CNSC sets out high ambitions in Hainan
China National Service Corporation Deputy General Manager Evita Qu outlines how the Sinopharm-controlled company plans to become a major player in the Hainan Island market.
China National Service Corporation (CNSC) has hailed Hainan Island as the “new engine” of the Mainland China and global duty free market and set out its ambitions for its first downtown store in Sanya, which will open soon.
Addressing the offshore duty free opportunity during last week’s TFWA China Reborn virtual event, CNSC Deputy General Manager Evita Qu said: “No-one can deny that Hainan is the new engine of duty free. China is making great efforts to create a new pattern of economic development in which internal and external growth circles provoke each other.” Here, the expansion of Hainan Island and new entrants to Sanya and Haikou, including CNSC, will play their part in driving internal consumption, she said, with “the era of exclusive operation” coming to an end.
“Hainan will quickly become the destination for Chinese consumers to purchase high-end goods, replacing Hong Kong as an Asian tourist shopping centre and replacing European and American markets to a certain extent.
“With the new policy [and expanded shopping allowances now in place -Ed], Hainan Island will become a growth engine for global travel retail.”
Focusing on the CNSC International Duty Free Plaza, Ms Qu said the new store is ready to open, but awaits final approval from government for its licence. Once that occurs, “we can open quickly,” she said. “We are confident that that will become a refreshing product for the global travel retail industry”.
CNSC says that its prime location in Sanya will give it strong consumer appeal
The store benefits from three main advantages, she said. A prime location is one, close to the political, commercial and tourism heart of Sanya, strong transport links, as well as a marina that should attract 5 million high-end visitors in the next three years. Almost 100 high-end hotels and residential buildings are also nearby, as are attractive dining facilities.
Another positive, said Ms Qu, is the multi-category nature of the store. “While taking into account the traditionally dominant fragrances & cosmetics items, we also pay close attention to high-value fashion products such as bags, clothing, watches & jewellery. We also carry emerging offshore duty free products such as wines & spirits.”
Leaning on the expertise of parent group Sinopharm, CNSC will also create dedicated zones for healthcare within the new complex.
Convenience and reliability of purchase are key drivers of visits and purchase in CNSC’s downtown stores, says the retailer
“Using the advantage of Sinopharm Group in the field of healthcare, we will create a brand new experience of duty free plus health. We will also include sports appliances, which are becoming popular. We want to fully meet the needs of all family-based customers. There is a big opportunity in family and health purchases, a trend heightened by the pandemic.”
Ms Qu said that healthcare would be presented in a premium way. “We will create an environment not only to sell the products but also services and ways for our customers to try out and learn more about the products. We want them to have a relaxing, personalised experience, in which they can enhance their health awareness. We will create healthcare areas dedicated to this.”
CNSC is aiming to deliver “an exclusive retail-tainment experience, integrating meeting, residing, travelling, shopping, health and entertainment. With the interactive operation of downtown duty free, offshore duty free and port duty free, we can realise a full service from outside to inside the island.”
After Phase One is completed, in Phase Two CNSC will support a project across 200,000sq m of space to create a ‘duty free park’ anchored by its store over the next three to five years.
Boosting the healthcare category at the new Hainan store
“Our team will strive to create CNSC International Duty Free Plaza as a characteristic product in China and even in international travel retail. We welcome global partners to join us,” she said.
Commenting on the wider market, Ms Qu said: “The Chinese have now transferred their spending in duty free to the local market because they cannot go abroad. The high-end market represented by travel retail and luxury goods is recovering strongly. Sales of top luxury brands have increased against the trend during this year.
“As an important participant in China’s travel retail industry, and while we are concerned about the impact of the pandemic, the crowded stores we see at CNSC location give us great confidence. The number of shoppers remains strong and stable and 75% of consumers have even increased their shopping budget in duty free.
“In addition, the proportion of young consumers aged 18 to 35 has now exceeded 50%, which will help make the market more dynamic.
“A new change in global travel retail has come. The Chinese market is becoming the new focus of global travel retail.”
A rising power across business channels
Long-established Mainland China travel retailer CNSC is not only a force in downtown duty free shopping, it is quickly firming up its presence at airports and in other channels too.
Deputy General Manager Evita Qu noted during the TFWA China Reborn event that the company has been operating stores at several airports already, and has taken big steps to expand its presence recently. As we reported last week, CNSC has been awarded the departures duty free contracts at Guiyang Longdongbao International Airport’s new Terminal 3, which is currently under construction.
That builds on other recent progress. The retailer was last month awarded three departures duty free contracts at leading Chinese airports – Nanchang Changbei International, Quanzhou Jinjiang International and Nanjing Lukou International.
Ms Qu said: “We will bring our experience from downtown to the airport business model. In our downtown stores we pay more attention to experience and loyalty and we want to bring these characteristics to our airport stores.
“With our new contracts, where we also have downtown stores in those cities we will use the advantages of both together, as they share the same customers. We will engage and guide our customers to buy in each, and attract them before and after they travel.”
Other trading channels are also in focus for the retailer. CNSC has secured three land port departure store contracts, at Longzhou Shuikou port (on the border with Vietnam), Pingxiang Friendship Pass (one of the most famous passes in China and a key point of political, economical and cultural communication between Vietnam and China), and Jian port, respectively.
In September, CNSC also celebrated the Grand Opening of a new-look downtown duty free store in Hangzhou, the capital of China’s Zhejiang province.
CNSC is in expansionist mode in the airports channel, with multiple projects in development (Quanzhou Jinjiang Airport rendering above, Guiyang Longdongbao Airport below)
Lagardère Travel Retail spells out qualitative goals in Hainan
Lagardère Travel Retail CEO North Asia Eudes Fabre has underlined his company’s high ambitions for the Hainan offshore duty free market.
The company has partnered with Hailvtou Sanya Downtown, controlled by Hainan Tourism Investment Duty Free Co Ltd (a wholly-owned subsidiary of Hainan Tourism Investment Development Co Ltd) for a new start-up operation.
“We’ve teamed up with Hainan Tourism Investment to open the second large-scale downtown duty free shop in Sanya,” Fabre said, speaking during the TFWA China Reborn virtual conference last week.
“It’s definitely an ambitious project, both in terms of scale, and timing. So we will be opening this month. We have had tremendous feedback and support from all brand partners to pull this project off and an accelerated timeline.”
Fabre joined China Duty Free Group President Charles Chen (see previous page) in saying that the Hainan cake is large and growing and that there is room for healthy competition. “I think there’s room to expand and to create more value for everybody.
“A key point, though, is that the growth is phenomenal… so it’s also really important that we be responsible stakeholders in this process, and that we work together to make it sustainable, not only by chasing sales volumes, but also by focusing on the quality of the customer experience and building the brand image.
“Ultimately, we need to be generating incremental sales and bringing new customers to brands rather than only cannibalising other channels.”
Fabre also updated the audience on the company’s progress in Japan. “I’m happy to report that in spite of everything [with the pandemic], we’ve launched in Japan this year, starting in Tokyo and Fukuoka, and most recently in Osaka Kansai Airport, together with our partners Asahi Airport Services.
“We see strong potential in Japan – it will definitely be one of the first markets to recover for travel and tourism. It offers a great opportunity for the rebirth and the renewal of the duty free business, whether it be through growth of traffic, or upgrade of the infrastructure. So it’s a market that’s full of promise, and that we continue to invest in.”
The Moodie Davitt eZine Issue 288 | 8 December 2020
The Moodie Davitt eZine is published 15 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail email@example.com