Why are so many travellers not shopping in duty-free any more? Like many others in the business, I am increasingly convinced that finding answers to this key question is going to be essential if travel retail is going to have a viable future.
“The business doesn’t come easy nowadays,” said Simon Knapp, GTR commercial director at Beam Suntory in an interview with me during Cannes, echoing the thoughts of many other travel retail drinks executives I met at the show. “You have to work hard for everything you get. Passenger numbers are going up, but [store] penetration is not and that is the key thing that we have to nail down. We have to get more people into the stores and convert them into buyers.”
Quite how bad the issue has become was illustrated in a fascinating TFWA research workshop held during the show. Garry Stasiulevicuis, president of travel retail research firm Counter Intelligence Retail (CiR), revealed some alarming findings from a recent study into the shopping habits of 11,500 travellers from 12 countries worldwide. The headline takeaway was that 57% of travellers don’t even enter a duty-free store – up from 52% five years ago.
Moreover, the percentage of non-shoppers rises to 61% for millennials and baby boomers, two of the largest and most important travelling demographics. The top reason given by travellers for not entering the duty-free store is that they had “something else to do” with getting something to eat the most common distraction, cited by 60%, while 39% spent their time on their phones and laptops.
The need to travel light was the second most important barrier to sales. As for what would drive a store visit in the future, Stasiulevicuis said that 49% wanted better prices and promotions; 22% would be swayed by a better product range, and 20% would be persuaded by exclusive products. “We need to have the right range of products; and although we are famous for limited editions, we need to communicate that better,” he said.
Stasiulevicuis also called for retailers to list more local products to tempt travellers while stripping out 25-30% of their overall ranges. He believes that the larger the product range offered by a duty-free retailer, the more potentially confusing and difficult to navigate it is for travellers.
Of course, getting Chinese travellers to spend remains a key priority for many in the industry and Camus president Cyril Camus told me during the show that goal is becoming more and more difficult to achieve. “Chinese consumers are becoming more demanding. They are very knowledgeable about products and pricing. They know where to get the products and they are very service driven.
“It’s a lot easier to turn off and turn away a Chinese consumer than bring them [into the store]. The Chinese expectation for service is growing faster than the duty-free industry’s capacity to service it,” he added.
Camus remains upbeat at the situation, however. “This is an area of opportunity for everyone. If we get our game up in terms of service, we’ll see sales perform better.” Let’s hope he’s right.
