Travel retail sales grow by 12%

Travel retail hits the news again this week – and as we have previously blogged about here – it’s a major growth area. Many retailers who would not traditionally trade in travel hubs are recognising the benefits of doing so and are scrambling to open new stores in exciting and exotic areas. This week a new publication by the Business of Fashion reported that travel retail sales have grown by 12% in recent years – with the largest area of growth coming from Asian customers where  tourists admit to applying a holiday-to-shop mentality that includes shopping as a one of their primary vacation activities.

Head of luxury goods research at Exane BNP Paribas, Luca Solca explained to the Business of Fashion how more growth is anticipated:

“Travel retail has been growing at about 12% in the past few years. A similar growth is expected in the next two to three years, putting it at double the growth rate for the luxury goods market.

“Travel retail is significant for the broader luxury market. We calculate that travel retail is worth about 15% of the broader personal luxury goods market.”

Vice president of Global Blue, Manelik Sfexz concurs:

“It’s really linked to GDP per capita. As soon as GDP per capita starts to rise and people have more disposable income, they want to travel, and when they travel, they want to shop. For 82% of Chinese travellers, shopping is their number one priority, dropping to 56% and 48% respectively for Middle Eastern and Russian consumers. The Chinese consider shopping a fundamental part of their travel experience. They are the sixth continent for the retail industry.”

The relevance of airports in retail sales has become increasingly apparent – for example, Heathrow airport in London welcomes 70 million passengers in any one year. Couple this with the taste for luxury goods amongst those with a disposable income and it becomes clear why non-traditional travel retailers such as Fortnum and Mason are investing time and energy into putting flagship stores into travel hubs.

Travel retail consultant at Heathrow, Muriel Zingraff, explains:

“In Dubai and in Abu Dhabi, they’ve taken a clear decision that travel retail is of huge importance. The square footage that has been dedicated to retail has made the airports a lot bigger and more like huge shopping malls. The Middle East is expecting to pretty much double their global airport sales.”

Experts such as Zingraff suggest that the impact of this shift in focus to travel retail is expected not only to increase sales within travel hubs, but in city centres as well. They recommend introducing brands via targeted tourism-marketing so that they know about the products before they leave – rather than when they arrive. If purchases of items which can’t be bought at home are planned ahead as part of the holiday itinerary, then by alerting travellers attention to them sooner, rather than later, they will increase the chances of a sale.