What is the true price of value perception in travel retail?
We already know that 52% of travellers do not even enter a duty free retail store when in the airport; that’s more than half of the airport population lost before the sparkle of amazing retail design has had a chance to even tempt a purchase.
March 2016 | by Garry Stasiulevicuis, Managing Director
Why? More than 50% of these ‘non-visitors’ believe that travel retail is too expensive, too premium, not very good value and therefore out of reach.
But the term ‘value’ is perhaps one of the most overused and misused terms in travel retail communications. The true essence of value, and the basis on which shoppers make their decisions, revolves not around the price tag, but around the perceived benefits of owning, gifting or consuming the product.
The true meaning of value to the shopper
Although price comparison before entering a store is becoming more common place, what the shopper is actually doing (consciously and subconsciously) is trying to determine whether the value of the product is equal to or greater than the price they are being asked to pay.
For instance, a pair of sunglasses may cost $x in one shop and $y in another. The shopper likes the sunglasses because they are made by one of their favourite brands, so they know the product will be of good quality. The sunglasses are cheaper in the first shop, but the second shop offers a 5 year guarantee and breakage replacement service; the shopper decides to purchase the sunglasses from the second shop because the combined value benefits are perceived to be greater than the first shop.
Of course, all shoppers value product and service attributes differently – but the likelihood is they will buy based on the benefits a product (or retailer) gives them, rather than just the lowest price. Value is a about a good deal, not just the cheapest deal.
The meaning of value to retailers
Today, many travel retailers are so fixated on grasping at any sale that they have lost sight of providing true value to shoppers. This, in turn, undermines the whole purpose of the products existing in the first place. Any pricing policy that relies on the basis of ‘the cheapest price wins’ is flawed and will result in an inevitable race to the bottom. A place where there are no winners!
Focusing on price promotions and discounts to drive an increase in sales only works in the short-term; ‘value’ then becomes the new retail code for low prices. Ironically, all this reactive approach does is decrease perceived value for the shopper, tarnish brand reputation and diminish profit in the long-term.
The true value of travel retail
Travel retail is in a privileged position to offer something exclusive, extraordinary and exciting; the channel is already geared up to make the shopper feel special, entertained and valued. Therefore the real meaning of ‘value’ in travel retail should be a perfect combination of quality, ambience, assortment, service and price. If travel retail plays to its strengths and offers the shopper excellent service in an enticing and welcoming environment, it is much more likely to succeed and endure.
Every product and brand has a story to tell, and it relies on the retailer to help tell it. The way everything in-store is displayed, communicated and presented narrates these stories along the shopper’s journey of discovery and encourages a purchase based on true value, not just price. By selling the true value of a product, we are promoting a desire, a hope and a need that is both aspirational and attainable – which makes the price of value perception in our industry truly invaluable.
CiR insight and research.
References: Ensere Consulting