Travel retail is a classic and important sales channel for many brands. But, in recent times, it is becoming even more relevant. The data made available in recent years shows that not only is it worth paying attention to, but it could also be one of the best moves for boosting sales.
According to the Duty Free World Council (DFWC), sales in duty free stores throughout the world have improved considerably during the last quarter of 2017. This improvement has been particularly consistent in the Asia-Pacific region, with an increase of 12%, as well as in other regions such as North America and Europe where sales have seen an increase of 7% and 8%, respectively.
But this didn’t happen out of nowhere. In fact, since 2004, sales data in travel retail trade has grown by an average of 10%, and the forecasts remain positive for at least the next six years [1].
Why Is There Such an Increase in Travel Retail?
The globalization of tourism has made it possible for people to travel much more than they did a few decades ago, causing the tourism industry to develop enormously. In this sense, commercial spaces that are related to tourism, such as shops in airports, railway stations, ports and museums, have caused a renewal of travel retail business formats. This growth has also been influenced by the industry’s development and changes to the management of commercial spaces, as we discussed earlier.
When we think about what classic airport shops were like just ten years ago, we remember cold and impersonal shopping spaces, where people ended up making purchases out of obligation or boredom, after spending endless hours in the airport.
The difference today is that the needs of travelers are increasingly better understood. People who travel spend many hours at the airport and require more welcoming environments, as well as more enjoyable experiences in the commercial spaces.
However, this is not enough if retailers do not want to fall into stagnation. On top of the innovation and creation shopping areas that offer experiences to customers, we must add a touch of differentiation and exclusivity. Just as Pere Ruiz Fausto, Commercial Director of HMY Retail Solutions, says, “Purchases must be perceived as a set of unique experiences, in which the products offered are shown as something unique, which cannot be found elsewhere or by other means.”
The Most Successful Sectors in Travel Retail
Within travel retail, we must highlight some sectors in which the numbers are especially good. Businesses dedicated to food products (especially liquor, chocolates, cookies, nuts, and other such products) and beauty products are the classic players in the commercial areas of airports, as well as the toy, magazines and tobacco sectors. The luxury segment also stands out particularly.
A clear successful example has been that of Estee Lauder Companies, whose brands have experienced a lot of positive growth within the travel retail channel, with a 14% increase during the last fiscal quarter.
Innovation and Technology as Keys to the Future
When it comes to innovating and creating unique spaces and experiences for the buyer, technology has and will continue to play a key role. Not only because it is essential for increasing and reinforcing a brand’s visibility, but because it can also be a starting point in the creation of truly distinctive spaces.
But when we talk about purchasing experiences, we do it not only in terms of sampling and testing products, or in decorating environments, but also during the final moments in the purchase, which is payment. This is something that Patricia Rodríguez Mediano, Key Account Director of HMY Retail Solutions, explains very well: “The differentiation of supply in relation to other distribution channels and other geographical areas will be the key to boosting consumption, based not only on the product, but on Payment Methods (Click & Collect) and the purchase experience, the key to success.”
