly islands get back on track from one of its worst-ever natural disasters.
Vanuatu: Inbound duty free allowances
Passengers over 15 years of age may bring into Vanuatu:
• 250 Cigarettes or 100 Cigarillos or 25 Cigars or 250 grams of Tobacco
• 2 litres of Alcohol
• 9 litres of Beer
• 2 litres of Wine
• 25 centilitres eau de toilette
• 10 centilitres perfume
• Plus other goods to the value of VT50,000 (US$460), excluding restricted or prohibited items.
Source: Vanuatu Customs & Inland Revenue Department
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Chanel and Dior are key brands for Paris Shopping |
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Significant savings power purchases of liquor by cruise ship passengers at Fung Kuei |
