Travel Retail: Innovation & Sustainability

New Shopper Behavior Demands

Airlines in America transport around 2.7 million passengers per day on their 45,000 flights that operate on U.S. soil daily.  Undoubtedly, the rising growth in Travel Retail, especially in the airport channel, offers enormous opportunities for luxury brands. However, the duty-free business has experienced changes in its travelers' demographic.  So, how can brands embrace this shift to attract new consumers during airport stops?

From a global perspective, the travel retail market size has grown rapidly in recent years. It will expect to increase more than $80 billion in 2025 at a compound annual growth rate (CAGR) of 11%.  The Asia Pacific dominates the global market, which explains why the top beauty luxury brands invest in this region with experimental initiatives to entice new consumers.  

Let’s dive into the leading segments with the most significant volume and sales, as well as the key drivers to transform the shopper experience for travelers.

#1 Cosmetics & Fragrance:

The Cosmetic & Fragrance segment dominated the market share of the total airport channel with more than 40%, growing the interest in females in the following demographic groups: GenX 48%, Millennials 29%, Boomers 13%, and GenZ 10%.  However, it’s important to mention that Millennials & Gen Z are the groups with a significant increase as travelers. Consequently, according to the M1nd-Set research, today’s average age of women who travel is 41 years old.  Moreover, 52% of the purpose of their purchase is for "own consumption", followed by gifting with 25%. 

As the L’Oréal Travel Division President, E. Goulin, quoted during his last presentation in the TFWA Global Summit in Cannes, “Confident about the future of beauty, and confident about the appetite for travel.  Focus on experimental activations in airports with innovative ideas”. Indeed, the travelers request sustainable initiatives during their airport shopping experience. For instance, one of their new initiatives is launching Lancôme Cafe in airports. In fact, this is an excellent idea with potential to blow up as a partnership opportunity merging other industries.  Imagine a minimalist eco-design coffee store with a beautiful herringbone floor, enjoying a fresh croissant, and organically doing your beauty shopping in the same place.  Moreover, all the products emphasize reusable options through refillable packaging.  

As well as Dior did, last year when they opened their first Dior Luxury BeautyRetreat in the Qatar Airport, elevating the travel experience, combining beauty and wellness in a modern two-story retail space.  The Key findings: build connections and emotions in all your brand efforts, be more experimental and innovative in your brand exposure, and be more interactive.  As previously mentioned, the demographic profile changes require more sustainable initiatives. Hence, as a brand or manufacturer, now is your chance to open new doors for your travel-customer persona.  

#2 Wine & Spirits:

The Wine & Spirits is the second leading segment in airports. It’s important to mention that airport bar users are significantly higher spenders and regular bar-goers than the average US consumer.  One in eight (13%) consumers typically visit airport bars. The demographics of airport bar guests make it essential that marketing stays relevant to the needs and views of 20 and 30 somethings. This relative youth also makes airport bars valuable platforms for generating brand equity and sales.

In addition to understanding who is using airport bars, it’s vital to know their behaviors. About the preferences, beer leads as the most popular selection, followed by spirits and wines.  Vodka is the most consumed spirit in airport bars, and then whiskey and tequila as the top requested. Tailoring the spirit selection to match visitor preferences is crucial.  As key findings: Seven in ten (71%) airport bar users say they are likely to pay extra for a better-quality drink—rising to 82% of those aged 35 to 54. Younger consumers are also receptive to trying higher-quality brands. And, those who discover drink brands while traveling may well go on to enjoy them elsewhere.

No worries if your liquor brand doesn't appear at the top of spirits preferences, be creative in your brand exposure. For example, think you're on Puerto Rico soil and must wait two hours for your next connection.  So, you decide to go for a drink, the bar music plays Cosa Nuestra song by Rauw Alejandro's new album, and the bartenders dress a white "guayabera shirt" with the Mas Miel liquor logo.  Also, the bar mat and napkins in front of you read the same, but you notice that one side of the napkins includes a QR that shows his new tour dates.   Does that work as a great conversation piece, turning into a tasting experience? Indeed, and I'm sure you will share it on social media. In short, knowing your bar-goer preferences allows you to work on targeting strategies to create unforgettable brand experiences.

Finally, talking about airport activations, it could be interesting to know what the Puerto Rico Tourism Company will do to create a “love at first sight”

experience during the first stop of the 400,000 people who bought tickets for the Bad Bunny Residency this summer in Puerto Rico.

Sources by Fortune business Insight, Cosmetic Design Europe & CGA Powered by Nielsen IQ & M1nd-Set

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