Virtual Travel Retail Expo

The ‘Travel eTail’ eco-system : DFS Group’s Benjamin Vuchot on how evolving consumer dynamics are reshaping the sector

In one of the highlight sessions of day one at the Virtual Travel Retail Expo, DFS Group Chairman & CEO Benjamin Vuchot delivered an insightful address on how consumer expectations are changing, and asked whether our industry can do more to transform itself in the face of these new dynamics?

“Let’s remember that our industry will be three quarters of a century old next year. And when we think of how much travel has changed during that time, and how travellers’ expectations have changed, I think we also need to ask ourselves, are we really doing everything we can to ensure our industry evolves at the same pace? And second, how does the energy, innovation and inspiration that we strive to bring into travel retail ensure a strong and compelling future?

Those were two key questions put by DFS Group Chairman & CEO Benjamin Vuchot as he urged a “mindset of courage” within the industry during a powerful Knowledge Hub session at the Virtual Travel Retail Expo on 11 October.

Vuchot noted that DFS’ philosophy over more than 60 years has been based on a simple premise – “to go where our customers go”.

Today, he said, “our premise is still the same, but of course we do it on a much bigger scale. We still go where our customers go, sometimes even before they decide that they want to go there. And we are still exploring new horizons, just as we did in our early days when we were the first travel retail operator in a new market.

“We did this in Hawaii and Guam, meeting our Japanese customers for the first time. We did this in Hong Kong, when we saw the pivotal emergence of the Chinese customer. And this led us to Macau. When we first went into Macau in a significant way, what we refer to now as the Cotai Strip was certainly not what it is today. But we saw the vision of what it could be, and today our seven Gallerias in Macau are true landmarks of luxury shopping, and represent the very best of what travel retail can be.

“And we did this in Venice, when we saw how many thousands of tourists flocked to this beautiful city seeking both retail and cultural enjoyment.”

Today DFS is “celebrating the past by investing in the future”, added Vuchot. “As retailers, remaining static is not an option. We need to look at today’s long crisis as an extended opportunity for transformation.” This is why, he said, DFS continues to pioneer new destinations and partners with 750 leading brand houses from around the world – and why this latest period is an opportunity for transformation, just as past crises were.

The consumer today has changed, and is seeking engagement in new ways from our industry, he noted.

“For our airport partners and key landlords, this is an opportunity to rethink spaces with us and to be even more daring and forward-thinking”

DFS Group Chairman & CEO Benjamin Vuchot

“When travel resumes again, we must be ready to meet our customers in the places they want to go to first, and in a way that makes them feel safe. This goes without saying – the pandemic may fade in time, but the new practices that it has brought with it – the contactless payments and service, the hygiene and personal protection measures – are likely to be with us forever.

“However, customers want more than just to feel safe in stores. People have been locked at home for so long. Have they stopped shopping? Of course not. According to Bain, more than 85% of luxury purchases were digitally influenced in 2021, compared to 75-80% in 2019, and 65-70% in 2016. In China alone, more than 52% of retail sales will come from ecommerce in 2021, a jump from under 45% in 2020.

“Have they stopped wanting to travel? Again, of course not. To want to see the world, to see family and friends again, this desire has not abated. If anything it has become stronger.

“But, when the customer begins to travel again, and to explore our world of travel retail, they will bring with them some new and heightened expectations – forged by not being able to be out in the world for so long.”

First, said Vuchot, travel shopping will need to match the digital experience that consumers now expect when they are at home.

“Too often we talk about omnichannel as though it represents a duality between online and offline purchasing. I disagree with this idea. We need to shift the thinking around this battle of physical sales versus ecommerce; no shopper defines themselves in this way.

“At DFS, we celebrate all channels: airports, downtown and digital. They are all just that – different channels to engage the travelling customer. Our job is to make relevant options available to them. We see the relationship between digital and physical in the same way that we see the relationship between airports and downtown – they are synergistic and symbiotic – each balances and complements the other.

“Proud to be a pioneer:” Benjamin Vuchot addressing the Virtual Expo audience (click for the broadcast in full); previous page: a visual of the Haikou Mission Hills project, where DFS is partner to Shenzhen Duty Free

Towards ‘Travel e-Tail’

“We believe that the traveller’s journey truly begins at home, on their devices. It continues at the airport, with a carefully curated offering of products that satisfies limited dwell time and captures the enjoyment of a journey. Then the journey progresses with a visit to a downtown store, where the offering is much broader, the entertainment and services are richer, and where the traveller is reminded that they are in a beautiful local destination with incredible local products to take back home. And the journey ends long after the customer has returned back home, and is reminiscing about their travel, sharing social media posts, enjoying their purchases and possibly even planning the next trip.

“The digital realm offers incredible new ways to explore and collaborate with our partners too. We have been doing this with our WeChat Mini Programs and powerful new ecommerce platforms, and we also developed a one-stop brand portal so our brands can customise their own pages on our digital touchpoints, enrich products, and much more.

“We call this online ecosystem ‘Travel e-Tail’, bringing customers and brands together within our own world of luxury that connects the physical, digital, airport and downtown experiences in a seamless and enjoyable way. In essence, a continuous circle that keeps the customer traveling, at least in their hearts.”

With the convergence of channels crucial on one hand, so too is addressing consumer demand for ‘real experiences’, of discovery and fulfilment.

“They will want to learn, to play, to find inspiration. “Their values have shifted, away from the purely transactional, and toward something more meaningful and genuine. And so must ours. Just as in a romantic relationship, if our customer does not feel valued, loved, and appreciated, they will break up and move on.”

