The travel retail industry has evolved significantly from its origins as a collection of duty-free shops and bookstores. While perfumes, tobacco, and confectionery stores remain prevalent at airports, the sector has grown into a substantial contributor to international airport revenue, accounting for 50% of income. Recent estimates put the travel retail sector at a $50 billion industry, with expectations of reaching $60 billion and achieving up to 20% growth by 2015.

The concept of travel retail began approximately 60 years ago at Shannon Airport in Ireland, where the world's first duty-free shop was established in 1947. Passengers on flights between Europe and North America could take advantage of duty and tax exemptions on their purchases after passing passport control. This concept quickly spread throughout Europe, becoming a staple of international travel.

The global travel retail sector extends beyond international airports to include cruise lines, ferries, and ports. However, international airports continue to dominate the industry.

Today, the travel retail sector hosts numerous glamorous brands, attracting luxury product categories like Tommy Hilfiger, Ferragamo, Hermes, and Guess, among others. Pop-up stores have transformed into high-end boutiques, offering unparalleled shopping experiences to impress customers and drive sales.

While fragrances and cosmetics remain a significant category, accounting for 31% of sales in travel retail, luxury products, including fashion and accessories, are the primary drivers, constituting 37% of sales. Travel retail has become a showcase for many luxury brands.

According to TFWA, the world's largest duty-free and travel retail association, the Asia Pacific region has emerged as a significant market, accounting for 35% of sales and outperforming Europe (34%) and America (23%).

The sales of travel retail outlets are closely tied to affluent passengers seeking big-name brands or exclusive products unavailable in their home countries. China, Russia, and Brazil are among the top countries with affluent flyers splurging on luxury brands. Travelers from the Middle East represent another target market, especially for luxury fashion brands.

Consumers often make travel retail purchases for gifting, personal indulgence, or due to the unavailability of specific brands at home. The environment that luxury brands create at airports is crucial, as brand-conscious consumers expect exceptional customer service and a wide range of luxury products. Personalized and customized offerings further enhance the shopping experience, catering to the preferences of discerning travelers.

On the other hand, travel retailers are making efforts to stand true to the expectations of the consumers, and identify buying trends and behaviors. Luxury brands are trying really hard to please their consumers, with their latest collection at the travel retail outlets. There are a few loop holes that these brands need to fix before they venture out to the target market.


Luxury brand retailers need to train staff, who can give useful insights to the buyers; make sure of availability of garments in all sizes, get timely delivery, stock up with brand new collections, take care of fittings, and after sales services to assure confidence into consumers before they spend their big bucks. Luxury retail brands are already working on ideas like getting flight details of potential consumers and updating them before hand, and even providing deliveries to a consumer waiting at the airport lounge for a pre-ordered personalized garment.


The Airports Council International (ACI) expects the passenger numbers per annum to grow up to 4.9% by 2014 in the world and that, for Asia to grow up to 8.9% per annum. With large amount of airport investment pouring in Asia, for the development of the tourism and travel sectors in countries like China, Vietnam, India, Indonesia, and Myanmar, retail facilities will improve and continue to flourish. More than 70 new airports are planned to be built by China in the next decade, and India's investment in the aviation sector is estimated to be $ 20 billion, giving impetus to the travel retail sector and a rise in the potential markets for luxury brands in these emerging economies.


The concept of luxury brand purchasing in the travel retail sector is flying high, and is going to expand, by providing better shopping experiences, and exploring new markets. The interesting merger of luxury brands and travel retail will help high flyers all around the world stay fashionable and indulge in shopping even while they are on the go.

 

References:

 

1.      Guardian.co.uk

2.      Moodiereport.com

3.      Fccsingapore.com

4.      Multivu.com