Travel retail, and airport retail in particular, has been experiencing tremendous growth in the past few years. Industry experts expect airport sales to maintain the positive trend, improving every year to reach $100 billion in ten years, which means maintaining an annual growth rate of around 12%. The figure is impressive – the luxury good market is expected to grow at half the speed.
Why this expansion?
1. More people travel
Every year, over 1 billion people travel internationally — that is circa 15 percent of the global population. And with the recent upturns in the economy, passenger numbers are expected to increase even further, especially in emerging countries like China.
2. Travelers are more prone to shop while en route
There are various reasons for this willingness to spend time and money in airports:
- The open-plan setup: Airports are a democratic shopping spaces – much more so than malls and high streets. In airports the differentiation between luxury and casual brands becomes blurred. Travelers just need to enter the open-plan stores (as airport shops have no doors) to access brands and items they may not have visited in a more traditional setting.
- Free time to browse and buy: Long waits and demands to show up in advance provide passengers with a lot of time to spare in airports. As airports are constructed as shopping spaces, which encourage passengers to leisurely walk around and shop during their wait.
- Holiday atmosphere: After having passed check-ins and security controls, passengers traveling for leisure are left in the right condition to buy items – whether to indulge themselves, to start off or cap off their trip.
3. Retailers can use data insights to better cater for customers
The fixed structure of arrivals and departures provides retailers with tremendous opportunities to offer improved customer service. Shops in airports have the privilege of knowing in advance when their customers will show up, where they are from and where they are heading.
Travel retailers are using this data in inventive ways. For example, World Duty Free Group in Heathrow airport organizes its staffing and product displays basing on flight schedules. This way passengers are welcomed by staff speaking their language and with the needed cultural sensitivities. Products are also changed basing on which nationalities are crowding the airport, to make sure that the right products are clearly visible to interested customers.
4. Products get even more visibility
Retailers have realized that travel retail provides them with tremendous opportunities to create visibility for their products, increase customer loyalty and recruit new customers in different countries. Airports have become an area where brands test their possible success in new markets, basing on customers’ nationalities and flight destinations. Many brands also offer “travel retail exclusive”, special products which are only available to travelers to entice shoppers to buy appealing to their desire for exclusive items.
Travel retail is, in many ways, different from traditional retail spaces. Brands have managed to capitalize on the differences to tap into a very lucrative market. As travel retail is expected to grow steadily in the next few years, brands count on some of their success in airports to trickle down to their traditional stores, and possibly help open new, profitable markets.