According to leading travel and travel retail research company, m1nd-set, there is still a great deal of untapped potential for increasing sales among Chinese shoppers travelling to Hainan.
The Swiss market research agency has released an updated edition of its highly coveted Hainan market focus research, published mid-2021, which focuses more specifically on the Beauty and Alcohol categories. According to the research, a significant percentage of shoppers in Hainan are still not taking advantage of their full duty free allowance, either on site or following the trip, and so not taking advantage of the post-trip online purchasing allowance and home delivery services.
The m1nd-set Hainan research reveals that only a minority – 18% of shoppers – used the full duty free allowance in Hainan and among those who didn’t use it yet, only 24% of shoppers said they had either used or plan to use their leftover duty free allowance online after the trip. Less than half (45%) of Alcohol shoppers said they had used their full allowance during the trip.
Clara Susset, COO at m1nd-set, explained that the source of the problem is lack of clarity among shoppers of the allowance and home-delivery details and how they can take advantage of these opportunities. “Around three quarters of shoppers did not use their full 100,000 RMB (circa US$15,500) so there is still a great deal of untapped potential for retailers and brands to reach out to travellers with post-trip marketing campaigns.” Marchesini/Susset said.
“More than two-thirds (36%) of Chinese shoppers in Hainan expressed a desire to purchase online but said they had difficulties in finding out where and how to do so” she continued. “Retailers and brands can bridge this gap through improved marketing campaigns and in particular, training the sales associates to encourage customers to take up the online purchasing opportunities to use their full allowance as well as make use of the home delivery option. While a relatively high percentage – more than half - of Beauty and Alcohol buyers use the service, when we look at the average across all categories, only 7% of shoppers said they made use of the home delivery service, since it was introduced early 2021.”
According to m1nd-set, this is particularly relevant when looking at the barriers to purchasing in Hainan. More than 20% of travellers who didn’t shop in Hainan said the reason was they didn’t want to carry more items with them. For middle-aged travellers, the figure is higher still at 37% according to the m1nd-set research, underlining the potential attractivity of a home delivery service for these non-shoppers.
“Communication is key and at a time when duty free sales have fallen across the globe, we must not be complacent and miss out on opportunities such as these in Hainan, where government regulations have enabled the industry to sell to the world’s largest consumer market, duty free without having to travel internationally.” Marchesini/Susset added.
The research also highlights the potential for new launches and duty free exclusives in Hainan. More than half of shoppers said they had bought new brands or products in Hainan, but between 8 and 9 out of 10 shoppers also said that brand reputation was an important aspect. According to m1nd-set, this underlines the need for lesser-known brands, whether from small companies or multinationals, to invest in customer education and brand-building activities.
“Consumer education is a vital ingredient to successful market entry in Hainan. It’s imperative to invest in sales staff education and product training, so they are aware of the brand, its core values and are motivated to promote it to the novelty seeker among Chinese shoppers in Hainan” Marchesini/Susset concluded.