#SOTN18: The most thought-provoking analysis of travel retail to date
1st June 2018
Counter Intelligence Retail have released an in-depth and incisive review of the duty free and travel retail business. The report doesn’t pull any punches in order to drive down to the all-important question: what does opportunity really look like in 2018 for both retailers and manufacturers?
The most definitive guide to the channel out there is necessarily wide-ranging, but it focuses in on key topics that are driving business strategy and category revenue; for example the scramble to digital, and beauty’s prominence, respectively.
Surfing the digital wave needs a fine balance
‘Hyper-connected’ passengers are not new to the DF&TR landscape, but they will define it for years to come. #SOTN18 says: “2018 needs to see (duty free) retailers give credibility to the connected consumer and understand the new normal that now exists. The domestic shopper is increasingly buying on impulse through sophisticated e-commerce channels. Duty free in-store activations must be convenient, agile, hyper-personalised, reward loyalty and complete the journey from online to offline – rather than the inverse.”
#SOTN18 also suggests that DF&TR stakeholders need to adopt technology to simplify the passenger journey. “However, operators and brands should be aware that technology is intended to simplify the user experience and remove barriers to purchase, not the other way around,” says Garry Stasiulevicuis, Founder and President of CiR. “This simplification should positively impact dwell times and drive incremental, and experiential purchasing.”
Next-gen travellers – the Chinese most especially – are seasoned users of mobile payment solutions, and DF&TR operators have realised how important this is for Asian customers.
According to #SOTN18, e-commerce shopping and cashless payments are particular trends for both Indians and Chinese – the two most populous nations on Earth. Their markets are also the fastest growing in terms of air traffic. However, a host of nations including Thais, Russians, Turks and South Koreans are also actively using their digital device whilst travelling and also posting to social media.
Given that future PAX growth is forecast to emanate from emerging nations, #SOTN18 points to mobile payments as the way to unlock hidden spend from a large number of nationalities.
Beauty is the undisputed darling of duty free
Looking at the revenue trend in DF&TR since 2015 it is clear that the channel has polarised to become highly beauty dependent. This partly reflects the greater influence of the Asia Pacific market where beauty has particular strength.
Comparing all other categories’ contribution to growth over the 2015-2017 period, beauty continues to lead from the front contributing +$4.7bn. This is more than twice the sum of all other categories combined over the two-year period, which is an astonishing feat.
Beauty has been dynamic in terms of segment and new category development, which have both been drivers in DF&TR. Looking ahead, the #SOTN18 report suggests appealing to inclusivity to better engage consumers for continued growth. The report says: “Merchandising must consider its role within a category that has seen lines blurred between gender, ethnicity and cultural roles.”
The big brands have been leading beauty’s march and #SOTN18 expects them to be the incubators of the future. “Consumer-led innovation has defined the category this past year and brands like L'Oréal are safeguarding themselves from future disruptors. This will drive the category forward whilst passing cost-savings to the consumer…but it can’t come at a risk to ingenuity and originality.”
Comprehensive insights and takeaways
The Travel Retail State of the Nation 2018 report offers stakeholder in the duty free and travel retail market comprehensive insights – not just about channel trends, but the economic and political contexts that will impinge on their future development.
“CiR’s State Of The Nation report has been invaluable to our business decision making. Digestible and with clear direction, it’s a core fundamental for any travel retail business. Covering a wide breadth of topics and issues in the industry, it allowed us to focus on the areas critical to our business in what is a fast-changing landscape. I’m confident that the 2018 State of the Nation report will prove just as valuable for our business”.
Matthew Hodges, Godiva [General Manager, Global Travel Retail]
Stasiulevicuis at CiR concludes: “We firmly believe that the detailed content and analysis found in this year’s publication goes well beyond anything we’ve produced in this series before – and anything else that is currently in the duty free and travel retail market.”
A sample of the full report can be found here.
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