All change at Hong Kong International

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

Where there was DFS there is Duty Zero (China Duty Free Group and Lagardère Travel Retail). Where there was DFS there is Beauty & You (The Shilla Duty Free). Where there was DFS there is Heinemann.

Duty Zero by CDF started operating on 18 November 2017

Welcome to the new-look retail offer at Hong Kong International Airport (HKIA), where all three new anchor store concessionaires are getting bedded in. As the signs say, the real Duty Zero offer won’t take shape till later in the year but already there are promising hints of what is to come. Expect a great Chinese spirits and tobacco offer in particular, an ultra-aggressive retail pricing policy and a big push behind fine wine.

Chinese spirits and tobacco take centre stage at Duty Zero

Heinemann will bring colour, zest and vibrancy to the confectionery offer, which will certainly benefit from having its own dedicated concession status.

The Shilla Duty Free has big plans too. It’s incredible to think that this long-time mono-market giant now dominates beauty retailing at three key Asian hubs: HKIA, Changi and Incheon International. How will they differentiate their approach by location? Can they make the numbers work (the same question applies to the other retailers)?

These are early days for the new travel retail triumvirate. Watching what they do on this collective grand stage promises to be one of the most interesting travel retail stories of the year.

The Chanel duplex boutique at HKIA remains one of the great sights of travel retail

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  • Sadly, does not the real reason for the high turnover in concessionaires relate back to the opening of CLK when most initial concessionaires wanted to renegotiate down their MRG (Minimum Rental Guarantee) due to poor retail location planning?

    As we all know location, location, location remain the 3 major reasons for maximising sales. Minimising shopping “dwell” time due to the long distances of most gates from major shops remains the weakness of CLK.

    Surprisingly, the CLK management did not carry over the Kai Tak management success of having over 50% airport revenue generated from shopping. I do seem to recall retail revenue is less than 30 % at CLK. Like airlines seats/enplanements, airport retail revenue has the potential in generating the best ROI to pay for expansion bonds.

    Competing airports, and your magazine, may want to consider measuring performance and ranking based on retail revenue % to total airport revenue over enplanements.

    Overall airport revenue would be better served if the commercial departments of these airports place their emphasis on location to maximise retail revenue from their captive potential customers – the less value it will be on maximizing only MRG.

    Clearly the more time these mega airport retail location operators spend educating airport management on the value of retail location x 3 the more “partnership” into maximising sales will happen. Furthermore, impulse remains such a critical value to retail sales which only equates to location. Why hide it? Ray Pai Fu