Trading in Asia
The address preceding the opening of the exhibition was delivered by TFWA’s president, Erik Juul-Mortensen, who expounded on the factors driving growth in Asia Pacific, namely the investments made by the region’s airports and airlines, the innovations brought about by brands and retailers, and the rising importance of China and India.
Last year, Asian airlines carried over 143m passengers, and developments in the industry have seen Cathay taking over Dragonair for $1.4bn, making it the largest airline in the region. There have also been significant developments with regards to the low-cost airlines, some of which have made a strategic shift in their operations by launching long-haul flights – for example, Oasis flying to Europe and Jetstar flying to Australia and New Zealand. “The development of the low-cost airlines,” Juul-Mortensen said, “means an increase in traffic in the region, and low-cost doesn’t mean low spend in retail.”
These developments have no doubt been helped by the innovative approach taken by many airport retailers, from Narita’s 5th Avenue at Terminal 2 or Hong Kong’s Sky Plaza. The retail environment is such that Seoul’s Incheon Airport reached $903m in sales, thus threatening Heathrow’s number one position with only 28m passengers a year. Incheon’s CEO, J E Lee, has the ambition to not only become number one, but also double sales by 2012.
Juul-Mortensen also pointed out that “given the right environment and offering, consumers are willing to spend and treat themselves if they believe that what they buy is not readily available in domestic.” And with the rising number of travellers from China and India, it is in the retailers’ – and the suppliers’ – best interests to make sure that the offering is varied, original and presented in the best possible setting.
China will have about 50m outbound passengers by 2010, and this is likely to double to 100m by
2020. With an increasing overall spend in duty free, the potential Chinese travel retail market represents an astounding $19bn.
India, on the other hand, is not yet as developed as China in terms of travel retail, but things are changing fast, particularly with the recent spate of bids for retail operations at the country’s international airports. India is the second-fastest growing economy in the world and is set to become the world’s third largest economy in the next five years. The middle class is growing fast and with domestic retail reaching US$250bn, the potential for this country’s duty free market is staggering.
The TFWA exhibition itself was deemed to be a resounding success by most exhibitors. While some sat at their posts with a schedule full of appointments, others went from one stand to the next with barely any time to draw breath. This show is particularly notable in that the quality of the visitors is extremely high and ‘unwanted’ visitors are rare, if there are any at all. Moreover, they are more inclined to sign a deal on the spot and have the authority to do so, making every appointment vitally important.
With 199 exhibitors and 1,977 visitors (up by 1% over last year), the TFWA Asia Pacific exhibition might not seem like the largest and most frequented, but it certainly is an event that no company doing business in the region can afford to miss. n
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