Industry Survey

Travel Retail Voices II

The opportunity for a hard ‘reset’

The survey asked a key question: does the industry try to return to where it was pre-COVID, or does it rewrite the rules and make a fresh start? Most airports, retailers and brands have “shunned” the idea of reverting to ‘business-as-usual’, because so much has changed. The non-aeronautical business is being reworked, notes the report. “Airports are prioritising revamps of their commercial programmes – sometimes from the ground up – with a view to driving higher spending per pax (SPP). A lift in spending has been a trend during the pandemic, but possibly an artificial one due to the skew of passenger types able to travel. In reality, nobody knows exactly how the pandemic will impact traveller sentiment in the long-run. For retailers what has been clear is that – though numbers remain low – passengers are often eager to shop when they fly.” A key question is whether consumer spending will remain high as travel returns at scale. It is unclear as yet whether that will happen. One feature of the new travel world is the emphasis on domestic travellers, with international traffic still subdued. The report states: “There is a greater appetite for airports to develop wider non-aeronautical revenue streams by targeting domestic shoppers as well as travellers. One major Asian hub could not be clearer in its assessment saying: ‘We have pivoted to non-travellers and local residents who come to the airport to shop and dine. We’re catering to the domestic market and this business is here to stay even when traffic recovers.’”

Sustainability is top of mind for travellers today

More focus is also going into property and real estate, through airport city projects for example, as a way for airports to create a broad-based portfolio that will reduce exposure to future shocks. A key question is how brands will engage with the channel in future. Encouragingly, many still see “tremendous value” in the sector. Immediate concerns for brands include restoring staffing levels and supply chains that were disrupted or halted during the pandemic; stepping up in-store experiential programmes to differentiate themselves; and reviving growth by being more on top of new trends that emerge in domestic retail. Using data better to understand all traveller segments – especially younger travellers and their sustainability focus – will be crucial. This will allow brands and retailers to target products more accurately and introduce new categories. The report also shines a light on the role of digital in consumer engagement and transactions. The report states: “Airports have little option but to exploit this to some degree if they don’t want to be seen as ‘behind the curve’, even if they have yet to find a way to make their online models fully financially viable.

The majority of respondents anticipate international traffic will come back in 2024

Q: When do you estimate international air traffic will be back to pre-crisis (2019) levels?

2022

0%

2023

0%

2024

0%

2025

0%

2026

0%

Never

0%

I can't say

0%

“An obvious ecommerce opportunity is to cross-sell and up-sell across segments such as parking, restaurants, facilities like lounges, and retail. It is a great idea in theory, but harder to achieve in practice. “Offering more of the standard product choices online using data-led selections would free up store space for bolder, crowd- pulling brand animations and for new and novel labels. At the same time, in-store SKUs could be reduced if they were available to be ordered digitally. Differentiation is also critical. Hybrid concepts, for example, across retail and dining, will be more of a feature of the landscape. And even with the rise of digital, there remains a healthy faith in travel retail as the “ultimate brick-and-mortar experience”. Airports and retailers may need to consider whether to reconfigure spaces, says the report. “Due to the pandemic, consumers may be reluctant to walk into smaller, compact boutiques and prefer an open-plan department store environment. This would also enable retailers to switch brands in and out to create more dynamic environments. Combining different brands in one space is not new, but mixing categories to create hybrid offerings has taken off during the pandemic.” Broadly, many in the industry believe travel retail will bounce back. An online survey of airports and brands conducted by Lagardère Travel Retail revealed that more than half (53%) of respondents felt the channel would be only ‘slightly challenged’ in a post-Covid environment.

53%

Over half of respondents feel the travel retail channel will be slightly challenged in a post-Covid environment

Over a third (35%) say it will be strongly challenged

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The Moodie Davitt eZine Issue 308 | 13 April 2022

The Moodie Davitt eZine is published 14 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 www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com

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