Your flight time will be 8,760 hours… you may experience some turbulence

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

“Ladies and Gentlemen, Customers and suppliers, friends of the #EssenceCorp family, we are ready for take-off. On behalf of Captains Bonas and their entire crew, welcome aboard flight 2021 non-stop service to Success, Worldwide.

 “Our flight time will be of 8,760 hours. We suggest that you keep your seat belt fastened throughout the flight, as we may experience turbulence. Champagne will be offered at departure and arrival. Sit back, relax and turn off your electronic devices, we wish you a pleasant ride.”

The Essence Corp Airlines crew, led by Captains Jean-Jacques Bona (right) and Patricia Bona (second right) 

And so, in the warm, witty and wise words of the admirable Bonas family, creators of the outstanding fragrances & cosmetics distribution and agency business Essence Corp in the Americas, we have indeed taken off onboard flight 2021. In cities such as Seoul and Taipei we’ve seen plenty of flights to ‘nowhere’ in recent months. Is the Essence Corp Airlines destination more tangible?

We’ll know soon enough, I guess. Here at my Interim Hung Hom Bureau it’s daybreak on the 3rd day of the new calendar year. In just under six weeks the Chinese New Year celebrations will begin here and the world will welcome in the Year of the Ox to succeed the Rat that alas in time-honoured style will always be associated with the plague that befell the earth in 2020.

The ox generally denotes qualities of hard work, positivity and honesty. Jupiter Lai, a Hong-Kong based Chinese and Western astrologer, says the ox is “grounded, loyal, gentle and trustworthy”. As well described by Kathryn Wortley in a New Year’s Day article in The Japan Times, the Chinese calendar rotates in 60-year cycles based on 12 earthly branches, each represented by an animal year, and five element years — wood, fire, earth, metal and water.

2021 is the Year of the Metal Ox. On a deeper level, writes Ms Wortley, each earthly branch is characterised by a yin or yang force and an element. In the Year of the Rat, the force was the fast, hard, active yang while the element was water, which Jupiter Lai says is known for “changing all the time.” In contrast, the ox’s earthly branch is associated with yin, which is slow, soft and passive, while its element is earth, representing “stability and nourishment”.

Those qualities would do very nicely in 2021, thank you. And in my case I shall experience them from a China perspective, having opted to set up a Hong Kong-based entity, Moodie Davitt Asia Ltd, and drive the business from travel retail’s modern-day epicentre. Like everyone else, my attempts a year ago at punditry in terms of what lay ahead came hopelessly unstuck so I’m going to be pretty cautious in what I predict time around.

What I do know is that the roll-out of multiple vaccines signals that much better days are coming. What I don’t know – at least in travel retail terms – is how soon and how much better.

Our sector was transformed in 2020 and no-one is simply going to be able to turn a switch and transform it back. It was transformed legislatively (think the UK and the return of outbound duty free to EU states but the simultaneous abolition of tax free sales for departing passengers; or the contrastingly far-sighted Chinese government introduction of the enhanced offshore duty free shopping policy).

It was transformed structurally (think of how many brand companies’ travel retail departments were scaled back or scrapped; how many jobs were lost; or how many airport contracts were revised, either temporarily or otherwise).

It was transformed digitally (more acceleration of ecommerce in one year than in the previous five put together). It was often transformed in relationship terms, sometimes for the better, sometimes for the worse. And it was transformed in terms of the rules of combat, with just about any way to deplete stock and maintain cash flow becoming fair game.

Changi Airport Group’s GetitChangiRecommends.com, for example, drew criticism from travel retailers and brands for compromising the duty free ecosystem by buying from the parallel market. But the group could quite reasonably point to where much of the available stock comes from in the first place. What is good enough for one is surely good enough for all, as one respondent to my article put it in defending the airport company.

Never, in multiple senses, have the lines between travel retail and domestic been more blurred. That has led to internal tensions within numerous supplier companies (who controls the offshore duty free business, domestic or travel retail?), and between retailers and brands. “The genie got out of the bottle with the Korean daigou business and once out you cannot put it back in,” said one brand executive, noting that her travel retail division’s previously lustrous internal image had been severely tarnished by the enormous volume of duty free product pouring into key domestic markets.

Outside of Hainan and to a lesser degree Jeju in South Korea, the traditional duty free sector was horribly moribund in 2020, the victim of a raging, indiscriminate virus combined with government indecision and ineptitude.

If you’re robbed of most of your traditional customer base (i.e. passengers), your prospects as a retailer are going to look pretty sick unless you find a different way to reach them or an alternative, wider audience. Retailers such as KrisShop, IShopChangi and Gebr. Heinemann have made rapid advances with home delivery to their local market, while various travel retailers have stepped up their daigou activity into China, often to an extraordinarily successful degree.

On New Year’s Eve I popped into Heinemann’s Sweet Dreams store in the Entertainment Building in Central. As reported, the company recently opened here with a one-year lease to help offset its losses from the hard-hit Hong Kong International Airport operation and mitigate inventory risks.

It’s a humble basement shop and a far cry from the retailer’s vibrant and colourful airport stores but it is also a statement of determination and flexibility. I bought some cookies and nuts as my gesture of support for a company doing everything it can to survive the crisis and keep its team employed.

As mentioned, you can’t just reverse all those industry changes I spoke of nor all that behaviour. But you certainly can learn from them as the vaccines’ roll-out leads to a gradual and regionally varied traffic recovery. Businesses will be leaner, certainly (hopefully not meaner), but hopefully also better. With fewer passengers, the obvious yet fiendishly difficult solution is to get those who do travel to spend more.

That’s what’s been happening in Hainan and Macau and in other locations too. There are so many good minds in this industry that I’m sure a partially reinvented sector will emerge dazed and blinking from the glare of the light after all that darkness and reach towards a more positive future.

So, I’m certainly happy to take that flight on Essence Corp Airlines. Its Captains have flown through plenty of turbulence before and they’ve already warned us there’s going to be plenty on this trip. But the plane will get to that alluring destination. One where there is indeed stability and nourishment. I’m all strapped in. Now, where’s that Champagne?

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