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Markets & trends

Asia and younger generations drive travel retail trends

The travel retail industry is, by all accounts, booming across the board. New research from market research company Euromonitor predicts that international arrivals will reach 2.4 billion by 2030. However, young and urban consumers are seeking out new travel experiences.

The Asian market will continue to outperform other markets, and increase its number of passengers for the coming years. - Photo : © beer5020 /

The Asian market will continue to outperform other markets, and increase its number of passengers for the coming years. - Photo : © beer5020 /

Global duty-free and travel retail sales will reach USD 120 billion in 2025, according to a report conducted by research group Generation Research and the European Travel Retail Confederation (ETRC), the industry association for the duty-free and travel retail industry.

Perfume and cosmetics to gain traction

Perfume and cosmetics is scoring more and more space in airports worldwide, and continues to be an important category in terms of both growth and profit contribution, notes René Weber, Managing Director and Analyst Luxury Goods / Food & Beverage at Zurich-headquartered investment bank Vontobel.

For Dufry, for example, the world’s leading travel retail company (with 13% market share in the overall market and 20% in airport travel retail), perfume and cosmetics currently represents the highest market share, and has risen from 27.1% in 2012, to 30.7% in 2017. This growth is set to continue, says Weber.

Asia Pacific: On the road to further growth

According to the ACI World Airport Traffic Forecast for the 2017 – 2024 period, Asia Pacific will continue to host the lion’s share of global growth with 52%, ahead of Europe (16 %), North America (11%), the Middle East (11%), Latin American Caribbean (10%) and Africa (2%).

The Asian market will continue to outperform other markets, and increase its number of passengers for the coming years,” agrees Vontobel’s Weber, adding that the region has experienced double-digit or high single-digit growth every year for the last few years. This could lead to more consolidation in Asia in the near future, predicts the analyst.

Along with France and the U.S., China will be one of the main beneficiaries of international arrivals, according to the Euromonitor data.

We will also start to see retailers move away from Western European brands, toward Korean brands, in a bid to woo Chinese travellers, Notes Vontobel’s Weber.

Real-time targeted marketing

Young and urban consumers are seeking out new travel experiences, driving travel and tourism trends along with more targeted services and products than ever,” notes Nadejda Popova travel industry manager at Euromonitor International.

Retailers are also striving to become “more consumer-oriented,” observes Weber. “They will try to understand what kind of consumers are coming in... and when a plane for China is landing, they will try to do all of the advertisements in Chinese.

This move toward a more personalized travel retail experience is pushing retailers in this area to invest in digital marketing strategies in order to connect with their target consumer groups.

By 2023, travel intermediaries are forecast to exceed USD2 trillion stimulated by digital advances and the shift to mobile sales representing 70% of travel agents’ sales in 2017, according to the Euromonitor data.

More and more travellers are doing the whole journey digitally, from researching the trip and checking, browsing and, ultimately, purchasing products, says the group.

Unsurprisingly, for these ultra-connected consumers, the airport traditional billboards are no longer cutting it, explains Vontobel’s Weber. “Retailers will need screens which can change every five or ten minutes, in order to attract consumers coming in, and bringing them to the right spots.

The sharing economy and digitalization are bringing new business models with consumers becoming more sophisticated and demanding,” adds Euromonitor’s Popova. “Providing a seamless travel experience is critical for competitive advantage, from the inspiration stage, through search and booking to in-destination services. Artificial Intelligence (AI), big data and cloud computing all help power the drive for personalized and frictionless travel experiences,” she concludes.

Hannah Ikin

© 2018 - Premium Beauty News -
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