TAIWAN. Official proceedings for The Trinity Forum 2014 began today at the Grand Hyatt Taipei, where 340 delegates from around the world have gathered for the leading global airport commercial revenues conference.
This year’s conference theme, “˜Towards Cutting-Edge Retail’, aims to champion excellence and innovation across a range of areas from supply chain to social media, design to data capture, as well as exploring the upside potential of industry stakeholder collaboration.
In his opening remarks, The Moodie Report Chairman Martin Moodie gave praise to Taoyuan International Airport Corporation for its commercial vision and progressiveness in a market that is one of the most dynamic in travel retail. Taiwan is not only home to what he believes is the best airport in the world, but also to two of Asia’s leading duty free retailers: Ever Rich and Tasa Meng.
Moodie highlighted four recent events that are set to define travel retail’s modern story: Dufry’s acquisition of The Nuance Group, the opening of China Duty Free Group’s CDF Mall at the Haitang Bay International Shopping Complex, Sunrise Duty Free’s announcement of its e-commerce initiative, and, against the background of José Maria Palencia’s departure as CEO of World Duty Free Group, the latter’s drive to “pursue business combinations with other operators”.
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The Trinity Forum 2014 kicks off with a 340-strong attendance |
With major change coming to the industry, the Trinity concept – and the relationship between the three key stakeholders – is perhaps more important than ever, he noted.
ACI World Chair Fredrick Piccolo noted that retail concessions continue to be the leading source of non-aeronautical revenues for airports, making up 29%. Therefore, he added, “Retail planning should never be an afterthought” – and urged retailers to also consider the potential of smaller airports, many of which boast great retail.
Taiwan’s Minister of Transportation and Communications Dr Kuang-Shih Yeh noted that Taiwan welcomed eight million international visitors in 2013, with passenger traffic growing by double digits every year (more than +11% annually). The Taiwanese government has been supportive in helping Taoyuan International Airport grow its passenger numbers and boost tourism through initiatives such as iTaiwan, which offers all inbound travellers free Wi-Fi for up to 90 days. Dr Kuang also hailed the Terminal 3 project that he believes will transform Taoyuan into an East Asian hub airport. The “mega terminal project” will boast a hotel and a host of retail opportunities.
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The Moodie Report Chairman Martin Moodie marks the continuing evolution of the Trinity concept and the role of the Forum as a platform to break down the barriers to progress |
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Sarasota Manatee Airport Authority President & CEO of and ACI World Chair Fredrick Piccolo: “Retail planning should never be an afterthought” |
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Taiwan’s Minister of Transportation and Communications Dr Kuang-Shih Yeh says the Taiwanese government is committed to helping Taoyuan Airport grow its passenger numbers |
The first panel discussion features Qatar Duty Free Senior Vice President Keith Hunter, Aer Rianta International CEO Jack MacGowan, Taoyuan International Airport Corporation CEO David Hourng-Jiun Fei, and L’Oréal Group Travel Retail Division Worldwide Managing Director Barbara Lavernos, on the topic, “˜Raising retail ambitions to a completely new level’.
Opening the discussion was Jack MacGowan, who outlined some of the problems faced by the industry: two out of three international passengers never shop when flying, the erosion of the travel retail competitive advantage by other channels (downtown and online), the declining attractiveness of shopping in airports, and how technology – e.g. free Wi-Fi – is stealing shopping time. The key is to recapture the draw of airport shopping by changing the passenger’s mindset. MacGowan also suggested funding and expanding the remit of the Duty Free World Council or another industry body to create a consumer-focused arm to promote the airport shopping proposition.
Taoyuan International Airport President & CEO David Fei underlined the major commercial opportunities that will be available at the upcoming T3. Taoyuan’s current terminals 1 and 2 have almost reached their combined capacities of 32 million passengers per annum, handling 30 million in 2013. The new T3, at 385,131sq m, will have a capacity of 20 million per annum.
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Aer Rianta International CEO Jack MacGowan suggests creating a consumer-focused arm to promote the airport shopping proposition |
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Taoyuan International Airport Corporation CEO David Hourng-Jiun Fei underlined the major commercial opportunities that will be available at the upcoming Taoyuan Airport T3 |
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L’Oréal Group Travel Retail Division Worldwide Managing Director Barbara Lavernos: “Being consumer-centric must be our mantra if we want to succeed” |
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Qatar Duty Free Senior Vice President Keith Hunter talks about the merits of taking the commercial business in-house |
To fully mine the retail potential of T3, Taoyuan has conceived a new commercial strategy encapsulated by the acronym CSO: Commerce, Service and Operation. Key to revenue generation are three master duty free contracts with an extended concession period from six to 12 years, based on a fixed rent amount and a percentage of sales. The provision of public service facilities, such as toilet renewal and maintenance, are a requirement in these contracts. With the opening of the new mega terminal, Taoyuan aims to become more than just an airport; its next goal is to become an airport city – an “Aerotropolis” serving both the local community and passengers.
