Shopper Marketing for Luxury brands: A touch of Travel Retail

Travel Retail: A new growth pillar

Travel retail is defined as the business conducted through commercial activities in stores located in train stations and airports, in duty-free or non-duty-free zones. These are specific infrastructures dedicated to travelers and shoppers from all over the world.
This duty-free sales channel dates back to the post-war period and significantly developed during the 1960s. Once associated with the sale of cigarette cartons or bottles of alcohol in soul-less airport shops, the duty-free product market has evolved: beauty (perfumes and cosmetics) now represents 30% of total sales, making it the largest category of this channel. Travel retail is thus attracting growing interest from international brands.

“This distribution channel is a strategic market for the development and visibility of our brands and contributes to the conquest of a billion new consumers.” – Barbara Lavernos, CEO, Travel Retail, L’Oréal

Airports have deeply transformed their business model to create true “malls.” Take Singapore’s airport, for example, which, under construction, will feature a giant greenhouse in the shape of a futuristic dome starting in 2018: the airport concept is being reinvented, blending commercial space with an urban park, offering a unique and immersive experience. The goal? To maximize brand exposure, retain and attract new customers.

A luxury brand circuit: the 6th continent

A privileged point of contact with a clientele that is both captive and highly qualified: the “Global Shopper” (consumer of travel retail) buys where they are, rather than where they live. The profile of the traveler and purchasing behaviors have evolved.

“This circuit targets clients who are probably more interested in luxury than the average and are over-represented (…) because the shopping experience is significantly improving in airports“, said Patrick Albaladejo, Deputy CEO of Hermès, in an interview with Le Nouvel Observateur.

With 3.6 billion passengers expected annually by 2016, this market is projected to reach 100 billion dollars by 2024. In France, it generated 1.7 billion euros in revenue in 2014 (47% of which was Duty-Free & luxury), reflecting an annual growth rate of 6% (Source: LS Travel Retail France). The airport thus becomes an ideal setting for a unique shopping experience and an opportunity for luxury brands.