Unlocking the Luxury Experience: Exploring High-End Brands in Travel Retail
Travel retail, and airport retail, in particular, have been experiencing tremendous growth in the past few years. Industry experts expect airport sales to maintain a positive trend, improving every year. The upward growth trajectory is impressive - the luxury goods market is expected to grow at half the speed. This growth does make sense, right?
Imagine you are on a vacation, the first thing that comes to your mind when thinking about home is souvenirs. Well, if not for others, you would like to buy some for yourself, right? I mean, come on, who are we kidding? Even if there's absolutely nothing special about a place, we would still want to buy something for the memory, that’s travel retail in a nutshell.
What is Travel Retail?
Regardless of the form of transportation that customers are utilizing, travel retail refers to the selling of items to them while they are traveling. This can apply to transactions made in airports, but it also applies to sales made in other places where travelers could make purchases, such as trains, airplanes, cruise ships, and other public spaces. Due to its capacity to draw in a lucrative and large portion of the traveling population, travel retail is a crucial area for both retailers and brands.
It is a market that is expanding, offering a variety of commodities such as luxury items, high-end and mid-range cosmetics and beauty products, fashion accessories, and gadgets. The market is heavily controlled, and limitations on the kinds of products that can be sold and the pricing tactics that can be used are frequently in place. Duty-free stores are a typical form of retail travel outlet and are generally located in airports. Due to the growing number of foreign travelers and their rising purchasing power, the travel retail sector is anticipated to expand over the coming years.
Bain predicts that by 2025, more than half of all passengers will be from younger, more technologically savvy generations with less disposable income. However, the number of business and long-haul travelers is declining, reducing demand for conventional and upscale airport shopping.
Global travel retail sales increased by 9% annually on average over the preceding ten years to reach $85 billion in 2019.
People Love Travel Retail: Here’s why
Everyone loves to travel, its a known fact that leads us to the question of “why”. Let’s decode it.
1. A surge in traveling
Over 1 billion individuals, or roughly 15% of the world's population, go abroad every year. Additionally, given the recent economic expansions, it is anticipated that passenger numbers may rise even further, particularly in developing nations like China. According to Statista, travel retail sales are mostly fueled by Chinese consumers, who make large growth-related contributions. This is because, the Chinese millennials are becoming a crucial consumer group for travel retail, with their preferences driving market trends.
2. Travellers are more likely to shop when they are on the road
This inclination to invest time and money in airports has a number of causes:
The layout is open: In comparison to malls and high streets, airports are significantly more democratic places to purchase. The line separating luxury and mainstream brands becomes fuzzier in airports. Travelers can access brands and products they might not have encountered in a more conventional context by just walking into the open-plan stores (since airport shops have no doors).
Long waits and requirements for early arrival give passengers plenty of opportunity to browse and shop in airports. Since airports are designed as retail areas, this encourages travelers to take their time and go about and buy while they wait.
Holiday mood: Passengers traveling for pleasure are in a good position to make purchases after clearing check-ins and security checks, whether to treat themselves, begin, or end, their trip.
3. Retailers may improve customer service by using data insights.
The predictable pattern of arrivals and departures offers shops a wealth of chances to deliver better customer care. The benefit of knowing when, where, and where customers are going to arrive is available to stores near airports. These data are being creatively used by travel retailers. For instance, the World Duty-Free Group at Heathrow Airport arranges its personnel and product displays in accordance with the time of day. In this approach, staff members who speak the guests' languages and are sensitive to their cultures can greet them. To ensure that the appropriate products are prominently displayed for curious clients, products are also altered dependent on the nationalities of the passengers swarming the airport.
4. Products receive even greater exposure
Retailers have recognized that travel retail offers them fantastic chances to promote their products, grow client loyalty, and bring in new customers from various nations. Based on the nationalities and destinations of their clients, marketers are already testing their potential success in airports. In order to appeal to consumers' craving for exclusive goods, several firms also provide "travel retail exclusives," special products that are exclusively offered to travelers.
The retail industry for travel is very different from that of typical retail. Brands have been able to take advantage of the distinctions to enter a very lucrative industry. Brands anticipate that some of their success in airports will spill over to their usual stores and maybe aid in the opening of new, lucrative markets as travel retail is predicted to rise significantly over the next few years.
The travel retail industry is a thriving, quickly changing sector with a substantial impact on the world economy. Millions of travelers throughout the world may enjoy a distinctive shopping experience thanks to travel retail's presence in airports, seaports, and other transportation hubs. The market includes a wide range of goods, from alcohol and tobacco to fragrances and cosmetics, and luxury firms are increasingly aware of its potential to attract wealthy consumers.
The Asia Pacific area stands out as the biggest market for travel retail, propelled by the rise of Chinese tourists, who have become the sector's biggest spenders. They have influenced market trends and driven the growth of travel retail with their tastes and purchasing power. Additionally, the sector has seen a boom in experiential shopping, with shops and airports investing in fully immersive brand experiences to attract customers.
Overall, travel retail acts as a fascinating meeting point between tourism and business, providing a dynamic setting for connections and growth between companies, customers, and airports. Travel retail offers customers a unique purchasing experience as they set out on their trips, combining the attraction of international brands, the thrill of exploration, and the ease of duty-free shopping, all within the exciting and fleeting world of travel.