Consumers, collaboration and creativity

Strong performance: Furla’s travel retail division posted a +14.5% sales increase in 2017

And what are the biggest challenges?

Travel retail needs to get better at telling people who we are and what we do. Many consumers still do not realise that there are savings or exclusive products to be had by shopping in an airport, so we need to market ourselves as an industry better, and this includes all stakeholders.

After nearly 20 years, too many passengers at airports within the European Union (EU) still don’t understand what they can or cannot buy ‘duty free’. Carry-on restrictions for certain airlines continue to be confusing and difficult, putting passengers off from buying on the ground.

Security clearance continues to be a nightmare, reducing the time consumers have to shop once they’re airside, while the ever improving food & beverage offers, along with increasing leisure facilities at airports, mean more competition for the little free time that passengers have.

Brands that can afford to are doing a magnificent job at airports with disruptive activations that draw the attention of the consumer, but this does not relate to all brands that do not have a huge advertising budget behind them.

Well, this is the subject of my speech at the next Trinity Forum in Shanghai, so I’m not sure I should go into that too much here! But briefly, I think that the physical and digital world in the domestic market is going to become much more intertwined with the role of stores changing to the point where they are not looked at as stand-alone profit centres. Travel retail needs to become a part of that process one way or the other – the question is whether it can or when.

Every generation is labelled: Baby Boomers, Generation X, Xennials, Millennials, Generation Z. Can we really lump whole generations together like this and decide a whole generation wants this or wants that? It seems to be the norm these days – but I know plenty of Millennials who hate being referred to as such; they want to be seen as individuals not as part of a group. Gen Z even more so.

I think that as a channel we’ve got very caught up with Millennials and have forgotten that there’s a whole heap of other people travelling who may happily spend money in travel retail if only we offered them products they want. For a start, we’re living in an ageing world – while Millennials and Gen Z are backpacking their way around the world on a shoe-string budget, Baby Boomers are spending their retirement travelling in style with disposable incomes way above digitally focused youngsters. We need to be more encompassing of everyone travelling, not just the few. There are plenty of successful fashion & accessories brands that have proved it’s not all about luxury.

Furla takes a strong position at Shilla’s new Beauty&You stores at Hong Kong International Airport

Unfortunately, I think it is the way it’s going to be for the next decade – as long as retailers continue to offer unrealistically high bids, airports continue to accept them and expect them, and the huge multi-brand companies continue to view the channel as a showcase and not a profit centre. The pressure always ends up on the smaller supplier in terms of margins, while the consumers often question the resulting value offer. Smaller, innovative, interesting brands are priced out of the channel and the resulting offer to the travelling consumer is not as rounded as it could be.

Is there a breaking point? Yes, ultimately there will be as this cannot go on ad infinitum – especially given the rise of e-commerce. It just needs the bigger groups to collectively make a stand against ever tighter margins. Just imagine if all the major liquor and beauty brands pulled out of the channel – that would have to make the airports and retailers rethink the model.

It’s a bit like the property market in the UK. Greed, basically, has seen house prices (particularly in the Southeast) go up and up at a ridiculous rate over the past decade, making it practically impossible for today’s youngsters to get on to the housing ladder. But the tide is turning. Houses on the market aren’t selling and predictions are that a major crash is on its way with prices falling by up to -35%.

Nothing lasts forever. Is there too much greed in travel retail? And what needs to happen before it really affects our wonderful industry?

It’s long overdue. It’s the only way that airport retailers will be able to use the amazing data that airlines hold and is most definitely the way forward, though GDPR [General Data Protection Regulation] restrictions will make it more difficult to work around within Europe.

There’s a long way to go. One airport/retailer having a programme with one airline when the airport may have 100 or more airlines using it still means there are an awful lot of consumers whose profiles are still anonymous.

No nonsense, straight, honest, loyal and fair. I believe that is what most people would say. I do believe in getting straight to the point and sometimes it seems I am being a bit harsh, but I can truly say that my heart has always been with this great business. I hugely value the relationships I have built over the years within the industry – on all sides of all the fence – and long may they continue.

Bringing all sides of the business, including airlines, to work together for the mutual benefit of all, so that this industry continues to exist, grow and prosper for many years to come.