Duty-free shops in the city are favored to make cakes bigger and attract consumption back
Xinhua News Agency, Shanghai, August 19 - Topic: the city's Galleria format favored big cake to attract consumers reflux
Xinhua News Agency reporter You Zhixin and He Xinrong
Since this year, duty-free shopping has become popular in China. More than 10 A-share listed companies announced that they are applying for duty-free business qualifications, involving Beijing, Shanghai, Guangzhou and Wuhan. In addition to airport (port) duty-free and outlying island duty-free, new companies are targeting duty-free shops in the city. Experts said that the enlargement of the duty-free cake is conducive to the return of consumption.
Duty-free shopping "ride the wind and waves" 100 billion growth space can be expected
Recently, the Xi’an Municipal Bureau of Commerce announced that China Tourism Group CDF and Xi’an Zhongda International signed a memorandum of intent on strategic cooperation, and the two parties plan to establish the first duty-free shop project in Xi’an.
Xi'an Duty Free Shop is a microcosm of the domestic duty-free shopping boom this year. Prior to Xi’an, listed companies such as Wangfujing, Bailian, Lingnan Holdings, Ewushang A, Dashang and Eurasian Group have successively announced that they have submitted applications for duty-free business qualifications to relevant departments, involving Beijing, Shanghai, and Guangzhou. , Wuhan, Dalian and Changchun. Among them, Wangfujing's application has been approved, and it was announced in July this year that it plans to invest in the establishment of a duty-free business subsidiary with a registered capital of 500 million yuan.
Why is duty-free shopping emerging this year? According to expert analysis, there are multiple factors behind this.
First, there is huge room for development in the duty-free shopping market. Ctrip and UnionPay International jointly released the "Report on Chinese Outbound Travel Consumption in 2019", showing that in the first half of 2019, China's outbound travel expenditure was US$127.5 billion, of which a considerable part was overseas shopping expenditure. For example, South Korea’s duty-free industry sales exceeded US$20 billion, and Chinese consumers contributed more than 70%.
Affected by the epidemic this year, many consumers cannot go shopping abroad, which provides an opportunity for overseas consumption to return. At this time, setting up a duty-free shop in the country can be described as taking advantage of the trend. According to a research report from China Securities, the scale of my country's tax-free market in 2019 will exceed 50 billion yuan, and it is expected to exceed 150 billion yuan by 2025. There is huge room for growth.
The second is the support of national policies. In March of this year, 23 departments, including the National Development and Reform Commission and the Ministry of Commerce, jointly issued a document to improve the city's duty-free shop policy and build a group of city duty-free shops with Chinese characteristics. Expand port duty-free business, and add port duty-free shops. Study and adjust tax exemption limits and tax exempt categories in due course, etc.
Layout of a new track for duty-free shops in the city
When it comes to duty-free shopping, many people think of duty-free at airports (ports) and outlying islands. Especially since the establishment of a free trade port in Hainan, the outlying islands' duty-free policy has been continuously relaxed, and the annual duty-free shopping quota for outlying island tourists has been increased to 100,000 yuan per person. Statistics show that in July this year, the four outlying island duty-free shops in Hainan Province achieved tax-free sales of about 2.5 billion yuan, and per capita consumption was 5,527 yuan, up 240% and 82% year-on-year respectively.
The outlying island tax exemption policy is obviously difficult to replicate and promote. Judging from the new round of applications, many companies are targeting duty-free shops in the city.
Recently, reporters at the Shanghai Duty Free Shop of China Overseas Personnel Service Co., Ltd. located in Jing’an District, Shanghai, saw that many cosmetics and daily necessities counters were crowded with people, some shelves had been sold out, and long lines had formed in front of the checkout counter.
According to the staff of China Service Shanghai Duty Free Shop, due to the epidemic, many people have been unable to go abroad in the past six months. China Service Shanghai Duty Free Shop has gradually relaxed the conditions that originally required customers to have entry and exit records within 180 days to allow more people. Have the purchase qualification. In addition, China Service Shanghai Duty Free Store advances the store celebrations held in August to July each year. The event time has been extended and the discounts have been greater. The prices of similar products are generally 20 to 30% lower than department stores.
Tang Jiansheng, deputy secretary-general of the Shanghai Consumer Insurance Commission, analyzed that compared with ordinary department stores, the goods in duty-free shops in the city are exempt from customs duties, value-added tax, and consumption tax, and the prices are competitive. Compared with airport duty-free shops, the city’s duty-free shops have more convenient travel, longer shopping time, and more tax-free categories.
"As of 2019, the sales of duty-free shops in the city represented by Lotte have accounted for about 80% of the total tax-free income in Korea." A report from Guotai Junan Securities pointed out that the current mainstream of tax-free shopping in China is represented by Zhongdu and Nishang Duty-free shops at the airport (port) and the city’s duty-free shops will be the next blue ocean.
From "fighting license plates" to "fighting operations" sharing cakes requires good internal skills
From international experience, tax-free shopping mainly implements franchise policies. At present, only 8 domestic enterprises have tax-free operating licenses. The entry of more "new players" will help make the cake of duty-free shopping bigger.
Do tax-free shopping, is it true that "the license is available, I have the world"? Industry insiders said that they need to think calmly about this.
According to Liu Haixiao, a senior analyst at Hai Fortis Fund, the construction of duty-free shops in the city tests the operational capabilities of enterprises. "On the procurement side and supply chain management, there are very high requirements. We can't just look at who can get a license, but also who can really do this well among the companies that are likely to get a license."
In interviews with some duty-free shops that have opened in the city, the reporter also heard many customers complain: “There are not enough brands, especially some common luxury brands.” “The price is not competitive enough, not only can’t keep up with airport duty-free shops, but even Not as good as some e-commerce companies have an advantage when they make big promotions"...
According to Chen Wen, Deputy Managing Partner of Oliver Wyman Consulting, under the impact of e-commerce, my country's department stores have generally fallen into a downturn, and entering duty-free shopping is one of the transformation options. But even if you have a tax-free operating license, you can only develop better if you practice your internal skills.
"Considering the particularity of the tax-free industry, it is expected that relevant departments will control the number and pace of tax-free license approvals to avoid impacting the existing retail market." Tang Jiansheng said that the growth of the tax-free shopping market is also beneficial to industry leaders. Companies have stronger bargaining power in the face of brand owners, provide consumers with better services and more intensive promotional measures, thereby accelerating the release of consumption potential, and building a domestic and international dual cycle as the main body. Play a greater role in the new development pattern promoted. (Participate in the collection and writing: Jiang Yiming)