Preparing for a Post-Covid World: the Future of Luxury Travel Retail

Tong answers your burning questions about China

What’s changed in China’s approach to Covid?

If we recall the protests from late last year, we can pinpoint the origin of this change in policy. In November 2022, after three years of increasingly strict lockdowns, Chinese society took to the streets to vent frustration at the government’s Zero-Covid policy, catalysed by a fatal fire in an Urumqi tower block. The result was an unprecedented government response wherein pandemic restrictions were rolled back, with some policies doing a complete 180 within weeks. This event initiated the process of dismantling the Zero-Covid policy, first with isolation requirements, then testing, and finally travel.

China was the last country to pursue Zero Covid, heralding it as an innovative approach to pandemic management. These drastic changes to the Covid policy are tacit acknowledgement of how unsustainable it was. On the 8th of January, Chinese airports were transformed with joyous scenes of the first travellers returning without having to quarantine.

Should we expect a surge in outbound Chinese travel?

If China’s travel agents and booking platform traffic is anything to go by – yes. Although it’s difficult to predict how quickly outbound travel will recover (many analysts predict it will never quite get back to where it was in 2019), there is strong evidence of ‘revenge tourism’ boosting travel retail as Chinese consumers are eager to shake their cabin fever and tap into unmet wanderlust.

That being said, as a wave of Covid sweeps China’s largely unvaccinated, ageing population, many people are still taking significant precautions, indicating that it may still be a little while yet before mass tourism recovers. South-eastern economies which suffered immensely in the absence of Chinese tourism (Thailand, Cambodia, and Vietnam), are desperate for Chinese travellers to return, with Thailand even offering access to mRNA vaccines, which are more effective against Omicron and currently unavailable in mainland China. These short-haul destinations will likely bounce back the quickest, while the streets of London, New York, Paris, and Milan can expect a trickle of shoppers unfazed by the long-haul journey.

Many countries have imposed testing restrictions on arrivals from China (the UK included). These were met with a strong reaction by the Chinese government, who have accused them of politicising the issue (without even a hint of irony given that China also still requires such testing for inbound arrivals). Netizens on the other hand are generally understanding of such policies; if anything, it makes them feel more confident in boarding a cramped aircraft for extended periods of time.

How have the expectations of the Chinese traveller changed during the pandemic?

As with other areas of retail, the pandemic fundamentally changed relationships between brands and shoppers, particularly in terms of expectations and priorities. Comparative survey work on ultra-high net worth individuals in China last year revealed a greater propensity for splurging on uniquely cultural or natural experiences – in particular, further afield destinations requiring long haul travel. This change in consumer sentiment has caused additional seismic shifts in the travel landscape. With travel restricted, consumers turned to luxury spending to fill the void, prompting brands to ramp up their ecommerce offerings, some of which were more successful than others. Streamlined ecommerce strategy remains a crucial touch point for brands in the China market, but the focus now should be on re-engaging with consumers on their home-turf. Post-Covid, expectations for integrated shopping experiences are naturally heightened. The challenge for brands will be delivering an equally experiential story through their offline channels. In certain categories (beauty and fashion), local players are now global competitors. Aided by the vacuum created by the pandemic, local challengers are here to stay, and brands must learn to adapt.

What should brands do to prepare for the return of the outbound Chinese traveller?

Those already in the market should prioritise re-kindling relationships through the lens of their consumers. This is a unique moment in time which is both exciting and inspiring for Chinese people who are suddenly confronted with the notion of rediscovering and reconnecting. Newcomers can make the most of this opportunity to capture market share when consumer brand loyalty is at its weakest in well over a decade. As Chinese tourists descend on London, there is no better time to explore emerging routes to market and capitalise on low-hanging fruit in the form of travel retail. Leveraging overseas influencers, investing in geo-located promotional content, and seeking out partnerships with travel booking platforms is key.

Tong are hosting a webinar: Return of the Chinese Traveller? Preparing for a Post-Covid World, on the 26th of January to explore answers to these questions and more. Register here.