Coronavirus puts a dent in global airport retail spend: GlobalData

Duty free retail sector poised to take a tumble; duty free area in Hong Kong International Airport pictured

The escalation of the coronavirus outbreak could have a detrimental impact on global airport retail sales, which had been forecasted to reach US$48.2 billion in 2020, up 6.1 per cent on 2019, according to data and analytics company GlobalData.

Coronavirus has already dented retail and leisure spending across the Chinese New Year holiday due to consumers being encouraged, and in some cases forced, to stay in and avoid travel.

The airport retail sector is poised to take a tumble; duty free area in Hong Kong International Airport pictured

Honor Strachan, principal analyst at GlobalData, said: “The prevention of travel for Chinese consumers will impact the performance of airport retail worldwide. Over the last few years, airport retailers, especially those in Europe, have tailored their propositions, integrated Chinese payment solutions and invested in Mandarin-speaking staff to target Chinese passengers and maximise sales growth opportunities. If outbound tourism from China suffers as a result of coronavirus, airport operators and retailers must adapt their strategies to target other passengers.”

In response to the crisis, retailers are considering closing stores, with the China Duty Free Group closing its mall in Haitang Bay – impacting the Asia-Pacific duty free market in 2020.

Should foreign offices extend their advice of avoiding travel to the Hubei province to other regions, then passenger numbers and airports in tourism hubs such as Beijing, Shanghai, Chengdu and Xi’an will be negatively hit.

British Airways (BA) has suspended all direct flights to mainland China until January 31, although the BA website shows no direct flights to mainland China through January and February, while the likes of United Airlines and Cathay Pacific Airways have also cancelled selected flights to China.

Strachan added: “Asia-Pacific is forecast to be the fastest performing region for airport retail spend in 2020, with sales rising 8.4 per cent to US$21.7 billion – 45.1 per cent of the global channel. While this recent coronavirus outbreak cannot yet be compared to the impact of SARS, if the coronavirus continues to spread globally over the course of 2020, its impact on tourism and economies, particularly across Asia-Pacific, could be severe.”

In 2003, SARS caused tourism spend in China to collapse while visitor numbers to Thailand, Malaysia, Singapore and Hong Kong significantly dropped off, causing airlines to ground planes and reduce flight schedules.

However, the 2020 Olympic Games in Tokyo should provide a significant boost to airport retail in Japan, and also neighbouring countries as visitors tour the Asia-Pacific region, said GlobalData. As seen with previous Olympics, we would also expect to see a halo effect with 2021 and 2022 also benefiting from the games.

However, it added, controlling the spread and severity of coronavirus over the next two months is vital to ensure this event will still attract international visitors and achieve the forecasts produced pre-breakout.

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