TFWA President states industry needs to adapt to new attitudes and values to move forward  

Opening the 38th TFWA World Exhibition & Conference, TFWA President Erik Juul-Mortensen thanked attendees from across the duty free and travel industry for the effort made to attend the event, whether exhibiting or visiting.

“I was delighted to see so many of you at the Opening Cocktail on the Carlton Beach yesterday evening. For many of us, this was the first real catch-up with colleagues and friends in a long time, and it was particularly good to see our Asian and American colleagues back in force after several years of pandemic-related travel restrictions.

We are making good progress, but we are not at 2019 levels yet

Juul-Mortensen moved on to speak about the state of the duty free and travel retail industry. “There is plenty of positivity around duty free and travel retail at the moment. People are hungry to travel again, as shown by the healthy results many airlines have reported this year, but we are not quite back to where we were in 2019. IATA global passenger numbers for the first 6 months of 2023 are around 10% behind their pre-Covid level, although the deficit for June narrowed to 5.8%.

“The surge in air traffic, although welcome, has created staffing problems, since 43% of airport workers worldwide left the sector during the pandemic, according to the Air Transport Action Group. The combination of the loss of highly experienced and specialist staff and the move to hybrid working have made recruiting even more difficult.”

Juul-Mortensen then explored the different rates of recovery across the world.

“The recovery is, however, patchy, with some airports in Europe much closer to pre-pandemic levels. Traffic in Asia is taking longer to return, with the region’s airline passengers in June at three-quarters of their 2019 level, but China’s recent expansion of authorised destinations for group travel will help. Overall, ACI World predicts global air passenger traffic of 8.6 billion this year, 94% of the pre-pandemic level. But there are concerns in some quarters that rising airfares and the rising cost of living may dilute the demand for travel.

“The cruise and ferry sector is also seeing a robust recovery. The baseline forecast of the Cruise Lines International Association for this year foresees passenger volumes some 6% above 2019.

“That the market has changed since Covid has by now become a cliché, yet it remains true. Travellers are returning, but buying habits have evolved. Average transaction values have risen, but footfall and conversion statistics sometimes fall short of pre-pandemic levels.”

We have to address pressing issues in our industry

Juul-Mortensen praised the resilience shown by the industry in recent times, but cautioned that changes have to be throughout the industry, stating: “This last year has clearly demonstrated the resilience that our industry has shown time and again in the face of geopolitical and socio-economic challenges. We are witnessing a wave of creativity as retailers and brands address the demographic shift among passengers and the new awareness of our planet’s fragility. With so much positivity and creativity in our industry, we have every reason to be optimistic, but let me offer another perspective.Yes, we are resilient and creative, but is there a risk we are living in a bubble of self-congratulation?

“In my view, there are some basic topics we must address to re-establish ourselves as an industry that is relevant and helps connect people around the world. It requires – again in my view – some major step-changes and initiatives that we all should embrace.”

Juul-Mortensen then highlighted the importance of sustainable practices to appeal to the new generation of traveller: “We all talk about sustainability, and some companies are doing brilliant work to ensure their products are manufactured, packaged and retailed with minimal environmental impact, while also supporting the communities involved. 

“Yet in stores we see isolated displays showcasing products that are labelled as ‘sustainable’. What does that say to our customers? That 1% of our offer is sustainable and the rest is not? No, we need to be more ambitious, setting ourselves key targets for sustainability in our product assortment and communicate those targets and milestones more boldly to our customers.”

The TFWA President moved on to discuss the importance of strengthening the foundations of the industry. “Nobody else is going to protect our industry – it’s up to us. And we can do it. The first requirement is data to communicate the size and economic benefits of our industry. I cannot think of any other sector that doesn’t have reliable data. The ETRC index is a model for what we need in each region, and it’s only made possible by the data received from retailers.

“I know this is a concession-based business, and it’s competitive, but surely we should all be able to agree some parameters for sharing industry data at global and regional levels. If it can’t be this year’s data because of competition concerns, then let’s agree to provide data at region, channel and category level with a three-year lag. We could start with 2019, pre-pandemic, as a baseline. It needs the leadership of the CEOs in this room to commit to that.”

The fight against illicit trade

Juul-Mortensen then reiterated TFWA’s commitment to the Duty Free: Trusted, Transparent, Secure campaign: “Next on my list is the need to stand firm in the face of allegations made about our industry by the World Health Organisation as part of their protocol to eliminate illicit trade in tobacco products. Let me be clear. The WHO’s misplaced efforts to link duty free and travel retail with illicit trade are a real threat to an important part of our industry.

“Our supply chain is one of the most secure in the world, and the percentage of notified seizures of genuine duty and tax free cigarettes is extremely low and is confined to a small number of isolated instances. That needs to be brought to zero.

“Every supplier, distributor and retailer needs to be absolutely clear that having even one or two companies thinking they can profit from illegitimate practices is playing a dangerous game. Such companies should have no place in this industry and the vast law-abiding majority should not have any business relationship with them.

“We need to reinforce our credibility and clearly and publicly position ourselves as a model business, committing to the values that governments, regulators – and our customers – want to see: authenticity, trading honestly, and taking a zero-tolerance approach to illicit trading, counterfeiting and intellectual property theft across every product category.

“These criminal activities unfairly tarnish our collective reputation as an industry when counterfeit goods are fraudulently mislabelled as ‘duty free’ to add authenticity. They cost industries like duty free and travel retail millions every year in lost sales opportunities.”

Adapting to the new market

Concluding his speech, Juul-Mortensen spoke about how the concept of ‘going back to normal’ is no longer a possibility. “Ladies and gentlemen, we have much to be positive about in duty free and travel retail right now: surging passenger traffic; busy airports, airlines, cruise lines and ferries; rising sales and healthy results for many retailers and brands. Our industry has discovered a new creativity in its approach to attracting and engaging travellers.

“But post-pandemic cannot just be a return to pre-pandemic. Reliance on more of the same is not enough. The pandemic accelerated the desire to live and shop more consciously but beyond that it saw a more fundamental shake up of values and ambitions – a focus on individual and collective responsibility to make this planet a better place, a focus on truth, on authenticity. We need to take heed of those values and embed them as individuals, as companies and as an industry.”

The article TFWA President states industry needs to adapt to new attitudes and values to move forward   first appeared in TravelDailyNews International.

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