Luxury’s airport strategy: Key trends from TFWA

The 40th Tax Free World Association (TFWA) World Exhibition & Conference took place at the Palais des Festivals in Cannes from September 29 to October 3. An important event for the global duty-free and travel retail industry, the conference brought together top retailers, landlords, and suppliers, with a focus on alcohol brands’ portfolios and new launches — the event also included a keynote conversation with Hillary Rodham Clinton, former U.S. secretary of state. TFWA president Erik Juul-Mortensen addressed the state of the duty-free market, highlighting the significance of air passengers as the driving force behind the sector. “Air passengers are the lifeblood of duty-free and travel retail, so recent figures published by Airports Council International World give us reason to be optimistic,” he said. Passenger traffic is projected to rise by 11.5% YoY this year, surpassing the pre-pandemic level. However, the recovery has varied by region, with the Middle East, Africa, and Latin America leading the resurgence, while Asia-Pacific continues to lag slightly behind its 2019 performance. Jing Daily breaks down the key conference takeaways for luxury brands. 1. Gen Z is the focus Like every industry, young demographics are at the forefront of brands’ strategy innovation. Travel retail is no different, with retailers and brands consequently increasing their focus on digitization, whether that is through gamification of the brick-and-mortar experience, connecting with consumers pre- and post-travel, or producing playful social commerce campaigns and loyalty schemes. “What you have to think about is how you are presenting visually, and how you are servicing [the airport] space in an artist-led way. And, what can you do from a social commerce perspective, while people are in the airport,” said CEO of beauty group Orveon, Neela Montgomery. “We’re very focused on social commerce outside of the airport. So, I think that’s something that is becoming an even bigger part of our business. I mean TikTok shops, for example, and now new platforms like [digital shopping network] Flip are all really influencing sales.” 2. Asian airports take the lead Stephane Geffroy, Head of Detail at London Gatwick Airport, said that the post-Covid recovery has shifted more toward city breaks, as well as long-haul travel, particularly from Asia. This impacts retail strategies, with a focus on anticipating future passenger trends. "We’re working towards an ideal world. How would landlords, retailers and brands come together to share data and understand what consumers want and what consumers or how consumer expectations are shifting?” said Geffroy, who joined the company last month and has high hopes for its creative evolution in retail. Conversations at TFWA emphasized that Asian airports continue to lead the way for innovation, from experiential retail, to pop-ups and activations. Singapore’s Changi Airport, for example, is not only a renowned tourist spot for its indoor greenery, it has also hosted movie theaters, a rooftop swimming pool, gaming arcade areas, and is established as a shopping destination. Jesus Abia, Managing Director of L’Oréal Travel Retail Asia-Pacific said of the brand’s 2024 skincare repair activation clinic for travelers: “By launching the Génifique Ultimate Travelers’ Repair Clinic at Singapore Changi Airport, we are redefining what is possible in global travel retail, demonstrating that Asia-Pacific is at the forefront of merging advanced science with luxury and personalized service.” 3. Vacation consumers move with consumer trends Zeitgeist-related factors are contributing to evolving consumer behavior, in China and all over the world. The booming wellness industry, for example, is shaping how people approach vacationing, and brands have to keep track of changing consumer traits. For 2024, there are some standout groups to consider when strategizing the travel retail experience, in order to capitalize on the rich luxury opportunity. Firstly, there are “writers and dreamers” who are traveling to find the mental space that fuels creativity. Then there are those looking to escape for stress relief, “honeymooners,” or people traveling on romantic getaways, family vacationers, frequent flyers, and high-net-worth-individuals. Taking these into consideration can help with the crafting of effective limited edition product lines, experiential retail strategies, and other targeted travel retail launches or activations. 4. Niche beauty brands embrace duty-free retail Some historic heritage brands continue to rely on travel retail for a large percentage of revenue, such as L’Oréal. Mario Badescu is an example of a more niche beauty brand that is finding success in duty-free retail, having entered the world of travel retail just last year. Melissa Hegazy, VP of Business Development at Mario Badescu said, “A lot of duty-free partners want a more niche brand now. A more affordable name that is popular among Gen Z. We cater to a wide demographic. It’s multi-generational – we have Martha Stewart who came to the brand because her mum introduced her, and then we have the younger generation from Urban Outfitters, who are coming in to put the facial spray in their backpacks.” 5. Internal communication is key for innovation — from airport to brand and retailer Many brands want to latch onto the sporadic, fleeting attentions of consumers in airports. Footfall in these locations is more concentrated than at any other retail location, so grabbing attention is highly competitive. It’s achieved through experiences such as Bottega’s Prosecco Bar across Central and Eastern Europe airports, or Lancôme’s train takeover at Singapore Changi Airport’s Terminal 1 Central Piazza. This takes direct communication and alignment between the airline, airport, retailers, and brand touchpoints. Brands must establish relationships and successfully pitch airport locations to achieve their goals and evolve – Lancôme’s inspirational moves in the industry are a direct result of just that.

Luxury’s airport strategy: Key trends from TFWA

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Published October 04, 2024

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Luxury’s airport strategy: Key trends from TFWA