Coronavirus will devastate airport retail worldwide
Global airport retail sales are forecast to reach US$48.2 billion in 2020, up 6.1% on 2019, according to data and analytics specialists. However, the escalation of the severity of coronavirus could now have a detrimental impact on airport passenger numbers – causing concern for airport operators and retailers.
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 maximize 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 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. 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.
In response to the crisis, retailers are considering closing stores, with the China Duty Free Group closing its mall in Haitang Bay – impacting the APAC 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. 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.
Asia Pacific is forecast to be the fastest performing region for airport retail spend in 2020, with sales rising 8.4% to US$21.7bn – 45.1% 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 APAC, could be severe.