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The global fashion business journal

Jun 16, 20247:56am

Travel retail in 2018: more offer, more passengers, but less expense

The travel retail market has tripled its size since 2002. However, the expenses of passengers have reduced in their figure during the last five years, according to report Why Travel Retail Needs an Upgrade, carried out by Boston Consulting Group.

Dec 5, 2018 — 10:00am
C. Juárez

Travel retail in 2018: more offer, more passengers, but less expense



Travel retail is reconsidered in order to take off again. Despite the sustained increase of passengers in the heat of low-cost travel’s boom and the growth of the offers, the expenses dedicated to this key channel for many fashion brands have been decreasing. That’s what Boston Consulting Group’s document Why Travel Retail Needs an Upgrade reports. Collaboration, specialisation, data and follow-up are, according to the consultant, the keys to turn around the so-called sixth continent for retail.


The first step goes through the joining of forces: airports, airlines and retailers should agree on working together and innovate in the solutions that would later be implanted. The report detects some instances such as the Kuala Lumpur airport in which the facility is building an integrated big data platform in order to back up operations and provide rea-time information about clients to the companies operating inside the airport. The complex will also facilitate travellers the click&collect option to buy online and to deliver orders at the departure gate.


In that sense, the document points out that companies must do something more than working independently in order to release collaborative initiatives with the rest of players inside the airport. One of the solutions specified would be the creation of a system that could share data about travellers and their purchasing behaviour so they could use this information to offer travellers an improved experience.




During the last 15 years, travel retail’s sales have grown an average rate of 8.6% per year even if the offer has doubled up. Nowadays, this channel’s income stands around 70 billion dollars (61.68 billion euros). The aviation industry is experiencing a full-on transformation ever since the arrival of low-cost airlines, and the popularisation of exotic journeys has made the number of passengers considerably increase during recent years. For example, since the arrival of Ryanair in 2002 from the Milan Orio airport to Serio, the quantity of travellers has gone up from a million to eleven million. Furthermore, the proliferation of secondary airport


s has also opened a new market for retail companies who operate through this channel.

Concretely, travel retail trade in the Asia-Pacific has experienced the highest increase of all regions, scoring a growth of 13% since 2002. In parallel, during the same period, the number of airline travellers has gone 5% up every year. According to the International Air Transformation Association (IATA), the quantity of passengers will double between 2016 and 2035. The expense of each passenger, on the other hand, has also increased an average of 5.8% per year during the last fifteen years. However, since 2013, the figure has reduced to a 3.1%.


An appropriate use of the data is one of the options proposed by the report that could help to increase the expenses of travellers at airports. Retailers can attract customers from the moment they book their flight and thus deliver a more competitive offer. The Frankfurt airport has already taken some measures in that direction, like the creation of an app in which people can reserve products from stores. Another example is Filo, an app that integrates the information of more than three hundred airports with all kind of information.





A conjunct e-commerce platform based on data, a control tower of passengers to provide them with a better experience and a tool of personalised prices and products for each traveller are the last three keys expressed by the report that could increase the figure of expenses in airports and revert the downwards trend of the last five years.


Another of the report’s recommendations is to adapt players to the new consumer profile. As stated by the document, by 2020, millennials will represent 46% of the expenses in this channel, whereas the Z Generation will spend more time travelling.


For channels, the report proposes several solutions. First of all, airlines need to offer more products and their selection must be improved. One of the options that could be implemented is the integration with airports so they can offer the option of purchasing on line during the flight and gather the order right after the landing.


Another of the ways to improve the situation proposed by the report is aimed at stores. The consulting group proposes that retailers specialise and modify their stores’ format in this channel specifically, differentiating them from the rest of stores with which the brand operates, as well as modifying the prices of everything that is sold inside airports. An example of that is Louis Vuitton’s point of sale in Shanghai, opened at the end of 2017, which is granted with differentiating elements.

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