3 x Ways to leverage Chinese tourists’ passion for duty-free shopping

We are becoming a planet of tourists – our own personal brands are being defined by the places we visit, and we’re increasingly seeking mementos that mark our travel accomplishments.

Some 52% of Chinese traveller’s overseas purchases were made in duty-free stores, making it an important retail channel for high-end brands. This is particularly true for beauty companies, with L’Oréal now considering travel retail as its ‘sixth continent’, largely thanks to Chinese consumer spending.

We look at three ways to leverage Chinese tourist’s passion for duty free shopping:

1. A Focus On Asia

According to the UN World Tourism Organization, China alone already accounts for more than a fifth of the money spent by outbound tourists – and this is likely to grow significantly in the coming years. Consider the fact that only about 5% of Chinese nationals have passports at present, and the government is expanding that number to the tune of 10 million new travel documents every year.

The majority of Chinese travel remains within the Asia-Pacific region – according to ctrip.com, China’s largest travel website, in 2017’s Golden Week (a national holiday and one of the countrys busiest outbound travel periods) the top four destinations were Thailand, Japan, Singapore and Vietnam.

Swiss travel retailer Dufry, which has outlets in 64 countries, estimates that duty free sales in Asia-Pacific will have doubled between 2014 and 2020. With strong regional growth forecast to continue, establishing or extending a presence within Asia-Pacific travel retail could prove valuable for luxury brands looking for a boost, or struggling in other markets.  

2. Beauty's Big Draw

Chinese tourists lead cosmetics and skincare purchases in the duty-free sectors with 41% buying skincare, compared to 25% for the average global buyer.

“Beauty products were always important in travel retail, but in recent years they have seen an extraordinary boom. South Korean skincare has proved hugely popular with young Chinese travellers.” Martin Moodie, founder of The Moodie Davitt Report, told the South China Morning Post.

Consequently, travel retailers are investing heavily in their beauty offer in some of Chinese tourists’ preferred destinations in the Asia-Pacific region.

Shilla Duty Free has opened a major beauty store offer in Changi airport’s newly opened Terminal 4 – providing showcase space for several beauty brands not available at other terminals, including Hera and Diptyque.

Brands such as Louis Vuitton are already homing in on the duty-free buzz, creating a travel exclusive monogram fragrance case, featuring the national flower of Singapore. With only 100 bottles in circulation, fans of the brand were sure to grab the limited edition at Changi Airport whilst they could.

Meanwhile, Lancome is creating technologically immersive retail experiences to attract attention in distraction-heavy airport terminals.

At Hong Kong International, Shilla has opened a cosmetics and fashion accessories concession based on a new experiential retail concept, ‘Beauty&You’. The format will be designed around how modern, travel-savvy customers shop, with the layouts incorporating augmented reality touchpoints and interactive digital displays. A dedicated ‘New Generation’ section will focus on the best of South Korean and Japanese brands.

3. Mobile Pay

Chinese payment services such as WeChat and Alipay are in a race to become the go-to eco-system for Asia’s duty-free shopping tourists, increasingly targeting integration with leading airport retailers.

Collaborations with tax refund services in locations popular with Chinese tourists is another facet of the two payment systems’ battle to remain foremost in the minds of duty free shoppers.

Asia has some of the highest concentrations of cryptocurrency owners, a medium of exchange that has major benefits for both frequent travellers and for luxury consumers. With increasing numbers of travellers passing through duty-free with cryptocurrency to burn, both systems may soon have to consider the potential of integrating the technologies.

SEEN is compiled by LOVE’s Head of Culture, Kat Towers. Want to say hello, ask questions or challenge her cultural knowledge then get in touch kattowers@lovecreative.com