Few cruise destinations can match the Caribbean, dotted with dozens of islands and shopping possibilities in the shape of convenient onboard shops and port duty free stores. Some of the big names in duty free are building up capacity to match the boom in cruises.
An indication of the importance of cruises to the local economy is on the island of Grand Turk, where the cruise line Carnival opened a major cruise terminal in 2006. On the small island of Aruba, Lesser Antilles, Swiss-based global travel retailer Dufry alone operates five perfumes & cosmetics shops, with a surface of 735sqm. The stores are located downtown and at the seaport, which last year had over 600,000 cruise ship passengers visiting.
Dufry is also in the process of opening a seaport shop for cruise line passengers at Santo Domingo, Dominican Republic. Its acquisition of the travel retail assets of the Luis Bared family in Puerto Rico and other Caribbean locations continued Dufry’s concerted expansion in the region.
The island of Cozumel, off Mexico’s Yucatan Peninsula, is another favoured cruise stop, and here Aldeasa operates a general duty free store under a concession that has been extended until 2016. The largest proportion of sales is in the traditional duty free product families of liquor, tobacco, packaged foods and fragrances. However, the focus of the product ranges is on cruise ship passengers, which Aldeasa views as being considerably different from airline passengers.
“The product with the best sales overall is liquor, which together with fragrances represents some 70% of our sales,” notes an Aldeasa spokesperson. “It goes without saying that the beverages that are most in demand are tequila followed by Kahlua.”
Aldeasa is considering an expansion of the commercial space that it manages at the Cozumel Port as well as once again opening a kiosk at the port, to replace the one destroyed by Hurricane Wilma in October 2005. Together with the new Terminal 3 at Cancún Airport, the restoration of the port facility will put to rest the destruction wreaked by Wilma, from which sales at Cozumel are still recovering.
The Mexican Tourism Board reported in March that in the course of 2006, 6.52 million cruise ship passengers disembarked in Mexican ports, down 2.8% from 2005. It cited damage to leading cruise ports like Cozumel as the reason for the decline. On a positive note, those passengers spent $458.3m dollars in Mexico, up from $452.6m the previous year.
Although there is a close interdependence between the cruise lines and the stores that serve their passengers, none of the operators contacted by Frontier acknowledges any plans to form a strategic alliance with any of the ship owners. For Aldeasa, neither a closer relationship with the cruise lines nor any onboard store operations represent a strategic objective, the spokesperson comments.
But the passengers’ spending power (and absence of baggage weight limits) is definitely a boon for local suppliers, especially when the goods for sale are representative of the region, like cigars. “Cruise ship passengers and tourists play the leading role in the consumption of Habanos products in travel retail,” says Addis de la Fuente, international travel retail supervisor for the renowned Cuban cigar maker. “Even when the Habanos cigars are not available onboard, cruise passengers can easily buy them once they arrive at port.”
Habanos has positioned its stores to be “unavoidable” for cruise ship passengers. Examples are the La Casa del Habano store and Cigar Emporium in Aruba; the cigar shop Cave Sheaper in Barbados; the Little Holland shop in Curaçao; and two La Casa del Habano outlets in St Martin (Guadeloupe) and St Maarten (Netherlands). Other stores are present in the Bahamas, Bermuda and Martinique, and go as far as Grand Cayman, south of Cuba, with both a La Casa del Habano store and a Churchill Cigars Shop.
Caribbean Cigars Corporation, based in Curaçao, is the exclusive distributor for Habanos cigars through a regional network of specialised cigar shops including five La Casa del Habano shops. The cigar business is flourishing over the years in this region, and at present Habanos market share is around 90% of the total premium cigars sales in the region.
For other suppliers it is the onboard shopping that really makes the difference. Charles Pelegrin, vice president of Bijoux Terner, says that the cruise ship business is the company’s number one sales channel. On board 144 ships worldwide, and growing, Bijoux Terner has found the perfect clientele among the Caribbean holiday cruisers.
In the winter season, up to 80% of the cruise lines travel to the region, including the major lines like Carnival, Royal Caribbean, Holland America and Norwegian Caribbean. “The average sale on these cruises is of 5 to 6 items per passenger,” says Pelegrin. “It is huge!”
Among the best-selling items, number one is watches, followed by bags (both travel and evening) and sunglasses. More Bijoux Terner boutiques are then available on shore at all the main Caribbean ports, such as the Dominican Republic, Puerto Rico, Barbados (with six shops) and Curaçao, to name just a few. But Pelegrin says that here customers are mixed, and not necessarily cruise ship passengers, as the on-board shops are becoming bigger and better supplied everyday.
“We have been onboard cruise lines since January 2001, and our partner is Starboard Cruise Services. At first we had limited retail space, but the passengers’ response was such that soon we were allotted more floor space, and this trend is growing on board of all the cruises where we are present.”
Pelegrin explains that recently a Celebrity Cruise ship closed down a fashion boutique to allow space for Bijoux Terner. Given the recent trend for ships to become bigger and bigger, that can only bode well for suppliers of fashion accessories, essential as they are for life on a cruise ship.
Retailers need to adapt to more activity at the smaller end of the market as well – examples include Windstar Cruises’ luxury voyages on motor/sailing yachts to some of the less frequently visited destinations. Purveying to this select clientele is a natural extension for operators in the exclusive environment of duty free.