China Duty Free Group (CDFG) owns a network 200 multi-format retail stores supplied by seven main logistics centers across the whole country. It offers duty free products and services to nearly 200 million domestic and foreign tourists every year

CDFG was ranked the world’s no. 1 travel retailer in 2020 and further consolidated its leading position in the world in the first half of 2021.

Its parent company – China Tourism Group Duty Free Corporation Limited – recorded an operating venue of RMB 52.6 billion in 2020 with an increase of 8% vs 2019 and of RMB 67.669 billion,  up 28.65% YoY.

china domestic tourism industry had a thriving performance in 2021, returning to the pre-pandemic level. how did COVID-19 change your operations over the past two years?

The global travel retailing industry was severely challenged by the outbreak of COVID-19, and the operation of duty-free stores had also been greatly affected.

In China, the pandemic has been effectively contained allowing us to carry out business orderly later.

Under the leadership of the parent company, China Tourism Group, we have closely focused on our main business-duty free travel retail industry and paid close attention to key markets and major projects. This implied fully grasping policy opportunities represented by the implementation of the new offshore duty-free policy for Hainan province as well as further cultivating the offshore duty free market.

We strengthened brand cooperation, progressively introduced new brands and products so to provide customers with a better shopping experience and meet the personalized needs of the constantly growing Gen-Z client group. . In addition, we minimized the impact of the pandemic on the company’s operations implementing business model innovation, accelerating the integration of the online business, actively executing the online integrated platform and its management.

in 2019, china received about 145 million international tourists. in 2020 and 2021 tourists were mostly domestic. what has been CDF main group of domestic consumers and what was their shopping pattern?

Gen-Y (those born between 1980 and 1995) has become the core consumer group in the travel retail market due to their strong will and purchasing power.

Chinese Gen-Z consumers (those born between 1995 and 2010), however, are growing to become a driving force within China travel retail market. These consumers have grown up with the Internet and are willing to try novelties. They prefer and are willing to pay for brands that can provide them with personalized products .

Accordingly, we are trying to answer to these new consumer expectations enriching and optimizing the range of  brands and product we offer.

During the year of 2020 alone, we have introduced into Hainan market 172 exclusively and specially supplied and 114 limited-edition products dedicated to those the consumers who lay/ emphasyse the importance of individuality.

CDFG has robustly invested in digital integration to support the client’s journey before and after their physical travel. how did this contribute to the strengthening of your ‘customers community’? did you notice an impact of these activities on sales composition? 

Since 2020, CDFG has been exploring ways to innovate duty free service so to reflect new retail consumption habits. This meant further connecting online and offline shopping, providing consumers with all-round shopping services supporting and constantly improving all phases of the customer experience -“before, during and after the trip”.

It has  built a unified membership platform and provided member services with an integrated brand image. At present, the number of CDFG members has exceeded 20 million.

CDFG has developed and completed the design of the integrated platform scheme. It will continue to promote smart stores and VR scenarios to improve consumer shopping experience. Through business development model innovation, CDFG has achieved the transformation and upgrading of the online channel, and, through these initiatives,  realized growth despite  industry downturn brought by the pandemic.

what is your view on the growth of the china market? what type customer service and support will be necessary to maintain this growth?

The past few years have witnessed the rapid development of the China travel retail market, and particularly the offshore duty-free market.

According to Hainan Provincial Department of Commerce statistics, the total sales of 10 offshore duty-free stores in Hainan reached RMB 60.173 billion in 2021, up 84% YoY. Data released by Haikou Customs indicated that, in 2021, the amount of offshore duty free travel retail industry in Hainan was RMB 49.5 billion, with 6.72 million person-times of shopping and 70.45 million pieces of goods purchased, up 80%, 49.8% and 107%, respectively YoY.

In order to maintain such growth, it is imperative to continuously enhance our service capacity. CDFG is regularly optimizing its pre-sales training system with the goal to improve the quality of staff and provide professional service, as well as beautifying the shopping environment for a convenient shopping experience and upgrading the extensive membership system. Furthermore, its delivers unified and standardized after-sales service standards through an extensive use of  digital tools.

As we believe that cooperation is key to solving problems, in future, we will continue to strengthen communication with global brands and industry partners to jointly promote the vigorous development of the global travel retail industry through multi-dimensional cooperation.

In this scenario, it is our intention to closely focus on the main business of duty free industry, make efforts to advance major projects and tap key markets. Improve core business capabilities, strengthen refined management, continuously enhance inward and outward development driving force, and harmonically expand opportunities for travel retail development.

in 2019, chinese tourist where the first contributor to global sales with purchases of about US 255 billion. what is your vision and strategy for future development?

In the future, CDFG will focus its overseas expansion on popular tourist destinations among Chinese tourists. CDFG will actively explore business or capital cooperation with local regional retailers.

in terms of products and services, are Chinese travelers’ aspirations and preferences changing?

In recent years, with the development of the national economy and the improvement of people’s living standards, China’s total consumption has been rising and the consumption structure has been evolving.

As the young generation of consumers become the main consumer group, we observe a more and more prominent trend towards personalized and diversified consumption.

As result of the sudden outbreak of COVID-19, non-contact services will become a trend and shape new business models. We are actively upgrading duty free services to cater to the new consumption habits, including digital capabilities.