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International / Global

2009: for better or worse..?
By Doug Newhouse, 5 February 2009

The Business' exclusive Global Travel Retail Survey 2009 asked readers 10 questions: Here are some of the responses to Q2 which asked: Do you believe that the coming year's general trading environment will be better or worse than in 2008? Please give a few brief reasons for either view.

LARS JOHANSSON, IMAGINATION UNLIMITED INTERNATIONAL: We have to be smarter to be better; buyers have to stop playing it safe with their decisions; with risk taking comes success or failure, but you have to take chances to be a leader in the first place.

GEORGE STERNBERG, MONTESTELLI LLC: In 2009 I believe that the trading environment will be marginally better in Asia and perhaps Latin America, but may be flat in Europe, and down by a small percentage in North America. Obviously, the reasons will be the current economic crisis, weakening of the dollar, airline problems, and softening cruise ship bookings.
The new Obama administration in the USA may be able to mitigate some of these problems, but I believe that economic recovery in the USA will not begin until late in 2009, or early 2010.

MIMMO MARIOTTINI, BALLY: Worse. People need to get over this financial crisis and it will take some time before we can go back to "normal".

ANTONIN CARREAU, COTY PRESTIGE: Worse. Most actors plan a flat year, which probably means a negative year.

PATRICK BOUCHARD, PUIG: The travel retail industry has proven historically to be resilient to crisis, but it cannot and will not be immune to the global economical slowdown. 2008 has been an extremely good year, but it is clearly front-ended, and we have noticed slowdown mainly during the last two months of 2008 which will set the pace for 2009.

PIERRE GERMAIN, GENEVA INTERNATIONAL AIRPORT: No doubt worse, but in which magnitude and for how long?

THEO LAMMERS, TRAVEL RETAIL INNOVATIONS: Normal business is expected to be slightly lower then last year. However, expansion of our business in terms of new customers and the expansion of our product portfolio with our existing accounts will result in business equal to last year.
For 2009, TRI has a wider portfolio in Russia and also we have brought Philips into our portfolio which we have launched in Spain and will shortly launch with some existing accounts in the Middle East. 

FRANK ZHANG, CHINA DUTY FREE GROUP: Worse; global economy will suffer more from the crisis and would not be recovered only by year 2010.

THEODORE GITZOS, HELLENIC DUTY FREE SHOPS: Definitely worse than 2008. The main and maybe the only reason is the credit crunch and the worsening consumer confidence.

PETER ZOTTL, DANIEL SWAROVSKI: The global slowdown, which already left its mark on 2008, will continue to impact the first six months of this year and then we shall see if the second half will provide us with good growth again!

ANTHONY CHALHOUB, HABCHI & CHALHOUB: 2008 was best ever despite slowdown in the last few months of the year. For 2009 we really feel the slowdown and therefore are extremely cautious. It is probably in 2010 that a start of the recovery will happen in our industry.

S.SHRIRAM, BANGALORE INTERNATIONAL AIRPORT: To the same question last year, I had responded that time will tell and indeed, it has - positively! The newly opened Bengaluru International Airport has set the benchmark for travel retail in India. This trend is expected to continue and grow bigger in 2009 as well.
Even with an alarming reduction in the passenger numbers as compared to the previous year, the retail/F&B partners at our airport have captured remarkable penetrations into their outlets in the first year of their operations, with their focused approach towards the business and their consumers.
With continued efforts, the outlook seems to be positive this year too.

GILLES R. VIGERAL, ELIZABETH ARDEN INTERNATIONAL: 2009 will be a continuation of the progressively degrading momentum we have seen in 2008. These degrading retail trends will put a lot of pressure on travel retail operators and to a second degree on vendors who have a domestic market to rely on.

ERIC BALÉ, CHANEL ASIA: Much worse for the above reasons [see Q1-Ed].

MAIKE KIESSLING, LA PRAIRIE TRAVEL RETAIL WORLDWIDE: Probably worse on a worldwide basis, as the real crisis areas seem to have an influence even on areas which, objectively, are still in good shape.

PANAGIOTIS PAPAGIANNOPOULOS, KARELIA TOBACCO: Depends: if the US dollar continues its devaluation versus to euro, then exportation to countries that are based on US currency will be difficult or even impossible.

JACOB BRYDE-NIELSEN, UNISET: Worse. Until end of year, then I think it will change for the better.

JONATHAN HOLLAND, JH & ASSOCIATES: Worse as the recession continues to bite deeper across the whole Asian territory leading to reduced traffic and reduced spend per head.

RICHARD FERNE, CAMUS INTERNATIONAL: MUCH WORSE - the world economic situation...

KANTI TAPPOO, TAPPOO GROUP: In the case of Fiji it remains to be seen. In the past, as I have said, we have benefited from economic crisis.

MASAO ORUI, JAL-DFS: This year will be worse than the previous year due to endaka [appreciation of Japanese Yen] and the decline of international passengers at Narita.

GILES MARKS, MAUI JIM SUNGLASSES: Overall, I anticipate "flat" growth for 2009. Given the amount of economic challenges which lie ahead, we would be pleased to maintain the growth we had in 2008.

HENRY ROOKE, AER RIANTA INTERNATIONAL: Definitely worse.