In her presentation, Barbara Lavernos declared: “Being consumer-centric must be our mantra if we want to succeed.” With that, she outlined the three key challenges for the Trinity: customer knowledge (we need to know them better to serve them better), customer experience (how can we engage with customers who are increasingly being wowed by retailers in other channels) and connected customers (how can we better reach out to customers digitally).
Keith Hunter noted the number of “distractions” present in an airport environment. At the new Hamad International Airport, Qatar Duty Free owns the retail and most of food & beverage, giving the company more control in maintaining service excellence. Hunter believes that taking the commercial business in-house has been instrumental to the successful delivery of a world-class retail and food & beverage business.
Adding to the diversity of speakers this year were Nomura International plc Executive Director, Investment Banking Consumer Retail Cay-Marco Fritsch and Dubai Duty Free Vice President Finance Bernard Creed, who offered a view of the travel retail industry from an investor’s perspective.
Examining several investor perspectives, Fritsch said that there is significant potential for investment in the travel retail industry for the next five, 10 to 20 years.
In a behind-the-scenes case study of Dubai Duty Free’s landmark US$1.75 billion loan in 2012, Creed demonstrated how the travel retailer leveraged its track record for success and vital position in Dubai’s economy to gain the confidence and backing of 26 major banks.
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Nomura International plc Executive Director, Investment Banking Consumer Retail Cay-Marco Fritsch (left) and Dubai Duty Free Vice President Finance Bernard Creed provide valuable insights into the investor perspective on travel retail |
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Knowing how to maximise non-aeronautical revenue is crucial for small airports, says ACI Director of Economics and Program Development Dr Rafael Echevarne |
ACI Director of Economics and Program Development Dr Rafael Echevarne highlighted the struggle of airports, particular those that handle less than one million passengers per year, to break even. Knowing how to maximise non-aeronautical revenue is crucial for these small airports. He added that an ASQ study revealed that several factors played a part in determining customer satisfaction at airports: the look and feel of retail facilities, the level of cleanliness, as well as cultural and gender differences. With these in mind, small airports can seek to increase vital non-aeronautical revenues by increasing customer satisfaction.
In a special segment on the importance of corporate social responsibility (CSR), Duty Free Philippines (DFP) Chief Operating Officer Lorenzo ‘Enchong’ Formoso and Ever Rich Duty Free General Manager Kevin Chiang talked about the initiatives their respective companies have undertaken to better the society. Formoso touched on how DFP Cares and the wider travel retail industry have helped to rehabilitate the Philippines in the wake of Typhoon Haiyan. Similarly, Ever Rich has initiated several disaster relief activities, as well as causes to provide children’s education and elderly companionship. Charity, Chiang explained, is no longer about simply donating business proceeds: it’s about donating resources, skills, manpower and time.
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Duty Free Philippines (DFP) Chief Operating Officer Lorenzo ‘Enchong’ Formoso speaks about how DFP Cares has helped to rehabilitate the Philippines in the wake of Typhoon Haiyan |
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Charity is no longer about simply donating business proceeds, says Ever Rich Duty Free General Manager Kevin Chiang; it’s about donating resources, skills, manpower and time |
The second panel of the day, themed “˜The power of investment in delivering a world-class retail and food & beverage proposition’, featured four speakers: Pernod Ricard Asia Travel Retail Managing Director Con Constandis, Maritime Mercantile International and Emirates Leisure Retail Group CEO Andrew Day, Furla Global Travel Retail Director Gerry Munday, and London Gatwick Airport Head of Retail Spencer Sheen.
Reminding the audience that consumers at airports are travellers first and shoppers second, Con Constandis said that the travel retail game “is all about conversion”. Using the Martell Experience boutique at Hong Kong International Airport and the Absolut store at Kuala Lumpur International Airport as case studies, he demonstrated how changing the approach from a pure “˜brand showcase’ to one that engaged consumers helped Pernod Ricard triple conversion rates.
Andrew Day stressed that the goal of the travel retail industry is to change the passenger’s perception of airports – to see airports as more than just a means to their final destination. We shouldn’t just “borrow their time” – alluding to Constandis’s earlier reference – we must make passengers want to shop there. He then highlighted the importance of F&B in elevating the overall airport experience: research has shown that consumer satisfaction in F&B leads to higher retail spend. “We want to be part of the “˜and’ of a good airport, not the “˜but’,” he emphasised.
