Looking at the global duty-free market, China is a rising star. However, in the year after Hainan established the free trade port and became the world's largest "offshore market", it has led the international Hainan duty-free market for two consecutive years with a growth rate of 103.7% and 84% year-on-year, or it will become a pioneering demonstration of the free trade zone opening up the duty-free market after the regional economy spread throughout the country, and at the same time, it also provides a sample for the fashion industry to use the duty-free market to open up a new situation.
In 2021, Hainan's duty-free sales will exceed 60 billion. The optimization of supporting services, the construction of the industrial chain, and the benign market competition order, these policy empowerments are the foundation and backing for the rapid development of Hainan's duty-free market. However, from the perspective of tax-free business entities, it is also crucial to differentiate operations and gain insight into consumer needs and lead the market.
At present, there are 5 outlying island duty-free business entities and 10 outlying island duty-free shops on hainan island, with a duty-free operating area of 220,000 square meters. In this new competitive relationship, there are both industry leaders China China Exemption, as well as the international duty-free giant DFS with a history of more than 60 years, as well as local state-owned enterprises in Hainan such as Hainan Travel Investment Duty Free and Hainan Holdings Global Consumer Boutique Trading Company, as well as Shenzhen Duty Free, which is running into the market, and there will be more enterprises waiting for the opportunity to win the duty free card in the future to queue up to enter and share the Chinese dividend of "expanding the domestic duty free market and competing for the return of overseas consumption".
There is a kind of analogy in the word of mouth from the consumer market: in Hainan, every day is Double Eleven. According to incomplete statistics, during the National Day holiday in 2021 alone, the Hainan Duty Free Market sold more than 2 million pieces of goods, with sales of 1.47 billion yuan.
According to data released by the Hainan Provincial Bureau of Statistics, in the first half of 2020, the epidemic led to the beginning of international travel restrictions, and the retail sales of duty-free goods on the outlying islands of Hainan Province were 8.572 billion yuan, an increase of 30.7% over the previous year; among them, which was often the off-season of Hainan tourism in June, the retail sales were 2.299 billion yuan, an increase of 235% year-on-year.
In Sanya, Haitang Bay International Duty Free City has almost become an attractive tourist destination with blue skies and blue seas
From July 1, 2020, the new tax exemption policy for Hainan outlying islands was officially implemented, and the annual tax-free sales of outlying islands were 27.48 billion yuan, an increase of 103.7% year-on-year, while the breakthrough of 60 billion yuan in 2021 was an increase of 84% year-on-year.
Another set of data comes from market entities operating tax-free operations: according to incomplete statistics, after the 8th tax-free license in 2020 was spent in Wangfujing Group, there are 12 companies in the tax-free license application stage, including many tourism companies such as Zhongxin Tourism and Lingnan Holdings.
From China's China Exemption, which already has a dominant position, to the newly entered Sea Travel Investment, China Service, Haifa Control, Shenzhen Exemption, etc., to the return of Hainan's international giants - the international duty-free giant Dufry signed a strategic cooperation agreement with Hainan Holdings, LVMH's luxury tourism retailer DFS cooperated with the Shenzhen state-owned duty-free industry that just got the Hainan outlying islands duty-free license - the rapid progress of duty-free merchants more fully illustrates that Hainan's duty-free industry is in a historic window of opportunity.
Looking back at the impressive performance of the Hainan market in 2021, Nancy Liu, who is currently the president of DFS China, said: "Hainan is indeed a treasure land that is booming, which proves that the overall planning of the Hainan Free Trade Port has been fully on track, and Hainan will undoubtedly become an international tourism consumption center in the future. ”
How much consumption potential can the Hainan market, which continues to be bullish, release in the future? The 2022 layout plan of China Zhongwai is also an answer to the imagination of the future market space. According to Wang Xuan, deputy general manager of China Tourism Group China Exemption Co., Ltd., in 2022, China Exemption will focus on creating duty-free boutique projects: first, expand the area of Sanya Duty Free Shop and introduce more brands; second, renovate and upgrade haikou Airport Duty Free Shop to improve quality and shopping experience; Third, ensure the opening of Haikou International Duty Free City, which will become the world's largest duty free shop after completion.
After the completion of Haikou International Duty Free City, it will become the world's largest duty free shop
When everyone has deeply understood that the Hainan duty-free market is a veritable "big cake", and there is a constant release of policies and increasing opportunities for entry, how can rookies open the market when the Chinese and foreign duty-free giants have completed the initial layout? How can the tax-free giants with their own advantages show their long boards and continue to impress consumers?
For many years, luxury travel retailer DFS, backed by the LVMH Group, has been the preferred destination for Chinese customers when traveling overseas, with more than 80% of its customers coming from Chinese mainland. Years of experience have given DFS a clear understanding of Chinese consumers.
As President of DFS China, Nancy Liu said with insights into Chinese consumers: "The maturity of Chinese consumers is the world's leading. ”
Although, during most of the holiday season, Hainan's duty-free market is crowded, and it is difficult to define the mainstream consumer user portrait of Hainan's duty-free market. However, looking at Hainan's consumer market from the perspective of DFS, we may be able to glimpse one or two from the micro. According to Nancy Liu: We have seen a variety of different styles of people in Hainan, but what is more special is that we have also seen an influx of many people with cutting-edge perspectives and mature consumption concepts. They typically travel the world and shop at other DFS stores, such as Venice, Paris, Sydney, or Hawaii. These consumers, who are currently unable to travel abroad as before, have come to the beautiful Island of Hainan instead.
