Passenger flow could help …

Global passenger numbers will recover to 83% of 2019 levels this year (3.74 billion) and then 101% of 2019 levels by 2024 (4.55 billion), according to Kearney’s report. However, traffic volume is not the same as consumption growth. To ensure consumption growth, there needs to be a fundamental shift in the industry’s value proposition.

… but the travel retail industry will need an essential regeneration to secure its future

In addition to competitive pricing and promotion, travelers want to have the right assortment, personalized engagement, a tailored shopping experience, and top-notch services. According to Kearney’s study, 55% would buy more with more competitive prices, 37% if exclusive products were offered, and 17% if delivery was available; and 32% mention experience as a key reason to buy.

“The pandemic was clearly a significant shock to the travel retail industry—and one it is still recovering from,” said Charles-Etienne Bost, Kearney partner and head of the consumer goods, retail, and luxury business for Europe. “However, while the pandemic was a black swan, the underlying factors that have necessitated a rewiring of global aviation and travel retail were lurking even before the first headlines from China. The important thing will be to recognize how passenger behaviors and trends around travel have changed.”

Vincent Barbat, Kearney partner and lead of luxury business for Europe, adds: “The ‘trinity model’ of airports—retailers and brands worked it for years. Now, it’s time to update our thinking around travel retail. A pentarchy model, adding in carriers along with digital and media partners, now better describes the distinct forces that need to be present to best serve air travelers and their needs. This isn’t to suggest some rosy cliché that we all simply need to work together. It’s a pragmatic, profit- and growth-driven approach to keep the new trends that are influencing duty free consumers at the center of business models for a new age.”

John Rimmer, managing director at the Tax Free World Association, concluded: “As with any retail industry, the priority for duty free and travel retail is to understand current and future customer behaviors, anticipate their needs and expectations, and tailor the retail offer and assortment accordingly. It is difficult to promote our industry when we are unable to accurately define the level of sales it generates, and therefore, the contribution we make to the travel industry worldwide. Initiatives such as this report from Kearney and the European Travel Retail Confederation Index are steps in the right direction, but it requires a coordinated global approach with the cooperation of all stakeholders.”

Methodology

To better understand travel retail’s new consumer behavior, Kearney conducted a comprehensive study involving 3,500 customers across 10 countries as well as in-depth interviews with more than 40 senior executives from global airports, carriers, travel retail, and brands.

About Kearney  

Kearney is a leading global management consulting firm. For nearly 100 years, we have been the trusted advisor to C-suites, government bodies, and nonprofit organizations. Our people make us who we are. Driven to be the difference between a big idea and making it happen, we work alongside our clients to regenerate their businesses to create a future that works for everyone. Learn more at www.kearney.com

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