Plenty to work and hope for, says TFWA president

04 October, 2017

The pressure on the luxury sector continues, according to Tax Free World Association president, Erik Juul-Mortensen.

Juul-Mortensen was speaking at the curtain-raising conference to the TFWA’s annual World Exhibition in Cannes this week (Oct 2).

He said once again fragrances and cosmetics performed the best with year-on-year growth of 9.2%. Whereas watches and jewellery sales declined by 8.4%. “The pressure on the luxury sector continues,” said Juul-Mortensen.

In terms of sales by channel, the strongest performer was ‘other shops’ which grew by 7.3%. Sales here are mainly at downtown and border locations and, increasingly, on-board cruise ships. The key driver of growth had been the sales of perfume and cosmetics in Asia Pacific downtown locations.

Across the regions, Asia Pacific was once again what Juul-Mortensen described as “the engine room for the industry” with a year-on-year growth of 8.2%.

The data, from Generation Research, showed that while in 2015 the industry experienced the first year-on-year decline in global sales in six years, final results for 2016 show that there has been a modest recovery. Year-on-year sales at US$63.5 billion were plus 2.4%, an improvement on the negative 2015. 

The first quarter of 2017 is showing some encouraging momentum building on the modest recovery of 2016, said Juul-Mortensen, and versus quarter one of 2016, global sales in quarter one of 2017 were up 4.2%. The two key drivers continue to be fragrance and cosmetics with sales up 11.6%, and the Asia Pacific region where sales were up by 7.8%.

In terms of sales channels, airports are up 2.2% and other shops grew by 7.8%, again with the perfume and cosmetics category driving this growth.

Juul-Mortensen went on to state that the duty free and travel retail industry desperately needs data that is as accurate and reliable as it can possibly be, and said that trade associations cannot expect to win the attention of government bodies around the world “if we cannot accurately say what we as an industry are worth.

“The need for meaningful, accurate data is something we at TFWA take extremely seriously and we have been frustrated by the fact that this need is not always universally acknowledged.”

He did, however, recognise the fact that in a concession-driven industry such as duty free and travel retail, data is extremely sensitive, but a way around this must be found for the good of the industry.

The progress of the tax free/duty free channel is dependent on what is happening in the wider world.

“Elections in the US, France, the UK and South Korea among others have produced results that were unthinkable just a short time ago. A climate of uncertainty reigns – and if there is one thing that economists and business leaders dislike, it is uncertainty,” said Juul-Mortensen.

Terrorist attacks are becoming increasingly frequent, and tourism, in some key and well-known locations, has been almost wiped out as a result, he said.

“We have seen in East Asia and the Gulf this year how vulnerable our industry is to regional disputes that ultimately affect the free movement of travellers between nations. The tensions and the serious situation around Korea, north and south, could have grave consequences for us all.”

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