E-commerce has emerged as a shining light of continued commerce during the Covid-19 crisis, in particular as China started to emerge out of lockdown at the end of March and domestic travel returned in China.
A cross-market approach using digital giants such as Weibo, WeChat and online discounts has helped speed the recovery of Hainan’s duty-free market. The luxury island is an epicentre for the Chinese duty-free industry and many stores in the area recently resumed business after closing in the wake of the ongoing Coronavirus pandemic.
Last year, Hainan duty free sales surpassed growth in the rest of the region, rising 35% to hit 13.61bn Yuan (US$1.97bn). A report from the Hainan Government says a diversified online and offline offer has helped business get going again in the region.
Once shops reopened, a number of online and offline initiatives were released and the duty-free business in Hainan recorded more than 44.28 million Yuan ($6.24m) in sales, according to the report. Single day sales on Sanya International Duty Free City’s e-commerce platform have also hit record highs and the company says it is actively innovating promotional activities and developing services to help rebuild the business and economy in the region.
China Duty Free Group (CDFG) reopened its downtown stores in Hainan including its flagship CDF Mall in Sanya on 20 February, and with it set a precedent for travel retail’s recovery among Chinese duty-free shoppers.
Hand-in-hand with this bounce back will be e-commerce.
CDFG President Charles Chen says e-commerce is a fundamental part of the company’s ongoing growth strategy and it is interlinked to the company’s core downtown and airport retail offers – both in its domestic China market and growing overseas investments (for example in Cambodia).
“At CDF, we have a new department called New Travel Retail, where we prepare for new strategies of new e-commerce, new pre-order and connected downtown. We have a lot of challenges ahead, to prepare better services for our customers. Airports and brands have to be on the same table, we need to work together to earn the money,” says Chen.
CDFG recently opened two new ‘experience stores’ in Mangrove Tree Resort World Sanya Bay and Nanshan Cultural Tourism Zone. They are flagship retail concepts designed for a more digitally-savvy customer that utilise the retailer’s pre-order service in a more prescriptive way.
According to flights specialist, Air4Casts, online sales in China are showing as robust, down just 0.8% year-on-year in March. As a point of reference, Air4Casts says the figure for January was up 16% YoY.
Similarly, ForwardKeys is expecting travel to Special Economic Zones such as Shenzen and Hainan to be the best indicators of recovery in China, with both seeing growth in recent weeks.
ForwardKeys VP Insights Olivier Ponti says: “We have been expecting a jump in domestic flight bookings to occur as soon as domestic travel restrictions are eased and now that appears to be happening. It is likely that there will be a surge in demand for Hainan in the near future, as COVID-outbreak is being more contained.” He adds the upswing in bookings for the early May Labour Day holiday period has born out the company’s predictions.
Positive signs of growing domestic travel spend from the Chinese represent green shoots of recovery for Shiseido. “Looking ahead, we remain cautiously optimistic about a recovery in Chinese travel and spend,” says Elisabeth Jouguelet, Vice President of Marketing & Innovation, Shiseido Travel Retail.
“We are seeing an increase in shopping activities among the Chinese, mainly in domestic e-commerce and retail stores, as well as an increase in travel planning as a priority, albeit within China domestic. These are positive signs, which will give impetus to the Hainan government’s tourism rejuvenation plan for Hainan Island,” she says.
In a bid to help promote its newly globalised Shilla Tipping online review and reward programme, The Shilla Duty Free says its Shilla TV online platform has seen viewers [and associated sales], spike during the Covid-19 crisis, especially via expanded brand collaborations and live shows with Chinese KOLs.
Shilla Tipping reached its first milestone of more than 10 million cumulative visitors after six months of trading and now just after its first anniversary, it regularly attracts between 70,000 and 120,000 users every day, according to the South Korean retailer that operates across China with several stores in Singapore, Hong Kong and Seoul.
“It is expected that ‘untact’ or a new normal where social-distancing is more prevalent than before, will be dominant in our society after Covid-19”, says a spokesperson for Shilla Duty Free.
“E-commerce will grow faster and all processes regarding purchase such as experience, order, and delivery will introduce ‘untact’ services even in offline stores. Following this trend, airports and travel retailers should introduce kiosks where passengers can make independent purchases or get information without contacting the staff. In addition to this, pre-order and pick-up services via mobile and online will become more important,” says Shilla Duty Free.
Retailers and airports alike need to be more agile in their approach to technology agrees the retailer. “They need to invest in data systems to implement a super individual marketing strategy. Retailers should offer a more personalised micro-level service to meet each customer’s preference and difference. This is where technology can accumulate, analyse and use data where necessary.
“For example, during COVID-19, increasing the influx of customers has been almost impossible due to the flight ban and the low desire to go abroad. We have focused on upselling for customers who are still making purchases. Thanks to our customer data system, we have identified high-involvement customers; we have been able to offer tailored benefits based on customer information and price per person as well as recommended products per destination.”
GlobuyX, as an online B2C platform with updated technology that targets WeChat Mini Programme campaigns, is focused on expansion in the travel retail marketplace. “We want to cooperate more with travel retailers and brands,” Jiaqi Luo Business Development Director for the company tells me.
“Our social media IP Globuy is including more platforms such as LittleRedBook and Douyin (TikTok) with more format short videos and more themes, new product launches and testing, duty-free bestseller promotions. All these collaborations add up to more reach: in total, GlobuyX and Globuy have more than 3.5 million users who love travel shopping.”
In early 2020, GlobuyX and CDFG signed an annual cooperation contract, she confirms. The new partnership will include more duty-free shops and the Chinese duty free operator’s pre-order service on GlobuyX is being rolled out at CDF Xiamen, Chengdu and Shenyang stores are currently in the process.
Live streaming shopping, another of GlobuyX’s new functions, is also being rolled out with CDFI (Cambodia and Hong Kong) to display products in real time. The platform allows viewers to buy products during live stream shows from influencers. “This new interesting and efficient way of shopping allows users to see what products are in the duty-free stores before their trip and they can complete the entire online pre-order process during the live streaming; meanwhile this also allows only one to two store sales staff to recommend and sell products to thousands of consumers at the same time, which was not possible before,” adds Luo.
This article first appeared in the May edition of DFNI.