Mountain Glory is the new addition to China’s duty free sector. The retail proposition targets winter, summer and alpine sports, a phenomenon that has grown in interest since the success of the Beijing Winter Olympics and Paralympics that were held earlier this year.
Hainan Zhihuo United Culture & Sports Industry Co, founded in March 2021, is backing the concept. Their aim is to introduce an Expo dedicated to imported sports goods, as well as create a sports industrial park and a sports town to encourage sporting-themed duty free retail.
Hainan Zhihuo United Culture & Sports Industry Co was first established under the guidance and support of the Hainan government. The development of sports resources in the island province is one aspect of the province’s far-reaching Free Trade Port Programme.
The 60sqm exhibition space will be hosted at the China International Consumer Products Expo (Hainan Expo), between 26-30 July. The event presents a high-profile opportunity for sports retail companies to collaborate with the Shenzhen Duty Free Group to promote the industry.
The huge potential of the project is recognised by its stakeholders. Interest and regular uptake in some form of regular exercise has now reached some 50% of Chinese people. Additionally, an estimated 100 million serious sports enthusiasts generate approximately 60 billion RMB (8.9 billion USD) of consumption value.
“The boundary between sport and fashion has been broken,” says Zhihuo Culture & Sports Technology (Hainan) Co General Manager Jessica Lan. Mrs Lan is highly experienced in travel retail and formerly served as the Operations and /Marketing Director of HTDF.
She continues, “luxury brands and high-end sport brands are pursuing this key opportunity. Ice and snow sports and camping and hiking are becoming more and more popular in China and camping’s upsurge will turn into a more representative ‘mountainous’ lifestyle.”
The evolving consumer dynamic has created great opportunities both for famous international brands and more niche labels. These companies are evolving in response to quickly-emerging customer bases.
“Last year the government hosted an exhibition for imported sports merchandise. It was the first one in China and it was held in Hainan,” says Lan. “The Hainan government wanted to attract all the international sports brands to come to China. Following the exhibition, they had the idea to develop this sports duty free shopping concept. And after a lot of research, we realised that this category could be a ‘blue sea’ – there is a lot of potential.
“Today, the middle-class people and the rich in China care much more about their health,” continues Lan.
The trend towards health began before the Winter Olympics but was accelerated due to the interest in winter sports in China rising.
The impact of the COVID-19 pandemic on the uptake of outdoor activities is another important factor. Increasingly, individuals want to wear internationally-recognisable brands. Customers are mostly made up of businessmen and middle-class people who are now demonstrating more interest in outdoor sport activities, and who want the most professional equipment.
“That’s why we realised that imported sport brands have a very high demand in China,” Lan adds. Duty free retail is able to benefit from consumer faith in the integrity of the channel and an aversion to buying dupes. “Duty free is a very good channel because everybody knows there is no fake product in it.”
Lan identifies the shift toward casual wear in the luxury retail industry as a prime opportunity for growth in China. “Another interesting phenomenon is that a lot of high-end sport brands want to become a luxury brand – they want to be the next Lululemon or next Canada Goose,” she says. “There are a lot of sports retail companies but we believe we have the only team with such a luxury retail background. We know how to protect and promote the image of luxury brands and also how to help high-end sports brands become luxury brands.”
So far, the reaction from the island’s duty free retailers has been extremely encouraging.
“The retailers on the island are realising that there is not enough differentiation. Everyone is selling the same products and competing on price. But since we approached them with this new concept, they have realised that high-end sports merchandise has a future in China, so the response has been very positive,” says Lan.
While many luxury brands have sports-focused lines, such ranges are not given prime retail locations and tend to be compounded with competing brands.
The Mountain Glory’s multi-level store experience will address this common issue.One level will showcase mountain sport activities, while another will showcase sports luxury items. As a result, each sport will have apt space for customers to browse.
Zhihuo Culture & Sports Technology (Hainan) Co. says that its retail proposition is a first for Hainan’s burgeoning offshore duty free industry and an ideal way for retailers to diversify their product offer and increase revenues.
Furthermore, sporting goods, including professional equipment, require considerable retailing space, something that Hainan’s sizable duty free stores certainly offer. The stores also have the added advantage of a home-delivery service where products bought and sold via the duty free retailers’ apps, including pre-order and cross-border ecommerce, can be fulfilled.
Respected international partners
Swiss company psc development is also joining Zhihuo Culture & Sports Technology (Hainan) Co in its venture. The company supports investors and entrepreneurs in developing and executing new concepts with a particular focus on the duty free sector which will be invaluable for Mountain Glory.
The company is headed by René Dafflon, a much-respected figure in the travel retail community who formerly headed the world’s second-biggest duty free retailer, The Nuance Group.
“We dream and deliver ambitious concepts, courageous brand purpose, guiding values and a sustainable brand mission,” says Dafflon of psc development’s philosophy. “All members of the psc development team are united by one vision: They want to contribute to the success of visionary concepts and are willing to invest their rich know-how, experience, and enthusiasm in every project.”
The psc development team combines over 100 years of experience in the global duty free business, covering the brand side from a purchasing and product range design perspective, while also helping their clients with operational, financial, communications and other services.
Dafflon is supported by Michel Mignot, a renowned figure in the travel retail beauty sector who spent over 40 years with industry leaders Dior and Chanel. Their colleague Lorance Dutreux Filler has also held influential senior roles with Benetton, Nuance and others during a long and successful career (including guiding the launch of a 22-strong shop opening at Hong Kong International Airport in a partnership with A.S.Watson).
“The power of money dominates the assortment of perfumes and cosmetics. The business models are such that only the big groups can afford to have a strong presence with the result that all stores around the globe are alike and have more or less the same offer. And shop-penetration is globally around 15-20%. That means around 80% of departing passengers do not see any interest in the offering,” argues Dafflon.
He continues, “Mountain Glory offers a huge opportunity for retailers, the concept has something unique. In our terminology, we don’t just talk about a store, but about a world of experience. The customer experience is to the forefront, then we present the goods. All this is coordinated with the design and decoration of the store space.”
Dafflon talks insightfully and respectfully about an “enlightened, informed and financially potent customer in Hainan”. Those customers have very specific expectations in terms of information about the manufacturer, its history, vision, manufacturing process and sustainability credentials. He claims that Mountain Glory identifies with all those principles.
Both Lan and Dafflon promise that the consumer experience will bring a new dimension to Hainan duty free shopping. Customers will enter through a fog wall, for example, navigate an ice tunnel, view some stunning panoramas, enjoy ski and snowboard simulators, and be able to browse an eclectic range of goods.
From the ground floor, which offers sports equipment, sportswear, accessories and skincare within an upscale ambience, visitors traverse the store to the ‘Top of the World’ on the top floor. This is comparable to Swiss luxury alpine resort town St. Moritz, representing the mountain sports hotspot through a combination of lifestyle, glamour and elegance on the top floor.
The luxury sports brands on display there are supported by appropriate design and merchandising and an almost intimate environment. The luxury floor will feature a dedicated reception area, a catwalk where the brands on display can hold their own fashion shows, and a podium with a piano, bar and semi-open but separated stores – all set amid appropriate alpine ambience and decoration.
All of this, says Jessica Lan, will create a shopping and experiential zone that is unique not only in Hainan but worldwide. “Hainan is the best place to develop duty free sports retail,” she insists. Based on the calibre and commitment of the stakeholders, that may well turn out to be a prophetic remark.
(Source: The Moodie Davitt Report )