Why Travel Retail should think inclusive as well as exclusive
Travel retail is set to be worth a staggering $125 billion by 2025. With its diverse culture of over 200 nationalities, fast growth in passenger numbers, a captive consumer base and with digital yet to be fully developed, it seems that things are destined to get better and better for our industry.
May 2016 | by Garry Stasiulevicuis, Managing Director
In order to optimise this predicted growth, it’s worth stepping back and considering how to make the most of travel retail today in order to prepare for tomorrow.
Airports across the world are home to impressive retail and brand success stories. A channel with exclusive product ranges, incredible retail activations and a generous investment in high-profile promotions. Of the travellers that do enter the travel retail store:
- 70% of buyers plan to make a purchase….therefore 30% buy on impulse.
- 50% buy to treat themselves….therefore we’re making the retail offer enticing.
- 30% buy a brand for the first time….therefore we’re giving shoppers confidence.
- 30% spend more than intended...therefore we're encouraging trade up.
It’s no wonder then that many brand owners view airport retail as an opportunity to expose their products to the masses, drive domestic market loyalty and capitalise on the uniqueness of the channel.
Be it for one reason or a mix of all, it’s clear therefore that the retail experience needs to be prioritised above all else to fulfil shopper, brand and the retailer requirements. In simple terms, travel retail must put the shopper at the heart of all it does.
So on the face of it, the investment that brands are putting into the channel is clearly paying off. Shoppers adore the theatre, the products and the exclusives.
But is travel retail inclusive?
Perhaps we have been lucky: the past few years have seen a surge in passenger numbers, which has positively impacted on sales. But are we really doing the best we can and can we really say travel retail is for everyone?
Today, 50%+ of travellers still do not even enter the travel retail store in the airport. Those who don’t enter say the offer is now too premium, too curated and perceived as having high prices. Lack of value for money is a key reason why travellers do not even consider buying from the channel.
Add to this, 20% of shoppers have no idea travel retail exclusives even exist, 40% of shoppers interact with store staff simply to ask for directions and 45% of shoppers would buy more if they knew items were cheaper than their benchmark.
Of the travellers that do enter the store, we know that around 50% make a purchase; however, 20% of shoppers wanted to make a purchase, but didn’t. Some said they couldn’t find what they wanted, or nothing enticed them; others revealed that they were simply overwhelmed or confused.
Then there are also many external factors influencing the channel now: the decline of the BRICs and their individual economic and political issues, the ongoing migrant crisis, the terror threat and then devalued currencies.
For a number of reasons, it seems that for many travellers, travel retail is or is becoming out of reach. Combine this with a rolling compound annual growth rate that suggests current industry sales are tracking below passenger growth and it’s questionable that the $125 billion by 2025 estimate is really achievable.
Style with substance
So the focus of travel retail efforts should be on being good retailers every day and for everyone.
During the last 10 years at CiR, we’ve worked on many category projects and, although the locations, briefs and details may change, shopper feedback is mostly consistent:
- Categories often have too many products on display
- Products that are there are not positioned correctly
- Communication is mostly one-dimensional and consumer (rather than shopper) focused.
In summary, today’s luxury agenda often comes at the expense of the basics.
Shopping in travel retail can be and should an enjoyable experience; but to provide an inclusive experience, we must consider all travellers.
The opportunity is there:
Make incremental improvements on the retail basics as it delivers lasting base line growth.
Embrace the latest digital advances to make meaningful connections.
Create retail environments that are relevant for everyone, not just the privileged few.
Lets not forget, trading up for most people is not buying a $5000 dollar bottle of Scotch, but moving from a 12 year old to a 15 year old product.
Source: CiR Data Base
Photo: Paolo Bona|Shutterstock