Tag: travel retail

A string of officials gathered on Friday, led by the governor of Hainan province, Feng Fei, to open a vast new duty-free shopping mall in Haikou, the capital of Hainan, a duty-free island in the south of China.

The scale of the project from China Duty Free Group (CDF), part of the recently-listed China Tourism Group Duty Free, is impressive. At just over three million square feet (280,000 square meters), the shopping center, called cdf Haikou International Duty Free City, is bigger than Florida’s largest mall, Aventura, and close to the size of American Dream in New Jersey.

The difference is that cdf Haikou International is fully dedicated to duty-free shopping and has been designed to be a luxury mecca. CDF describes it as “the largest single duty-free shop in the world” and a driver of internal tourism to Hainan. The government of China has continued to keep its citizens behind its borders thanks to its zero-Covid policy—whose staying power may be longer than some had first thought—so Hainan has become the alternative to traveling abroad in order to shop duty-free.

In a statement, CDF said: “With the continuous recovery of the domestic tourism market, CDF Group will maintain its dominant position in the tourism retail market in Hainan, and cdf Haikou International Duty Free City will become a new benchmark.”

Luxury has pride of place

More than 800 well-known international and domestic brands are showcased with around 25 claimed to be firsts for the island, and some tagged as exclusive to CDF. Among the luxury line-up are: Alexander McQueen, Balenciaga, Bottega Veneta, Burberry, Moncler, Prada, and YSL. More niche international luxury names coming to cdf Haikou International include: Ami Paris, Christian Louboutin, Maison Margiela and Thom Browne.

These brands—50 of which sport their latest store concept designs—sit together in a high-end section covering nearly 43,000 square feet. Seven brands have developed concepts specifically for cdf Haikou International.

Beauty has been handed a huge 323,000 square feet of space on a single floor. Other notable features include first-to-market spa experiences from luxury brands like Givenchy and Guerlain; China’s first whisky museum; a ‘secret forest’ themed atrium created by Wētā Workshop, the six-time Academy Award winner for best visual effects; and the world’s largest 180-degree dome-screen flying theater (with a 60-seater ride) for the first time. Meanwhile, the 50-strong watches and jewelry line-up will include Boucheron’s Jardin d’Hiver, the only luxury boutique in the mall serving French afternoon tea.

Spreading the money around

The mall, on the west coast of Haikou City close to its new seaport, sits in one of six plots that include a luxury hotel and offices. With the array of entertainment elements, CDF has clear intentions to wow its customers and push up duty-free spending in Haikou, which sits at the top of Hainan Island, to basically spread the spending around.

The current magnet for duty-free shopping is the tourism center of Sanya in the south, where CDF has its original duty-free mall and where there are other competitors. Tourism in Sanya has exploded in the past decade. In 2012, the city welcomed over 11 million visitors, and by 2021 the number had almost doubled to 21.6 million.

However, tourist revenue has quadrupled in that time, reaching over $10.5 billion according to Hainan’s inward investment arm, IEDB. Duty-free sales have grown even more spectacularly across the island, from $317 million in 2012 to $6.9 billion last year, according to data supplied by Statista.

That past performance is not necessarily a guide to the future though. Covid has taken its toll on China’s middle classes and youth unemployment has soared. Jason Cao, the founder of the WeChat account DutyFreeExpert (DFE
DFE
), told me: “Wealthier people are not affected by Covid and they may be spending more. But the middle classes have lost purchasing power and they are looking for more affordable products and are a little more price conscious.”