[Blog] Redefining Travel Retail

You’ve just finished an exhausting work trip in Zurich and cannot wait to board the flight to Gatwick…only to realize you didn’t have the time to shop for those Swiss chocolates and cheeses your family was more excited to receive than you yourself!

Or you’ve been saving up to buy the Louis Vuitton bag from the Singapore Duty Free because you’ve been told it’s the cheapest airport to buy luxury items… come to think of it, why, when and how did airports become a key retail hub?

Airports no longer only cater to the business of flying passengers. Global duty free & travel retail sales increased 12.9% year-on-year in 2018 to US$78.96 billion, according to travel retail research company Generation Research. Fragrances & Cosmetics, Wines & Spirits and Fashion & Accessories are the biggest selling categories with particularly high rates of growth being noticed in the fragrances and cosmetics market.

Everyday duty free and retail shops see different types of travelers – the serious shoppers who check in hours before their flight, the business ones who have time constraints and then the window shoppers who just like to have a look around. Whilst some passengers make pre-planned purchases, other members of these “captive audiences” often end up making impulse, sometimes unnecessary purchases that are fueled by factors such as free or no time, discounts and tax-free status or simply boredom.

The advent of private operators and infrastructural improvements has encouraged retailers to identify and maximize the opportunity within this space. Brands are now exploring a more creative way to become a part of the traveler’s journey. They are competing for traveler attention and customer engagement on both the shop-floor through formats such as pop-up shops or experiential zones and airport exclusive product lines as well as by building customer relationship strategies. The worldwide passenger traffic increased once again in 2017 by 6.6% which results in more footfall for these retailers who are now choosing to swap the high-street for the terminal.

As the concept of ‘aerotropolis’ – whereby airports increasingly come to resemble microcosmic town centres continues to gain traction, we should expect more of the same town-to-terminal rates of relocation.

Change in consumer behavior such as preference for digital and technical advancements has resulted in travel retail become more personalized and differentiated. While on-ground progress is being made, in-flight retail is also gaining relevance and importance.

KrisShop, Singapore Airlines flagship retailer, recently launched an omnichannel brand, shifting from being outsourced concessionaire focusing principally on inflight retail and sales to an omnichannel e-retailer, fully supported by all the shareholders’ resources. Be it a desktop, IFE screen or brick and mortar store, the idea is to simplify the customers shopping experience.

Similarly, FrontM plugs into IFE and airline app channels to bring its airport duty free, merchandise and e-commerce partners into the airlines. With FrontM, opening the airline to a wider retail ecosystem is a quick transformation. Our recommendation and personalization engine further drives targeting for increased conversion. We can support the best bits of inflight duty free – direct engagement and personal service, but we also go further, by viewing time in flight as a good time to browse selections of duty free goods much broader than those carried on board.