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The travel retail game “is all about conversion”, says Pernod Ricard Asia Travel Retail Managing Director Con Constandis |
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Maritime Mercantile International and Emirates Leisure Retail Group CEO Andrew Day highlights the importance of food & beverage in elevating the overall airport experience |
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Furla Global Travel Retail Director Gerry Munday: fashion is a diverse category that requires a differentiated approach, a deeper understanding and a long-term perspective from airports |
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London Gatwick Airport’s billion-dollar investment has paid off strongly in terms of raising passenger satisfaction, according to Head of Retail Spencer Sheen |
In a forthright address, Gerry Munday asked: the fashion category is increasingly committed to travel retail, but is the travel retail industry becoming more committed to fashion? Fashion is a broad category that requires a differentiated approach, a deeper understanding and a long-term perspective from airports. More can be done by the Trinity to drive the category in terms of retail theatre, consumer engagement, events, experience, visual merchandising and staff training.
Spencer Sheen outlined how London Gatwick’s billion-dollar investment in improvements in the past few years has paid off strongly in terms of raising passenger satisfaction. Besides a transformation in the retail offer, Gatwick has enhanced the forecourt, check-in and security areas, the departure lounges and gates, runway and immigration halls.
The Design Solution Director Robbie Gill presented one of the most ambitious projects in the aviation world today: Abu Dhabi Airports’ Midfield Terminal. Set to open at 07.00 on 17 July 2017, the massive facility will feature 28,000sq m of retail and F&B space. Highlights include innovative retail formats such as “icon stores” and “retail pods” that offer unique branding opportunities and an Arabian market.
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The Design Solution Director Robbie Gill presents a series of renders of the remarkable retail offer to be introduced in Abu Dhabi Airports’ massive Midfield Terminal |
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Prism Skylabs SVP of Managed Services Cliff Crosbie quotes STORY owner Rachel Schectman: “Don’t think about sales per square foot, but experience per square foot” |
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Mighty Media Group Chief Enabling Officer Stephenie Rodriguez examines the use and potential of social and digital media among airports, travel retailers and brands |
Prism Skylabs SVP of Managed Services Cliff Crosbie noted the various airport retail challenges that impede the ability of companies to understand the customer experience. These include the lack of visual access into stores and brands and data on customer movement and product interaction. He then suggested several alternatives of working within these constraints, such as the utilisation of remote visual access and walk-by or crowd reports, which will help companies optimise their merchandising and staffing and increase sales and reduce costs. He concluded with a quote by STORY owner Rachel Schectman: “Don’t think about sales per square foot, but experience per square foot.”
Rounding off day one, Mighty Media Group Chief Enabling Officer Stephenie Rodriguez examined the use and potential of social and digital media among airports, travel retailers and brands. Alluding to concepts such as closed loop marketing and contextual intelligence, she put forth her own Trinity of disruptive technology in travel. The three essential parties that can work together to deliver closed loop are the closed loop marketing experts, airports and their partners.
[NOTE: Click here to view detailed coverage of the day’s proceedings via Moodie Live]
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Martin Moodie offers Jack MacGowan a teddy bear clad in an All Blacks jersey, as (scant) consolation for Ireland’s narrow defeat to New Zealand in a key rugby international last year |
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MacGowan has the last word after nominating Martin Moodie for the ice bucket challenge (below) |
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With the conclusion of day one proceedings, delegates moved to the newly opened Mandarin Oriental Taipei for the gala dinner. Hosted by Taoyuan International Airport and sponsored by Ever Rich Duty Free, the dinner was accompanied by a vibrant entertainment programme offering the best of Taiwanese culture, including a riveting performance by Ming Hua Yuan Taiwanese opera troupe.
A highlight of the gala dinner was the presentation of The Moodie Report’s first ever Humanitarian Award to Ever Rich Group Chairman Simon Chiang, in recognition of his commitment to charitable causes.
The Trinity Forum concludes on Friday. An in-depth report on the event will feature in The Moodie Report Print Edition for October.
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Ever Rich Group General Manager Kevin Chiang welcomes guests to the Gala Dinner and talks warmly of the ‘pride, passion and culture’ of Taiwan and its people |
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Ever Rich Group Chairman Simon Chiang accepts The Moodie Report Humanitarian Award for his company’s services to Corporate Social Responsibility in Travel Retail |
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The gala dinner’s entertainment programme offered the best of Taiwanese culture |
