Record-breaking Hainan store opens doors

15 December, 2022

The world’s largest duty free store has opened on Hainan but what does the future hold for this fast-growing market?

The sheer scale of it takes the breath away. China Duty Free Group’s new cdf Haikou International Duty Free City shopping centre, which opened on the north coast of the Chinese island of Hainan in late October, spans 280,000sq m. That’s the equivalent of nearly 40 football pitches. Boasting more than 800 international and domestic brands, this giant luxury retail emporium is billed by CDFG as the “largest single duty free shop in the world” and a “new benchmark” for the island’s tourist-driven retail market.

Beauty and fashion are by far the largest product categories showcased in the new mall, but an extensive offer of wines and spirits is on display too. For instance, Moutai, China’s most famous luxury baijiu brand, has opened a Moutai Experience Store, selling some of its rarest products, and presenting interactive, educational displays about Moutai’s cultural and historical significance. Fenjiu, a high-end baijiu based in the northern Chinese province of Shanxi, also boasts a store there.

International spirit brands are well represented too. Diageo Global Travel has opened a Whisky Boutique at the mall, for instance, while Rémy Martin, Martell, Camus, Courvoisier, Bacardi Grey Goose, Hennessy, Royal Salute and Patrón all have a strong branded presence. According to local press reports, the shopping centre also boasts an “immersive whisky museum”, focused on aged malts.

The enormous size and scale of the investment by CDFG and its brand partners at cdf Haikou International Duty Free City underlines Hainan’s continuing importance for the wider duty free industry at a time when Chinese outbound international travel is still a fraction of its pre-Covid levels, but continued sales growth there is certainly not guaranteed.

The country’s continuing zero-Covid policy continues to impact China’s domestic tourism and hospitality sector. The key Golden Week holiday, which started on October 1, saw an 18.2% drop in tourist trips compared with 2021, for example, according to figures from China’s Ministry of Culture & Tourism. As well as Covid curbs, a slowing economy and rising unemployment are also forcing many middle-class consumers to tighten their belts.

Growth engine

A new post-pandemic trend is emerging. Over the past two decades, Chinese consumers have been the main growth engine for the duty free sector, but this year it is Europe, the Middle East and the Americas which have been driving the industry’s post-Covid recovery, not Asia.

This trend was underlined in Swiss travel retail giant Dufry’s most recent financial results– the retailer has enjoyed organic growth of 98.8% over the first nine months of the year.

“In particular, holiday destinations in the Mediterranean region, southern Europe, Middle East, Central America and the Caribbean were driving our performance,” Dufry Group chief executive Xavier Rossinyol commented. “Southern Europe, Middle East, Central America and the Caribbean were driving our performance. The US remained strong, with South American countries having traded upwards.”

With many travel retailers having unsold stock to sell through and suppliers tentatively re-engaging with the duty free sector, 2022 has not been a vintage year for travel retail exclusive releases. However, the pace of launch activity has definitely quickened as the year has progressed. In October, for instance, Brown-Forman announced that Jack Daniel’s would launch a single malt line extension exclusively into travel retail in June 2023.

Keywords: travel retail, gtr, hainan, CDF

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