Over 1 billion people travel internationally each year – approximately 15 percent of the global population – and they spend the equivalent of more than $1 trillion in the process according to Deloitte’s Global Powers of Retailing 2015 study.
In my new job as IFS’s Industry Director for Retail, I am doing my fair share of travelling and I have been exposed to travel retailing – a segment of the retail industry referred to by companies such as Pernod Richard and L’Oreal as the ‘sixth continent’ – to a greater extent than in the past.
One billion people travel internationally each year – the numbers will continue to increase in the coming years – with a shift from traditional airports such as Heathrow and Frankfurt to the world’s largest traveling hub today: Dubai as the rising star of international airports.
What are the characteristics of this retailing segment?
Well, normally the speed and pop-up behaviors of the industry come at large as we see tendencies of high-fashion and experience-retailing trying to make use of the hours travelers spend at the airport waiting for the next flight or connection to the next destination.
I believe that the combination of flight information with the possibility of allowing for catered solutions for the customer is still immature. But I cannot understand why large airlines don’t align better and try to use such information with regard to their passengers to deliver a better retail experience.
Never a complementary service offering between the destinations, always just a connection when booking, but never during travelling – why not? Regulations? Lack of creativity? Or what?
Peripheral services for airlines are what peripherals in the printing industry have been for years; or in the booming coffee industry by companies such as Nespresso and the like – an ever-increasing important part of the low-margin high-volume business of flying people from point A to point B.
The airlines surely know a lot of information about me and my preferences as one of their travelers, and it is there ready to be used – but instead, I believe that the focus is on the cabin experience or establishing the ‘lounge experience’ for business travelers, and not the ‘transition experience’ where time really is on the side of the retailers.
Time spent in airline lounges and the ability while travelling to get work done is of course always central, but I still believe that airlines with the best ‘peripheral services’ that enable them to realize the ‘travel retail experience of the future’ will ensure that the most successful airlines will endure in the long run.
Other than that, I noticed the other week that Heathrow Terminal 5 did not have me in scope while defining their luxurious clientele with Bottega Veneta, Louis Vuitton and a small pop-up by Prada. At least my lunch at Ramsey’s ensured that the restaurateur view of the future is starting to shape – eat there, or carry on to your flight – skip the boring meals of most airliners and allow yourself an extra treat!
Deloitte has a good summary view of the trends they see in the overall retail landscape, including travel retail, and what this may look like in this infographic:
Much of my thoughts in this post were prompted by my journey experience on the way to and from Boston earlier this month to take part in the IFS World Conference 2015. I am continuously interested in understanding ‘shopping of the future’ so if you have something to recommend, please do – leave a comment here, or reach me directly: email@example.com.
[Image of the duty-free shopping area at Dubai’s Terminal 2 at top of page via HEFFX report Dubai Duty Free Sales Touch $1.9-B In 2014]