DAVID THOMPSON, D.G. THOMPSON: Considerably worse; decreasing demand; lower sales; reduced profit margins.

CAROLINE CHEUNG, ESCALE USA: Trading environment will be worse in 2009 versus 2008, and the recovery may not happen till year-end, and it will be an arduous one.

KLAUS R. MELLIN, BRAUN GMBH: Obviously the financial crisis, which started later in 2008, will have negative impact. On the other hand, we can concentrate more on yet untapped opportunities.

DAVID FERREIRA, AT CROSS: It will be worse than 2008 in this region, for at least 2009 and part of 2010. Reasons: there is already a reduction of exportation in the region, price commodities down, oil prices down. The US crisis has affected the tourism in the region. The devaluation of the real has reduced the amount of Brazilians travelling to the south, therefore affecting countries such as Uruguay and Argentina. Foreign investment in the region is to be decreased in the next two years.
On the financial sector, the cost of the foreign credits has increased for local companies and also governments, therefore the availability of credits will be less. This will result in local currency devaluation (real, Mexican peso) and will increase inflation rates.

PEDRO VARGAS, JTI: I believe that the trade environment will be slowing down the first half of 2009 and pick up again in the second half. The US economy will most likely get a quick boost from the new administration with the new policies. This will have a direct impact on international trade and currencies in the second half. In the meantime, the euro may appreciate itself again against the US dollar.

SELWYN GRIMSLEY, TOURVEST DUTY FREE: I believe the coming year's general trading environment will be worse than 2008 due to the uncertainty of where "the bottom" of this global recession lies. With the continued uncertainty, companies will cut down on non-essential travel activity and consumers will be guarding their disposable income.

MAURICE DOYLE, BACARDI GLOBAL BRANDS: It will be worse than 2008 as a whole, as 2008 only deteriorated in the last quarter.

MAHENDRA MOTIBHAI PATEL, MOTIBHAI GROUP: General trading environment in 2009 will be affected negatively as all economies are suffering and lower discretionary spending. We will be getting lower spending travellers.

G.S.KUMAR, FLEMINGO INTERNATIONAL: Challenges as mentioned above [Q1-Ed] would only encourage players to push the boundaries to make the trading environment more customer friendly. I feel the trading environment will be competitively better than this year.

DANIEL SMITH, BAT INTERNATIONAL: I believe that the coming year will be slightly worse than 2008 due to the fact that less people will be travelling, and those that are travelling will be more careful with their money.

CHRIS PFISTER, VILLIGER SONS: General environment will be worse due to less passengers as a result of the financial crisis. This will influence the duty free market more than the domestic markets, where we can compensate loss in duty free in increased sales in emerging markets.

VIKASH PONANGI, V & V GROUP: (1) Worse - Global credit crunch; (2) reduced consumer confidence; (3) lack of access to credit; (4) retrenchments.

ADRIAN DONNER, AMKA OY/AB: Worse, due to downturn in economies.

PAUL MARTIN, LUCID INITIATIVES: Undoubtedly it will be tougher overall, but we are optimistic about our ability to improve further in 2009.

DOUG BENHAM, MACQUARIE AIRPORTS: To use a football saying, I believe it will be 'a game of two halves'. I believe that the first half of 2009 trading volumes will be under pressure as the current economic conditions bite, but that we may then see stability and early signs of a recovery in the second half of the year and into 2010.  

TIM PAECH, PERNOD RICARD PACIFIC TRAVEL RETAIL: All economic indicators and passenger movements in our region suggest we are in for a tough year.  

JOHN SMAILES, PERNOD RICARD TRAVEL RETAIL EUROPE: This will largely depend on passenger numbers. If these remain constant and don't show significant decline, then the outlook is optimistic. When people are in the airport, they are buying. However, it's difficult to predict here in January exactly what will happen in the coming year regarding passenger traffic and whether we will see any future declines.  

FRANCIS GROS, LUXOTTICA: 2009 will be challenging for retail in general, but I also see opportunities for travel retail. We must remember that our audience is a much higher concentration of affluent consumers than the domestic retail market, and despite softening of passenger numbers, they still exist in their hundreds of millions.
Tax-free prices can generate a natural price saving that would appeal to any consumer in the current climate. However, the key is not to rely exclusively on this, but to use it to our advantage and continue to improve the offer and experience we deliver.
In my view, sunglasses could benefit from consumers seeing them as an entry-level purchase to luxury and premium fashion brands. People still want these brands, but will not want to break the bank to buy into them.

MELVIN BROEKAART, GLOBAL LIFESTYLE: 2009's general trading environment will be better than in 2008. People will revert to duty free once again to seek for savings on their favourite items.

RAY MARTIN, TRAVEL RETAIL TRAINING: Worse, given the reasons outlined in answer to question one.

[Retailers, airports and some suppliers who provided detailed/lengthy answers WITHIN THE DEADLINE are covered separately. The full version of this exclusive and comprehensive survey is available in the January/February 2009 edition of The Travel Retail Business magazine, along with exclusive global sales statistics for 2008 from Generation Databank and detailed forecasts for every year until 2015-Ed. For a copy, please contact Janice Hook at: janice@trbusiness.com].