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Only 353 sleeps till Christmas…
Yes, we are truly into the swing of things in 2025. More so, in fact, than in the average year, as Lunar New Year falls so early (29 January) in the Year of the Snake.
It has been a busy Christmas and New Year period for many in the travel retail community, including me. The website that never sleeps certainly does not change its nocturnal habits at what amounts to a peak trading period for our industry, something reflected in the more than 30 stories we have published from Christmas Day onwards.
Many of them reflect the prevalent themes of 2024 and the challenges that lie ahead in 2025. We published a flurry of reports – particularly from Hainan and the Middle East – underlining collective promotional exuberance, expertise and excellence but others reflecting my belief that travel retail has reached a watershed moment.
I refer to those two standout markets of recent times, Hainan and South Korea. Probably my two key stories over the holiday period were those summing up the trading performances of each – in the former’s case, 2024 as a whole; in the latter’s the first 11 months.
Neither make for comfortable reading. Hainan’s duty-free sales fell -29.3% in 2024 to CNY30.94 (US$4.23 billion), according to newly published Haikou Customs data. This was not, contrary to some media reports, due to a slump in visitor numbers (in fact tourist numbers to the island were up +8.2%) but (partly) down to a -15.9% decline in shopper numbers. That is a key point of difference. Collectively, those who did purchase bought -35.5% fewer items.
I have documented the reasons for this decline many times over recent months. The crackdown on daigou trading; weak consumer sentiment; competition from overseas destinations (notably Japan, driven by its weak Yen); a growing preference for experiences over transactions; and a domestic and online market flooded with cheap beauty products – the category that has long ranked as Hainan duty free’s commercial lifeblood.
As for South Korea, those of an uneasy disposition turn away now. The situation is alarming. I have been visiting the Republic each year since 1990, chronicling its fortunes – good, bad and (especially over recent times) ugly. My story last week, for example, related a -12.2% year-on-year decline in total duty-free retail sales (excluding inflight). And yet, total customer numbers rose by +12.9% over the same month in 2023.
More people but spending less. Again, the erosion of bulk daigou trading has played a key role; so has the change in Chinese travellers’ behaviour. The results make horrid reading for Korean travel retailers and those who supply them.
‘Golden geese no longer: South Korean travel retailers ring up heavy losses as market changes take toll’ ran the headline on my 24 November story describing the travails of the Republic’s ‘Big 4’ duty-free retailers, Lotte, Shilla, Shinsegae and Hyundai. The table below says it all. Turned to loss; turned to loss; turned to loss; loss grew. Ouch.
So where next? There’s little point in cowering in the face of vicissitudes and those leading companies such as Lotte Duty Free and China Duty Free Group are tasked with finding solutions. If the days of bulk selling to consumers who are buying for others (and I’m not talking gifting) are over (or at least limited), then what fills the gap?
In both South Korea and China there’s a big push behind national products, many previously unseen in travel retail. And in both markets there’s a concerted effort to marry shopping with culture and with the wider tourism experience.
Last month, Shinsegae Duty Free unveiled a pop-up store at its K-Food Promotional Hall at Incheon International Airport Terminal 1, showcasing premium Korean fresh produce, including Jeju tangerines (delicious I can avow), chocolate-covered strawberries and other delights.
Around the same time the Korean travel retailer also unveiled two emerging Korean beauty brands, Portré and TOCOBO, in Terminal 2.
Similarly, China Duty Free Group is stepping up its efforts to promote ‘China Chic’ beauty, fashion and accessories brands.
Local. New. Different. Exclusive. Experiential. Those five terms perhaps best represent the wayfinding parlance our industry needs. In that context, I return to the wise words of Lagardère Travel Retail Chairman & CEO Dag Rasmussen from one of the standout interviews of my career, conducted last July.
When I pressed him about the multiple challenges facing travel retail, Dag replied sagely: “The point is to see how we can continue to grow in a business where you have some categories which are at risk, like tobacco and liquor, where you have some trends in certain countries which are not that positive. And the short answer is sense of place. It’s having an offer which you don’t see everywhere else. It’s giving passengers some new experience.
“We summarised it in the Aelia concept ‘Here and nowhere else’, and that’s critical. The objective I set for the teams in duty free is to have 30% of local products. Sometimes we are way below but then we should work on it. It could be craft, it could be gastronomy, it could be wine, it could be lots of things.”
Here and nowhere else. Or to deploy the acronym taught me by Dubai Airports Chief Commercial Officer Eugene Barry, WACD. What Amazon (or Alibaba) can’t do.
Note, too, Dubai Duty Free’s stellar final month (and particularly final week) of 2024, which propelled it to record sales of AED7.901 billion (US$2.16 billion). But the standout performance didn’t come from any of the usual product suspects, according to Managing Director Ramesh Cidambi.
Speaking to me on New Year’s Eve (from 36,000 feet on a plane from Delhi to Dubai), he singled out confectionery’s stellar performance as pivotal to the year-end surge, with three newly introduced locally themed brands – Locali, I Love Dubai and Fix – turning in star results.
“Confectionery was the real standout,” Ramesh told me. “Sales in the category were up nearly AED14 million (US$3.84 million) compared to last December. In percentage terms that’s around +30%. And nearly all that AED14 million has come from the three Dubai chocolate brands, Locali, I Love Dubai and Fix. These three brands didn’t exist last year – we introduced them in October, November and December.” Local. New. Different.
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Another example – and perhaps the best of all – again emanates from Dubai, in this case from Dubai Airports, operator of Dubai International Airport. The company recently introduced Emirati District, a retail hub dedicated to empowering and showcasing young local entrepreneurs.
It’s an admirable initiative and as I pointed out in my original story, its ‘Roots of tomorrow. Take a piece of home’ explanatory text (below) offers as rich and fine an articulation of the sense of place concept as you will ever read, parts of which I quote:
“As you walk through the Emirati District, you don’t just witness crafted objects; you experience the essence of sogha – the act of giving from the heart. It is an age-old tradition in the UAE, where every gift represents a piece of home, a part of the giver’s story.
“Each carefully crafted item holds the spirit of the UAE, not just as a symbol of its rich culture, but as a token of its future, meant to connect people across borders. These are not just keepsakes – they are bridges between the past and the present, gifts from the hands of the UAE to the world. The pieces of a legacy that we build today with the knowledge that what we do today will echo in the stories of tomorrow.”
The fact that passenger numbers will continue to grow strongly over the next two decades is pretty much a given in a world of miserably few givens (death and taxes, as Abraham once noted, being unpalatable exceptions). At least travel retail is (mostly) free of tax. The challenge is to ensure it remains full of life. ✈