Travel Retail: Converting the Passenger Growth Opportunity

The global traveller is more
adventurous than ever before. Their thirst for experiential
travel has seen global passenger volumes soar
over the past few years, the international passenger
market has grown 21% since 2015. To many, it would make
sense to assume an organic relationship between
increased passenger numbers and a growth in travel retail value sales. But here at NPD Travel Retail
we know that unfortunately this just isn’t the case. I’ve identified five key
issues the industry needs to address in order to capitalise on these incredible
passenger growth numbers. Within the airport space, the
traditional core categories are facing competition
as food and beverage is fast becoming a destination
shop for passengers. The travel retail industry
needs to find a synergy or explore collaboration
with this distraction that’s luring passengers away
from spending in their stores. Domestically we’ve seen how the ascension of the digital economy is
catching retailers off guard. Digital payment solutions,
frictionless retail, direct-to-consumer digital native brands and price comparison apps have become base
expectations for consumers. To survive, duty free needs
to learn from the situation that complacency brought
domestic retailers and quickly embrace the digital age. Duty free must acknowledge
that it no longer guarantees shoppers lower priced items. The industry must look
beyond price differentiation and focus on the
uniqueness of travel retail by exploring themes
important to travellers such as exclusivity and sustainability. The low-cost traveller
is an important group but they’re not catered for directly by the current offerings in
travel retail and as such, average spend is declining. The industry must either align
with a volume driven model or challenge how their
product assortment looks in order to unlock the potential
of this key travel group. Growth is undoubtedly
coming from the Far East, but actual volume is
still being driven out of Western Europe and the United States. Travel retail must be able
to satisfy the future demands of the Chinese without sacrificing focus on present high-volume nationalities. So there you go; my five
key areas the industry needs to explore to make the most of the passenger growth
figures we’re seeing. In my latest report, Travel Retail: State of the Nation 2019 I challenge the assumptions
surrounding passenger growth and offer timely, data-driven
insights and recommendations to help steer your strategies
in these testing times. In the report I also explore trends for all travel retail
categories and discuss issues and developments for cruise,
border stores, and downtown. Travel Retail: State of the
Nation 2019 is available now. Contact us for a preview
report and to discuss my in-house workshops where
I’ll help your teams absorb the key report messages and
suggest how they can put actions in place that align with
your company objectives. I look forward to hearing from you.

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