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(formerly Counter Intelligence Retail)

We specialize in global traveler statistics, data driven insight, and activating against trends for all major categories sold in duty free and travel retail.

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Why you need a digital mindset to capture traveller’s spend

Duty free and travel retailers are behind the curve on digital. This is especially true when it comes to high-spending Chinese travellers – whose spending they are missing out on.

July 2017 | by Garry Stasiulevicuis, President 

The consensus on prospects for Chinese travel has been widely upbeat from organisations ranging from the UN World Tourism Organization (UNWTO) and World Travel & Tourism Council (WTTC) to liquidity and capital experts such as CLSA, and analyst Oxford Economics.

For DF&TR it is relevant that the Chinese will likely remain the biggest outbound tourist market for years to come. Why? Because their propensity to spend when they travel – while recently reduced – is still much greater than other nationalities.  

UNWTO’s latest data show that Chinese tourism spending increased by +12% last year. “China continued to lead international outbound tourism, followed by the United States, Germany, the United Kingdom and France,” the organisation said.

Recently, Counter Intelligence Retail undertook a bespoke study to examine the behaviour of Chinese travel shoppers in the Scandinavia/Baltic region. We asked all sorts of questions ranging from the most popular categories shopped to the reasons for not buying in duty free.

We also looked at the way the Chinese planned their shopping. What we found came as no surprise to us… and should make some DF&TR operators sit up and think.

Where digital comes in

Our research findings have been distilled into five key interlinked themes that I believe can be used to influence the Chinese shopper – and digital is at their heart.

The five themes are:

* Pre-trip planning – offering a clear opportunity to connect with travellers before they arrive

* Creating convenience – creating seamless shopping and purchasing experiences using digital

* Differentiation – where travel retail’s unique position can be exploited, especially in terms of exclusives and limited editions

* Gifting – which still has potential as a lever for growth, especially for local/regional brands

* Back to basics – fine tuning the retail fundamentals.

Communicating with the Chinese before they travel can be key to successfully engaging them when they arrive at their destination. This first step remains unexploited by the vast majority of DF&TR operators.

Social media is so under-estimated

Internet usage in China is huge. China Internet Network Information Center (CNNIC) – a government agency – says that by December 2016, China had 731m Internet users. While that amounts to just over half of the country’s population, it is well above the entire population of the EU-28 (510.1m, source: Eurostat), whether they are Internet users or not.

Tied into Internet access has been a massive development and use of e-commerce in China. When it comes to travel, one in five Chinese travellers book online according to the European Travel Commission, and 2015 data show that the online travel agencies Ctrip, Tuniu, and CY were the three largest accounting for 50% of the total OTA market (source: China Internet Watch).

PRC travellers also make extensive use of digital technology while travelling. Two thirds of them use blogs or have a personal web space, and almost half use social networks and email and 83% use instant messaging (source: ETC).

CiR’s research shows that almost 75% of Chinese travellers research their trips before they leave, so marketing in advance represents a clear opportunity to connect and influence shopper behaviour.

Our surveys also tell us that the Chinese do a lot detailed planning ahead of their travels. They’re looking at many things including accommodation, transport, options for eating – and, of course shopping, so catching their attention at this point should be a high priority.

Some 70% of travellers are also researching shopping opportunities and for information on what retail options are available at airports, according to respondents. Furthermore, almost 70% plan to visit a duty free store and almost 60% of purchases are planned to some degree.

Seamless digital

With Chinese consumers so immersed in the digital landscape, investing in social media platforms and marketing on the leading Chinese-language sites are an opportunity to be seen and be part of their pre-planning. With social media being used for both research and transactions, being present should be seen as a must. 

The social media landscape is different in China compared to Europe, so forget about Facebook, Instagram or Twitter. It is also more complex: the core PRC Internet powerhouses are Baidu, Alibaba, Tencent and Sina (the BATS) which all have several social media and/or e-commerce platforms.

These search, chat and payment platforms are often seamlessly interwoven. Several chat sites are also highly trusted as portals through which consumers hear what they perceive to be reliable information about products and services, often direct from other users. 

The role of digital-based commerce within the airport environment or on the journey path of a PRC traveller should therefore be a no-brainer. Electronic devices are near ubiquitous with Chinese travellers and CiR data show that some 86% go online at the airport – with price checking one reason for doing so. Four in 10 look specifically for information on airport duty free stores, so presenting shopping-related opportunities online should be part of the mix.

Digitisation of the DF&TR environment has to be implemented as a priority – with some thought to in-app transactions for payment. Travel retailers must embrace these technologies to ensure the shopping experience is as seamless and as convenient as possible. If they don’t Chinese travellers will go to the retailers that do. 

For further information, please contact Garry@counterintelligenceretail.com