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					                                                  www.rejsehandel.dk




The difficulties in the post-abolition duty-free
                 market place”

                        Alan Bork
                    Travel Retail Consultant
 former Retail Development Director of Copenhagen Airport
          chairman of Danish Duty Free Association
Board director of ITRC - International Travel Retail Association
                                              www.rejsehandel.dk




High street retailer, joined Copenhagen
Airport in 1994

94-96 building a retail operation
96-99 spent 3 years of my life lobbying for
continuation of duty free in Europe
98-01 CPH International projects
00-02 CPH post-abolition masterplan
                                   www.rejsehandel.dk




“Jelved bombarded after
liquor war;

“I am UGLY
and STUPID”
“She is Europe's most
criticised minister”
reed pages 6.7.8.9 and editorial
                                  www.rejsehandel.dk




                                        Why am I
                                        not as
                                        good as
                                        them ?




H C Andersen, the famous danish poet
                                  www.rejsehandel.dk




What happened to sales in the Nordic
         Region after 99?
                                                          www.rejsehandel.dk


                                                      $
                                             i   on
                                           ll
                                        bi
                                    7
                                  2,




                                                            1,
                                                              8
                                                                  bi
                                                                    lli
                                                                       on
                                                                            $




Market data kindly provided by;
                                  www.rejsehandel.dk




Market data kindly provided by;
                                  www.rejsehandel.dk




Market data kindly provided by;
                                  www.rejsehandel.dk




Market data kindly provided by;
                                       www.rejsehandel.dk




“The difficulties in the post-abolition duty
            -free market place”



              What are they?
                                         www.rejsehandel.dk




It used to be that…..

Travellers grow at a steady rate

Travellers are captive customers

Best bargains to be found in duty free
                                                www.rejsehandel.dk




It used to be that…..now it is that….

Travellers do not any longer grow at a steady rate

Travellers are captive customers but now feel less inclined
to buy

Customer perception is that best bargains to be found in
duty free by shopping around
                                                              www.rejsehandel.dk




                  Gulf war 1
                  Duty Free Abolition
                  September 11
       ars




                  Gulf War 2
     ye




                  SARS
 nt
ce




                  WHO tobacco “war”
Re




                  Liquor taxes in Denmark lowered
                  Liquor taxes in Finland lowered
                  Next ?
                           WHO liquor “war”?
                    ?
                  ars




                           How about confectionery?
                  ye




                           What will terrorism do to the travel industry?
              ng
             mi
             Co
                                   www.rejsehandel.dk




All sorts of problems and
challenges, depending on which
sector;

• foot-fall into our stores
• from passenger to customer
• price proposition
• gross margins
• concession fees
• etc.
        And perhaps the most important
        issue…..

        The customer perception of
        Duty & Tax Free shopping and
        Travel Retail
                                             www.rejsehandel.dk




In July 1999 the customer´s perception of Duty Free changed




  “Confusion”

             “Credibility”

                       “Indifference”

                                       “Trust”
                  www.rejsehandel.dk




 Simple concept



Complex concept



   Challenge
                                              www.rejsehandel.dk




How does the industry deal with the huge problem of
confusion?

It really does not.

Suggestion; create a common platform from which we all
communicate the tax & duty Free / travel retail messages
in a simple way.
                                                  www.rejsehandel.dk




Common platform?


• Is not necessarily commonality in the individual travel
retailers marketing position
• Differentiation is a parameter of competition
• Diversification = shopping experiences
• Commonality in basic conceptual understanding of the
shopping concept
                                              www.rejsehandel.dk




Since we share our customers, who are basically passengers
commuting between the European airports, it must have
some impact if the customer has the same experience at both
ends of the journey



don´t re-name or re-invent but lean up against the “old”
perception, i.e. 1) Tax & Duty Free……. è 2) Tax & Duty
Free prices
                                              www.rejsehandel.dk




Are we forgetting some of the fundamental´s with our
business?
                                               www.rejsehandel.dk




Are we forgetting some of the fundamental´s with our
business?


