The Analyst

A bloodbath in travel retail down under

The Mercurius Group’s Ivo Favotto reports that the rate of retail and F&B store reopenings at Australia and New Zealand airports continues in reverse gear, as governments in the two countries pursue ‘COVID zero’ strategies.

Ivo Favotto, a Sydney-based executive and company owner who has worked for all three stakeholders in the Trinity ecosytem, presents his latest commentary and figures on the gradual re-emergence of airport commercial activities in Australia and New Zealand. Favotto owns and runs The Mercurius Group, a consultancy focused on industry research, consultancy and benchmarking studies, as well as operating his own destination merchandise supply business. Here, Favotto – in the latest edition of his unique monthly report tracking the recovery of an initial 832 travel retail outlets across Australia and New Zealand – reflects on further setbacks to the pace of travel retail reopening in Australasian airports in the face of strict COVID-19 lockdowns. With only around one-third of outlets open across the two markets, there is little sign of recovery in sight for the industry.

The historical definition of a bloodbath was “a ruthless slaughter of a great number of people – a massacre”. More recently however, we refer to a bloodbath as “a period of disastrous loss or reversal”. Either way, it’s hard to describe what is currently happening in travel retail in Australia and New Zealand in any other way – it’s a bloodbath. According to The Mercurius Group’s 17th monthly report tracking the recovery of travel retail in Australia and New Zealand from the COVID-19 pandemic, only 32% of travel retail stores were open in August 2021 compared to the number of stores open pre-pandemic in 2019. The ratio of stores reopened has plunged from a high of 64% reported in May 2021 to a level not seen since June 2020 in the immediate depths brought forward by the pandemic. Back then, travel retailers in Australia for example had the support of the Federal Government’s Job Keeper wage subsidy programme but no such support exists this time. The ensuing bloodbath has caused yet another – even bigger – wave of jobs losses across the travel retail sector. And the cause of this bloodbath? An outbreak of the Delta variant, caused by a single unvaccinated Sydney limousine driver ferrying COVID-19 infected international aircrew to their hotel. This single incident has ballooned into a major outbreak with daily infections numbers across Australia –particularly in Sydney – at all-time highs. And the same strain of Delta COVID-19 even made it all the way across the Tasman Sea to start an outbreak in New Zealand. So, with Australian State Governments and the New Zealand Government still clinging (some say naively) to the goal of ‘COVID zero societies’, another raft of border closures has ensued, all but snuffing out any green shoots of recovery that had emerged in the first half of 2021. The continued spread of the Delta variant – despite some of the longest and strictest lockdowns across both countries – means that both lockdowns and border closures and the pain and suffering of travel retailers are likely to continue for some time. At the end of August 2021, all New Zealanders and over half the number of Australians were in tight lockdown. In Australia, the Federal Government has developed a national plan with targets for the lifting of restrictions. When 70% of the population of every State/Territory is double vaccinated, lockdowns and domestic border closures will be lifted (in other words, the slowest State/Territory can hold up the rest of the country). And when 80% of the population of every State/Territory is double vaccinated, international travel restrictions will be lifted.

Regular number of outlets versus open as at 2021

Australia and New Zealand >0.5m pax

Source: The Mercurius Group travel retail database and analysis

Double vaccination rates in Australia currently sit at around 34%, so there is still some way to go to get to 70% or 80%, even though the pace of vaccination rollout is accelerating. And some recalcitrant State leaders have seemingly already reneged on the national plan, stating that even 80% double vaccination is not enough if case numbers remain high. All this makes Qantas CEO Alan Joyce’s announcement that Qantas will restart international travel by December 2021 seem like an audition for the optimist of the year award. If ever there was an argument against a country being formed by a federation of independent states, this is it. While only 32% of travel retail outlets are open compared to 2019, the situation is a little better in F&B, where 36% of total outlets are open and a little worse in specialty retail where only 28% of outlets are open. The situation is particularly dire in New Zealand with government directives forcing all travel retail outlets to close. If there is a silver lining to the lockdowns in Australia and New Zealand, it is the mobilisation of their respective vaccination programmes which have ramped up significantly in August. As at the end of the month, 58% of Australians and 50% of New Zealanders have had at least one jab while the proportion that have had both jabs is respectively 34% and 26%. Whilst to date the common narrative in both countries had been to attain a zero COVID case count the mood is starting to shift to talk of ‘living with COVID’. However, the fate of travel and travel retail remains unclear. Unlike England, there is no ‘Freedom Day’ looming for Australia or New Zealand.

A Tale of Two Airports – continued

This month, we continue the comparison of the rate of reopening at two airports on opposite sides of the world – Melbourne, Australia and Manchester, England, which we began in July. The differences in the approaches to recovery can be seen in trajectory of the rate of travel retail outlet reopenings in both airports. While our tale of two airports case study began with Melbourne Airport having almost twice as many outlets reopened as Manchester airport, the situation has turned around in just three months. Manchester now has a higher proportion of outlets reopened (47%) compared to a declining proportion at Melbourne (39%). Contributing to the turnaround is the reopening of Terminal 2 at Manchester Airport, together with a new line-up of specialty and F&B stores.

Outlets open preCOVID vs July 2021

Manchester Airport vs Melbourne Airport

Source: The Mercurius Group travel retail database and analysis.

Footnote: The Mercurius Group, in partnership with The Moodie Davitt Report, has released the inaugural edition of the Airport Food & Beverage Study (AFABS). The AFABS 2021 edition focuses on the Australian and New Zealand airport F&B markets, covering all 27 airports in Australia and New Zealand with annual passenger volumes exceeding 0.5 million. The AFABS 2021 also features The Mercurius Group’s Top 12 F&B Operators League Table. These particular operators are responsible for 75% of the outlets within the region. Other key features of AFABS Australia and New Zealand include:

  • An estimate of overall airport F&B sales in the Australian and New Zealand market;
  • F&B PSRs by country, terminal type and airport size;
  • F&B PSRs by outlet type, outlet location and operator size;
  • The number and type of F&B outlets in the market;
  • A ranking of the Top 12 F&B operators by sales and a profile of their outlet portfolio; and
  • A profile of the F&B programme for each airport (and for each terminal where applicable).

Other special features of the publication include a commentary on:

  • How airports build an F&B programme; and
  • The potential for F&B operator consolidation (mergers and acquisition activity) in the Australian and New Zealand airport F&B market.

To purchase a copy please contact The Mercurius Group:

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The Moodie Davitt eZine Issue 300 | 16 September 2021

The Moodie Davitt eZine is published 15 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit and to subscribe, please e-mail

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