Travel Retail. Is the bubble about to burst?

Travel Retail. Is the bubble about to burst?

By: Ima Crisp   •   email: info@trunblocked.com

Travel retail is a great place to work. It’s a nice community and one that, give or take a couple of global crises, continues to grow each year – driven by the lowering costs of international air travel and the PRC middle class desire to explore the world (and to shop outside China).

However, every year we go as an industry to Cannes, Orlando and Singapore for the large trade shows. Everyone has fun, spends a lot of money, catches up with colleagues, enjoys nice dinners and mostly work hard.

Don’t get me wrong, however, it’s still like a private members club in the past – quite exclusive, where new brands find it hard to infiltrate and where a lot of the TR community do not realise that the world has and is changing dramatically.

We all talk about digital and worry about Amazon and Ali Baba. However, what’s to worry – they are two of the largest retailers in the world and they probably don’t care if they are part of the TR club, nor that they need to go to the trade shows to feel good and do business.

They have a proven business model and act fast to seize opportunities. Clearly the international traveller is a significant opportunity for them. Plus they see an old-fashioned business model in place in TR that creates an opportunity for them to enter quite easily.

The consumer votes with their feet – or fingers in the case of online. Shopper penetration in airports continues to decline and only Perfume and Cosmetics seems able to convince travellers to spend money in airports year after year.

Let’s think what a great place – and space – TR is to work in and focus more on the consumer before it’s too late and they don’t shop in TR other than for the last minute distress purchase.

Unlike high street retail, our footfall continues to grow each year. It’s an envious position to be in if you’re a high street or mall retailer. Yet the bubble that is TR is about to burst unless we do something quickly.

A high MAG concession model doesn’t work for two parts of the Trinity and, as a result, my view is that brands will invest less in TR as margins get cut to the bone.

This will lead to the traveller penetration dropping even further, and then operators will fail and airports will go back to operating their own stores in their own airports – way back to the origins of TR seventy years ago.

Time to wake up, before the bubble bursts, and recognise that the consumer is our priority and change is an opportunity that we must all embrace quickly.

Leave A Comment