Packing up in duty free for the holiday

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Martin Moodie
Martin Moodie is the Founder & Chairman of The Moodie Report.

I’m on BA 006, six hours out of Tokyo Narita, en route to London Heathrow, my final flight of the year.

It’s been a long day, rising at 4.15a.m to leave for Gimhae International Airport in Busan before the short journey onboard Japan Airlines to Narita and then the much longer one homewards.

While I’m not packing up for the holidays (The Moodie Davitt Report’s ceaseless appetite for being fed with words will ensure that over Christmas and New Year), today at Gimhae Airport I saw a young woman who most certainly was.

It was one of the most remarkable, or should I say flagrant, scenes I have witnessed in all my years in travel retail, the familiar daigou (shuttle trader) phenomenon played out in front of me to an extraordinary degree.

Sitting near the duty free pick-up (i.e. from downtown purchases) zone, this young ‘shopper’ seemed to have bought half the inventory of the entire South Korean duty free industry. As I watched, she feverishly unpacked item after item from its packaging and placed them into one of several holdalls. Skin creams taken out of their boxes; the same routine applied with what looked like accessories and watches. One after another after another.

Where did she buy all this stuff? Well, the answer is clear – in Korean downtown duty free. She must have made several visits (or more likely had several associates) to acquire such a stash of duty free inventory. All clearly to be resold wherever she was bound.

Now, I am a realist. Combine pricing disparities between local markets and foreign duty free and you’re going to get daigou or its equivalent. But on this scale? Look at the size of the rubbish bag into which she is placing all the discarded packaging. Astounding. And, as you can she, she was far from the only shuttle trader feverishly repacking.

Now, I know that daigou trading has helped sustain Korean duty free through the THAAD crisis but is this what our industry is really meant to be about? Sorry, I don’t think it is. What do the brands think about it? I watched as some of the world’s most illustrious beauty brands were stripped out of their packaging and stuffed into this young woman’s holdalls. Doesn’t do much for the selective distribution argument does it?

These pictures and the short video below tell a story and it’s not a good one.

If anything, such scenes emphatically justify the Chinese government’s desire to maximise domestic consumption by making the Mainland China duty free opportunity more attractive. On this evidence, who can blame them?

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That wasn’t the only curious scene I witnessed at Gimhae International Airport. Earlier, I arrived at the Dufry Thomas Julie store (one of the airport’s two duty free concessionaires alongside Lotte Duty Free) just after 6.30a.m to discover a curiously long queue of expectant shoppers lining up to buy outside the store. All of them, it transpired, to purchase duty free cigarettes that were able to be sold from 6.30a.m before the shop opened at 6.50a.m. But they could only be sold out of boxes from a row of tables outside the store.

Bizarre. Especially as the same store has an impressively merchandised, well-ranged tobacco section inside (see bottom two photos).

Tobacco products are clearly in high demand at Gimhae and I’m certain that this surreal situation is not of the retailer’s choice. Something (the contract? The union?) must be stopping them from opening 20 minutes earlier. But selling cigarettes from boxes displayed like some car boot sale? Another example, alas, of duty free, Busan-style, not helping our industry’s image one little bit.

 

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