As far as the global fashion industry is concerned, the next stop of globalization is to firmly capture consumers in the local market, and the same is true in the offshore market in Hainan. DFS provides products, services, and creates experiences based on the preferences of Chinese customers. From a strategic point of view, it is necessary to grow your business closer to your customers. As a result, Shenzhen Duty Free x DFS Mission Hills Haikou Duty Free Mall is a great opportunity to unleash deeper opportunities behind the excellent location advantage of Chinese consumers' favorite domestic resorts.
Consumers competing for duty-free shopping cannot rely solely on offering cost-effective goods.
Last year, CTS Travel and CTS Duty Free jointly launched the "Free to Enjoy Hainan" free travel series of products, all tourists who purchase this series of products spend in Haitang Bay Sanya International Duty Free City, on the basis of participating in the various promotional activities in the store, and then enjoy discounts, which can be stacked with specific vouchers. Under the multiple offers, it attracts many consumers outside of regular travel.
In addition, providing extraordinary luxury retail experience, a fully optimized omni-channel strategy, and a full range of online to offline travel retail experience are all indispensable strategic deployments in Hainan's duty-free market entities. In addition, while continuously expanding categories and brand cooperation, it has also become an important measure to cater to the needs of Chinese consumers and markets.
DFS's approach is that Hainan continues to leverage its award-winning expertise in store design, luxury marketing and marketing campaigns, combining the latest retail technology with avant-garde retail concepts, with more premier, exclusive and "pure beauty" brands launched in 2022.
Tax exemption is an oligopolistic market, but just as China, as a rising star in the global duty-free market, has amazing explosive power, the new entrants to the duty-free business have their own different advantages.
Strengthening customer loyalty with a sound point system is the consensus of all retailers. Admittedly, China, which has an 8-year history in Hainan, has more advantages in the point system. In terms of shopping experience, each family is different. Even, the short board will become an advantage.
Sanya Hailu Duty Free City constantly adjusts the brands and shelves to provide a better shopping experience and form its own differentiated advantages
Taking Hai travel exemption as an example, because the flow of people is relatively small, the shopping experience occupies an absolute advantage at the current stage; before the balance of traffic and operation, the brand is continuously optimized, the growth of the brand is verified by the market, the withdrawal of the cabinet is eliminated and the optimization adjustment is being carried out, and the brand matrix is constantly upgraded. At the same time, through the points and preferential system of brands and stores, when the designated counter needs to be full of three pieces of 30% off, Hai travel can achieve 30% off across brands and stores.
Mission Hills Haikou Duty Free Shopping Mall "One Day Meets the World" Experience Zone
DFS, with its more distant history, takes the scene experience a step further, with its cooperation with The Mission Hills Haikou Duty Free Shopping Mall as an example, in its retail space of 20,000 square meters of "One Day Encounter world" experience zone, where every consumer can feel as if they are in Venice, Sydney or Macau, China, and have an immersive experience.
It is an indisputable fact that Chinese consumers are the most digital consumers in the world.
In Bain & Company's recently released China Luxury Market Report 2021, it is expected that the growth rate of online sales of personal luxury goods in China will reach about 56%, compared with 30% offline. Excluding sales from Hainan duty-free shops, the overall online penetration of China's luxury market will reach about 19% in 2021. If you count the online penetration rate of Shanghai South Duty Free, the overall online penetration rate of China's luxury market will reach nearly 26%.
Retailers who carry out duty-free business in Hainan have fully realized the role of online channels, established their own channels through official WeChat accounts, mini programs, etc., not only through coupon methods to serve online consumers the same promotion efforts, but also transplanted value-added services such as goods mailing and modification of flight information to online channels, providing great convenience for consumers who do not have enough time or are accustomed to online methods. Even if they have left the island, consumers can still satisfy the unfinished shopping pleasure through online channels within a specified time. In this way, whether consumers can visit physical stores or have left the island, they can complete duty-free shopping at any time - in other words, duty-free sales penetrate themselves into the largest possible time, space and scene range by making good use of consumers' digital capabilities and habits.
In the past, Chinese contributed half of South Korea's duty-free sales, and the proportion increased year by year; it contributed 30% to Japan's tourism consumption, ranking first in the world; mainland tourists spent 100 billion yuan shopping in Hong Kong every year... Before the epidemic, consumption outflow reached 700 billion, and 70% of the luxury consumption of Chinese people occurred abroad. After the epidemic, the return of consumption has led to a comprehensive increase in sales of domestic taxable shopping malls, and once gave birth to a "shop king" such as Beijing SKP. And the tax-free channel, due to the benefit of the new tax exemption policy on the outlying islands, to achieve double sales growth, the formation of explosive potential, the next step of domestic retail will be like where?
At the macro level, in 2022, when fiscal easing continues, the top-level design and market participants have a common goal, that is, to drive and release the potential of the internal circulation and consumer markets more deeply. From this point of view, the Hainan duty-free market, which thrives in the global duty-free market, is a sample of China's retail industry. How to break through the borders and achieve an outbreak? The Hainan Revelation provides an idea. WWD
Written by Li Jun
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