Curated experience: The acclaimed T Fondaco dei Tedeschi by DFS in Venice

‘Destinations within destinations’

He added: “At DFS, our mantra for many years has been ‘to create destinations within destinations’, through the environments we create, the services we provide and the attention we pay to the smallest detail. And, as we have observed how the isolation of the pandemic has created a corresponding desire for more meaning and intimacy, we have taken advantage of the slowdown to really double down on this intention.”

This has been a recent focus in Hainan, with partner Shenzhen Duty Free, where the ‘World in A Day’ store invites Chinese customers to take a virtual holiday to Venice, Sydney, or Macau.

“It will be our focus in Brisbane, in Australia, which was already fast becoming a popular tourism location for its sunshine, beaches and laidback lifestyle – and which is likely to be even more popular for the same reason when travel resumes. “And in Queenstown, New Zealand, which has long been a favourite destination for outdoor enthusiasts – and will likely be even more popular when travel resumes. “And, perhaps most spectacularly, this was our focus with our newest store Samaritaine Paris Pont-Neuf, because we have absolutely no doubt that Paris remains high on the list of must-visit destinations, and will quickly reclaim its place as Europe’s shopping capital when borders reopen.

The spectacular new T Galleria store complex in the Queensland capital, Brisbane. It is set to open in phases from late 2022.

“The year-long delay in opening caused by the pandemic also created an opportunity for us to be extra deliberate and intentional in the layout, zones and the innovation we expressed through our assortment and offering.

“The result is a true destination within a destination, for both locals and travellers alike. Where a customer can pop in for a lipstick or an espresso, or indeed spend the entire day exploring the brands, sampling the restaurants, indulging at the spa and salon or engaging with artists and installations. And I have to say, 30,000 visitors a day are testament to this success, and to the fact that the physical experience can never be truly replaced.”

Returning to the Chinese traveller, Vuchot noted that this group represents “untapped potential” for future travel. “Within this population, we know that there are diverse segments who travel and shop differently from how they are back home. We see true luxury aficionados, on the lookout for the latest products from the most prestigious houses, but for whom exclusivity is as much about the rarity of the experience as the product.

“We see couples on a getaway who want to treat themselves and indulge every moment of their time together. We see youngsters on a weekend trip out to explore and experience the world.

“How will we, as travel retailers, surprise and delight each of these customers on each of their journeys? How will we have them fall in love with us by understanding and addressing their wants and needs? How will we provide a moment of joy to our customers in Hainan, as well as to the US and Latin American customers that we see returning to Los Angeles Airport? For us, it comes down to the experience we offer, the curation we provide, the loyalty we nurture. No matter where, when and how they shop with us.”

Inside the magnificent Samaritaine Paris Pont-Neuf by DFS in Paris (Photo: @We Are Contents)

Spirit of solidarity

Third, customers will place greater emphasis on ‘purpose’ than ever before, said Vuchot. “There is a shift to more meaningful consumption globally. At DFS, we are seeing an ‘upgrade trend,’ with customers choosing more quality investment pieces that last a lifetime. But we are also seeing a move toward more conscious consumerism, with customers who want to see their own values reflected in the brands they buy and the stores the visit.

“Within travel retail, the urgency and ability with which some of us have shown care and consideration for our employees during the pandemic speaks volumes about our passion for purpose.

“At DFS, when we had to close our stores in line with local health directives, many of our employees faced uncertainty and anxiety. I am very proud of the way we stepped up to support employees on furlough and protect jobs for when travel resumed. I am also enormously proud of the many initiatives we launched across our global locations to support marginalised communities who were put at even greater risk by Covid-19.

“This community spirit is deeply embedded for many of us in the travel retail industry, and our hosts at The Moodie Davitt Report are themselves an excellent example of social responsibility, with the many worthy causes they support. This spirit of solidarity must continue while the pandemic is with us, and we must build on it when our stores reopen – for the sake of our employees, our communities, and our customers.”

Partnership and pent-up demand

Vuchot also addressed how actors in the travel retail eco-system must act together to tap into the pent-up demand for travel shopping, and for luxury in particular, which “far from slowing down, is seeing a resurgence”.

“If the level of pent-up demand for shopping is anything to go by, the pent-up desire to travel will be even stronger when borders reopen. Again, meeting that influx of travellers in the places they want to visit first, and providing them with an inspiring and desirable offer that delights their senses and satisfies their need for a seamless experience, is the opportunity for the retailer.

“For brands, this is even more of an opportunity to meet a new cohort of customers – those who may not have been so brave or keen to venture out of country before, but who now have a greater sense of how precious their time is. The passport penetration rate in China is 14%, compared to 24% in Japan and 45% in the US. There is still immense potential that we as travel and luxury retailers can tap into, as travel remains a highly aspirational activity amongst the global rising middle class.

“And for our brand partners, the first time they engage with these new customers is highly likely to be in a travel retail setting. Therefore, how their brand is positioned, perceived and purchased by the new customer can make the difference in achieving that first and critical sense of brand loyalty.

“For our airport partners and key landlords, this is an opportunity to rethink spaces with us and to be even more daring and forward-thinking, to collaborate with us to find more ways to incorporate technology, entertainment, animation, and unexpected details to surprise and delight. We are constantly evolving our format because at heart we are a true retailer.

“We focus on innovation to an obsessive degree in our downtown stores, where we are known for taking historic buildings and marrying their cultural heritage with a suitably curated commercial modernity. But we are also invigorated at the prospect of innovating in airports. We believe that it is possible to achieve joy and inspiration in these environments as well, like we are doing for instance in San Francisco.”

In closing, Vuchot urged a mindset of courage, a laser focus on consumers and a drive to maintain evolution and transformation. He concluded: “Borders will reopen. Travel will resume. And those of us who have used this time wisely to reset, refocus and recharge our commitment to our industry and our customers, will be in the best position to benefit.”

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The Moodie Davitt eZine Issue 302 | 22 October 2021