1) Tax & Duty Free is very much a perception

2) Tax & Duty Free is still around for non-EU
travellers…..and don´t forget…..the same passenger is
travelling inside EU one day and outside EU the other
                                              www.rejsehandel.dk




We lost foot-fall into our stores

Penetration rates dropped and became very different for
different passenger segments

Spend levels developed very different depending on the
passengers destination
                                                 www.rejsehandel.dk




Part of shopping in travel retail is branded retail…

however, the vast majority still comes from the traditional
tax & duty free categories
                                               www.rejsehandel.dk




Dual pricing or Single Pricing?

Dual Pricing, i.e. same product / same shelf……two prices

Create “unhappiness” with the less lucky passenger who
is taking an intra-EU journey……

Don´t forget….customers vote with their feet
                                                   www.rejsehandel.dk




Single Pricing i.e. “available for all travellers” working well
for most travel retailers




         raison d´etre for travel retail?
                                                 www.rejsehandel.dk




Are we in one or two markets?


Passengers are increasingly shopping for other reasons
than price….convenience…..time-killing…..fun…..etc.


Pre-abolition Scandinavian airports were tax paid outside
the traditional duty free categories…..and in fact still is
                              www.rejsehandel.dk




Strategic approach;

1) keep the non-EU business

2) re-build the EU-business
                                                 www.rejsehandel.dk




Is this not giving us a clue to what the target could be?

1) The target will have to be all passengers but the
underlying target is when the passenger is travelling
inside Europe. Those are the travellers that we need to
convince to come back into our stores.

2) The message based on the "old" duty free perception,
i.e. the ever-dominating sales driver "great savings on
branded products"
                                                  www.rejsehandel.dk




Challenge or problem; Not all product categories can be
offered to the consumer with a price saving depending on the
levels of the national duty rates


There seem to be one exception; The perfume & cosmetics
category, now the “star category”
                                                 www.rejsehandel.dk




Another main area is the relationship between the various
players in the market

There is still a huge task ahead of the industry to restore
the travellers confidence in what travel retail stores have
to offer……

….this will require, however, that the industry can find
each other in a common approach to the customer….
                                                   www.rejsehandel.dk


                  The “players” in the market

  Supplier / Brand                      Landlord


Retail operator                            The customer
                                                   www.rejsehandel.dk


                  The “players” in the market

  Supplier / Brand                      Landlord


Retail operator                            The customer




                                         Whoever “owns” the customer is
                                         setting the agenda
                                               www.rejsehandel.dk




But don´t get too arrogant….. the guy blowing the trumpet
  at the back seat is equally important to the business
                                           www.rejsehandel.dk


What do they want and what do they bring to the table?

Supplier / Brand                       Landlord




Retail operator                        The customer
                                            www.rejsehandel.dk


What do they want and what do they bring to the table?

Supplier / Brand                       Landlord
Want;                                  Want;
• sales and volumes                    • maximum income
• brand exposure                       • high minimums
                                       • provide service




Retail operator                        The customer
Want;                                  Want;
• Return on investment                 • a good bargain
• Low risk                             • an experience
                                            www.rejsehandel.dk


What do they want and what do they bring to the table?

Supplier / Brand                       Landlord
Want;                                  Want;
• sales and volumes                    • maximum income
• brand exposure                       • high minimums
Bring;                                 • provide service
• brands and products                  Bring;
• market knowledge                     • space for retail
                                       • passengers and flows



Retail operator                        The customer
Want;                                  Want;
• Return on investment                 • a good bargain
• Low risk                             • an experience
Bring;                                 Bring;
• Retail skills and                    • needs and desires
logistics                              • money
• innovation and
development
                                                    www.rejsehandel.dk




The great challenge in this industry is for all the players to
find each other in a common approach to exploit this
magnificent market, which our colleagues in the domestic
retail market envy us so much

There seem to be a development underway…..The Trinity
Forum in London in June created a lot of awareness……

The Travel Retail Seminar in Denmark in August not only
identified some problems……it also gave some proposals
for solutions……..a working group is now pursuing matters
                www.rejsehandel.dk




Thank you for
  listening

				
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posted:10/15/2013
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