TFWA conference examines the way forward

Gavin Lipsith

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Speakers at this year's TFWA event looked back on the industry's growth and asked how the business should proceed if it is to fulfil its potential

The duty-free industry and its global trade show have come a long way since the first event in Amsterdam in 1973, Tax Free World Association president Erik Juul-Mortensen told delegates at the TFWA conference on the opening day of this week's TFWA World Exhibition in Cannes.

The event, on the 20th anniversary of the Cannes show, reflected on the industry's progress since its inception in 1947 and, with thoughtful presentations from Visa International president and CEO Christopher Rodriguez and outgoing BAA group retail director Brian Collie, examined the possibilities that lie ahead.

Juul-Mortensen echoed the industry's belief that while early progress in the industry had been rapid, the past few years have seen little growth. He acknowledged that the trade had been hit by an unprecedented succession of crises?Collie later remarked that more incidents had affected business in the past five years than in the preceding 50?but Juul-Mortensen, Collie and Rodriguez all agreed that the industry is underperforming.

"If the global industry had matched the growth of BAA's retail operations over the past 10 years, it would be worth about $31bn this year," said Collie.

He added that partnership, knowledge of the consumer and long-term planning would be critical if the industry was to reach its potential, and criticised some retailers and airports for succeeding in spite of, not because of, the travelling consumer. "All too often a captive market is an abused market."

Visa international's Rodriguez offered some useful data on travellers and their spending habits from his company and its 20,000 member banks. He started by saying that, as a frequent but jaded traveller, retailers would attract him back to duty-free "only if the retail proposition changes dramatically". Nevertheless, he said, the next 20 years for travel look as exciting as the last 20.

He revealed that in the first half of 2004 Visa cardholders spent $1.7bn on duty-free purchases outside their home countries, a 70% increase on the same period in 2000. The average transaction size is set to exceed $90 this year, up by $12 on 2000. He talked about the importance of new technology in security, speeding up transaction times and improving customer service, and suggested that the "cardless transaction" is likely in the near future.

Rodriguez identified three main spending groups among the travelling public?tourists, travellers and explorers?each with different needs and expectations from their shopping experience. Tourists, often inexperienced holidaymakers, seek something to remind them of their trip such as souvenirs with iconic value and regional identity. Travellers, who are keener to examine the culture, people and history of their destination, will seek global brands in a sophisticated environment that reflects the local culture. Rodriguez advised travel retailers to ignore explorers, who he said sought authentic articles from sources such as the "traditional Peruvian basket weaver" rather than the goods they could offer.

He ended his presentation by saying that the international credit card industry and the travel-retail industry had much in common, and that he looked forward to working closely with TFWA in the future so that both parties could benefit from a better understanding of their customers.