Nearly all visitors to the island said they visited a Duty Free shop while on the island according to the research.
The latest consumer research from Swiss research agency m1nd-set reveals essential keys to converting Chinese domestic tourists heading to Hainan. The research, which is part of an ongoing and frequently updated series of research reports dedicated to shopper behaviour on China’s “Duty Free paradise”, was conducted over recent weeks among Chinese consumers who have travelled to or who live in Hainan Province. The research provides a long-term picture with projected traffic growth as well as sales forecasts, and analyses both the travelling and shopping behaviour of domestic Chinese tourists who have visited Hainan. The m1nd-set research also highlights the positive outlook for sales given the competitive pricing policy adopted by duty free retailers on the island. Hainan’s duty free retailers are offering discounts of up to 50% compared to the prices on leading e-commerce sites, which means sales are inevitably set to see healthy growth in the coming years.
The Hainan focus research also reveals some staggering numbers in terms of footfall and conversion, emphasizing the importance of shopping for Chinese visitors to Hainan. Nearly all visitors to the island said they visited a Duty Free shop while on the island according to the research with more than seven out of ten visitors also purchasing at Hainan’s Duty Free shops. Footfall is highest in the Beauty category (55%). The Alcohol category, fuelled by Cognac sales, is also popular among Chinese travellers to Hainan with 33% of travellers visiting the category. m1nd-set reports that while second in terms of footfall after Beauty, conversion in the Alcohol category is the strongest - at 93% - compared to 70% for Beauty, making it the second most purchased category among Chinese visitors, at 31% vs 38.5% for Beauty.
The research reveals that Watches & Jewellery claims the highest spend among all categories at over US$ 960. An average of US$ 765 is spent on Beauty products by Chinese travellers in Hainan, while US$ 523 is spent on Accessories, US$ 512 on Fashion and US$ 466 on Alcohol. Tier 1 city residents and middle-aged shoppers are among the top spending segments, both of which spend above average when in Hainan, m1nd-set reports.
There are significant opportunities for brands to win over Chinese shoppers looking for novelty when in Hainan, according to m1nd-set, given the high propensity to purchase new brands or products. 68% of Chinese tourists visiting Hainan’s duty free shops said they were open to buying a brand or product they had never before purchased. The research details the purchasing behaviour for new products and brands on an individual category level. Other essential data revealed in the research includes the impact of certain touch points as purchase drivers, such as peers – family and friends – as well as sales associates, billboards, digital screens and online branding.
According to m1nd-set, there are significant opportunities for brands to reach Chinese tourists both before travelling as well as while in Hainan. m1nd-set owner and CEO Peter Mohn explained: “As well as focusing on shopping behaviour in the research, we also take a deep dive into how Chinese tourists plan their travel to Hainan – how they book, where they stay, what other activities they engage in when visiting the island. This enables us to help brands determine where best to reach their specific target segment. While large hotel group websites and airlines sites are heavily used by Chinese travellers booking their stay on the island, we also see a significant percentage booking their travel, accommodation and activities via sites such as Ctrip and opting to stay in smaller boutique hotels. We are seeing a growing number of partners seeking this type of information on a detailed segment level to optimise their pre-travel marketing to the Chinese shopper heading to Hainan.”
“With the increase in allowances, we also see a growing potential to reach Chinese shoppers who have not spent their full allowance while in Hainan” Mohn continued. “Our research analyses the level of allowances used – both in terms of volumes for liquor and tobacco or by dollar amount. Brands are using this information to reach travellers who have yet to benefit from their full allowance through post-trip marketing for online duty free shopping also. “This is increasingly frequent, especially since the government increased the duty free allowance in Hainan in 2020” Mohn concluded.