Lotte Duty Free Shop
October/November 2006
THE MOODIE VIEW
Welcome to The Moodie Report.
A s this edition went to press the softening of the
Japanese Yen had reached near crisis propor-
tions – not just for world economies but for the
travel retail trade. The Japanese may not be quite the con-
sumer force they were through the 1980s and early 1990s,
but they remain key to the industry’s fortunes.
By definition currency fluctuations work both ways but,
when you’re on the wrong end of it, it is perhaps the most
frustrating negative a business can encounter – precisely
because there is nothing you can do about it.
Take DFS Group in Hawaii, for example. The retailer runs
a superb operation there, merchandising with all its cus-
tomary élan and exploring every possible means to per-
suade customers in-store and to buy. But its business is a
one-target phenomenon – the Japanese. So when the Yen
slides out to nearly ¥120 to the Dollar, as it had when we
went to press, that can only translate into depressed sales.
Equally, fewer Japanese choose to visit a destination
where they are going to get less value for their money.
DFS has blamed the soft Yen for the lacklustre Hawaiian
tourism market this year, with Japanese arrivals having
fallen by -8.6% year-on-year in the first eight months.
The Yen has also suffered a prolonged slide against the
Euro and other key travel retail currencies such as the
South Korean Won. This month’s unfortunate news of
an underground nuclear test in North Korea is consid-
ered by most analysts to be a further dampener on the
currency.
Dow Jones quoted Divyang Shah, a global strategist at
IdeaGlobal in London, as saying: “If ¥120.00 breaks…
then this changes everything.” He wasn’t referring to
travel retail. But he could have been.
It has been a turbulent few weeks for the travel retail
channel. The 10 August terror alert in the UK and its sub-
sequent impact around the globe put the business in the
global spotlight – and it didn’t always show up favourably.
The Moodie Report
FROM THE PUBLISHER
In the lead-up to this edition the restrictions on duty free
purchases that had hurt business so badly around the
globe in the wake of the alert began to be eased. Europe
is heading towards a ‘business as usual’ situation, albeit
with goods having to be carried in sealed bags.
The all-powerful Transportation Security Administra-
tion (TSA) in the US has been surprisingly reasonable in
recent days, easing hand baggage restrictions from 26
September. Allied to good behind-the-scenes work in
Europe by industry lobbyists, the outcome on both sides
of the Atlantic has been broadly favourable to travel retail.
TSA Assistant Secretary Kip Hawley noted sensibly: “We
ask passengers to go through a lot at the airports in the
name of security. TSA has a corresponding obligation
to make sure that what we ask travellers to do is, in fact,
really needed for a current security reason.” We say bravo
to that.
The most important thing to come out of the respective
TSA and European Commission clearances for a return
to normality is that a fundamental industry tenet has
been accepted. The channel’s key defence against being
caught up in a long-term ban was the highly regulated,
secure and compliant nature of the supply chain from
bonded warehouse to shop shelf. The counsel for the
defence put the case – and won it.
But the industry, buffeted by recent events, can only
afford a temporary sigh of relief. As we have said before,
collectively it was caught napping in August – and we
believe the argument for a full-time CEO of global body
the Duty Free World Council has become irresistible.
That said, once the industry did spring into action – in
Europe this followed a pivotal, well-supported meeting in
Amsterdam just days after the UK terror alert – it showed
that it can be an effective fighting force. The European
Travel Retail Council did the right thing in August by
appointing an external consultant (John Hume) to help
lobby the authorities. And the industry should be grate-
ful to have dedicated individuals such as Frank O’Connell,
Sarah Branquinho, Keith Spinks and Michael Payne in
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FROM THE PUBLISHER
the US. Without their efforts, and those of others, the
regulatory outcome could have been very different.
But the business must heed the lessons and build
pro-active defences. Hume, who has been a tower of
strength in recent weeks, should be retained full-time –
it’s hard to think of a better investment the European
industry could make, given recent events.
The industry must not only self-regulate but be seen to self-
regulate. To the authorities, to the politicians and to the
consumer it must talk up its own regime, its commitment
to traveller safety and the merits of the service it provides.
We said on 10 August when the terror alert was
announced that it was the day the duty free industry
feared. Hindsight tells us it could have been much, much
worse. If the right lessons have been learned from this
very rude awakening then some real good will have come
from the crisis.
Sung-Joo Kim. Remember the name. We think she will
have a profound impact on the travel retail and luxury sec-
tors in the years to come. We tell Ms Kim’s remarkable
story on page 238 and it is, I believe, one of the most fas-
cinating interviews you will ever read.
Born into one of South Korea’s and Asia’s richest families
– which controls the Daesung Chaebol – Ms Kim, in
keeping with Confucian tradition, as a woman did not
share the family inheritance with her three brothers. To
say she was unimpressed would be an understatement but
she channelled her feelings into a determination to artic-
ulate and advance the cause of women in South Korean
society and business.
She is leading by example. In 2005 she acquired control
of ailing luxury brand MCM; nearly two years later it is
no longer ailing but bursting into new life. She says that
Asia, and Asian women, are the coming forces. When you
meet Ms Kim you believe it. Remember her name, her
brand and her formula: IQ + EQ = WQ. What’s WQ?
You’ll have to read the article to find out.
I started The Moodie Report back in September 2002 in
what was ubiquitously known among my industry col-
leagues as the Worldwide Headquarters of Moodie Inter-
national. It was in fact, as my friend and regular mentor
Mohamed Mounib of Abu Dhabi Duty Free regularly
reminds me, my garden shed.
We’ve come a long way since then but we have no qualms
about talking of our humble beginnings. In fact they give
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October/November 2006
us cause for immense pride. To enter an overcrowded
media sector, to challenge every rule in the book and to
come out four years later in a leadership position in all
sectors of our multi-media business – e-mail, Internet and
print – is immensely rewarding.
We’ve made that journey with little start-up capital, no
borrowings and a simple vision that said – to quote the
famous phrase from ‘Field of Dreams’ – ‘build it and they
will come’. That philosophy, based on our adage of ‘Fast,
Factual, Free’ quality, neutral information underpins
this print edition and our whole multi-media portfolio.
While this publication carries my name, it is the end prod-
uct of many people’s passion and dedication. Reading the
words in this issue by Rebecca Mann, Mary Jane Pittilla,
Hui Min Neo and Dermot Davitt, I am proud of the team
I have gathered at The Moodie Report. The back-room
staff led by my redoubtable side-kick and long-time friend
‘Captain’ Bob Wilby, the ace production and design duo of
Jon Elphick and Ray Heath, and the super sales force of
Mandy Shine and Claire Wates not only go the extra mile
for me, they throw in a marathon along the way.
I thank them and I thank you, our audience, for your
readership and support of The Moodie Report.
– Martin Moodie, Publisher
Duty Free – The First 50 Years DVD
With the May/June print edition of The Moodie
Report we attached a DVD copy of the above film.
This 70-minute documentary covered the begin-
nings and extraordinary development of the duty
free industry over its first 50 years.
Unfortunately the packaging and the credits on the
film itself – supplied to The Moodie Report – failed
to include key details of the original sponsors and
producers.
The video was originally produced by Marshall
Lightfoot during the campaign to retain intra-EU
duty free. Its production would not have been
possible without the generous support of all the
sponsors involved. They were Aer Rianta, Allied
Domecq, BAA, Dubai Duty Free, Nestlé and TFWA.
The producers would like to take this opportunity
of thanking them again for their support. We are
also pleased to invite anyone who did not receive
the DVD in May to contact Peter Marshall at
admin@marshallartsinternational.com
The Moodie Report
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