Image

Monthly Archives: November 2020

Luxury advent calendars – a missed opportunity for travel retail?

/

Why aren’t there more luxury advent calendars in the travel retail marketplace?

Major beauty names along with more jewellery and alcohol brands have been enjoying the advent calendar sales lift at the this time of year for a while now. So how come these branded bundles of joy are not more widely available in the duty free environment?

Larger size packaging and weight will be key issues. However as more travel retailers start to embrace omnichannel and digital ordering capabilities such as click-and-collect on arrival home, is it time for a rethink? How about bundling advent calendar promotions into the potential new arrivals duty free offer in Europe?

Apart from the physical size stock challenges, beauty advent calendars in particular present an opportunity for exclusive or limited edition product showcases. An opportunity for retailers to work with brands for one-offs exclusively available per region for example.

Luxury advent calendars have become a global reach target for major tourist retail destination stores such as Liberty, Selfridges and Harrods, while jewellers such as Tiffany & Co have also launched HNWI showcases that lend themselves well to international digital marketing campaigns.

Influencers and digital reach go hand-in-hand to help promote the one-off appeal of festive advent calendars in the run up to Christmas. According to marketing website My Market Insight, online media dominates the advent calendar advertising category as it represents 99% of coverage in EMV (Earned Media Views) and 90% in mentions. Apparently, mentions have shifted from online blogs to online publications, which now have a 79% share of mentions – driven by a doubling of advent calendar articles, to help promote partner brands’ products.

My Market Insight found that 2019’s most popular beauty advent calendars – by online mentions – were The Body Shop and Elemis, as they both scored highly on its EMV scoring.

The Financial Times has a consumer-friendly shopping list for its top 10 favourite 2020 advent calendars, Diptique and Dior Beauty and Fragrances among them.

Here’s a recent digital campaign case study by Echolution that targeted overseas shoppers visiting the UK to promote a luxury department store’s well known beauty advent calendar. It’s a good example of the global reach that services this type of annual product purchase that coverts shoppers into loyal repeat customers.

TRP Takeout: If I was a beauty director of purchasing at a duty free operator, I would be looking at major brand houses to collaborate on a retailer-owned luxury advent calendar carrying a range of miniature bestsellers from the likes of Estée Lauder, L’Oréal Paris, YSL Beauté’,  Lancôme, Shiseido, MAC Cosmetics, NARS, Laura Mercier, Jo Malone, Charlotte Tilbury, Chanel, Clarins and Dior Beauty. If it’s good enough for John Lewis, it’s a multi-brand trinity partnership waiting to happen for World Duty Free.

Luxury’s accelerated focus on digital

/

As luxury brands emerge from an extended period of reduced sales due to the Covid-19 pandemic, online has been a saviour. And travel retail is more important than ever, especially for younger Chinese consumers. 

As per the latest Bain & Co x Altagamma Luxury Study, luxury brands are mitigating reduced global retail sales by ramping up their digital strategy. They are keen to focus on the new wave of younger online shoppers who are spending their way through and out of the pandemic. 

19th edition of the Bain & Company Luxury Study, published November 2020

Phygital luxury retail is rising exponentially, especially in China according to the latest Bain & Co Luxury Study, that says online luxury shopping has soared due to the pandemic. Digital shopping is now double what it was last year, driven by younger cohorts from Gen Y and Gen Z according to the latest market report, published in association with Altagamma, the association of Italian luxury brands. 

19th edition of the Bain & Company Luxury Study, published November 2020

While the bad news is that sales of luxury goods are set for a record fall this year, the good news is that they are predicted to recover by 2022 aided by online shopping behaviour. 

Bain said the share of luxury purchases made online nearly doubled from 12% in 2019 to 23% in 2020.

Bain’s forecast for the personal luxury goods sector is that it will drop 23% this year to $258bn, which is slightly better than its previous estimate of a 35% dip, given in the spring. 

“It is clear that this year will be the biggest drop ever for the industry, and some trends such as online commerce and reducing the reliance on tourists are fast forwarding versus what would have happened without the crisis,” lead author Claudia D’Arpizio explained. “A full recovery will happen between mid-2022 and 2023 depending on wider macroeconomic factors.”

“Chinese consumption has been roaring across channels, categories and price points, driven largely by young people,” said D’Arpizio. “They will drive the recovery next year mostly in China but also abroad if the vaccines help open up travel.”

By 2025, Millennial and younger consumers will be the most important spending demographic, with an estimated 65-70% share of the luxury market. With a marked shift in generational change seen in 2020, Bain predicts these younger cohorts are expected to contribute to 180% of the luxury market’s growth in the next five years. The market share of Gen Z consumers will grow from 8% in 2019 to 20% in 2025; that of Gen Y consumers, will rise from 36% to 45-50% in the same period.

“The under-25 consumer segment is the most important, they are consumers who are truly significant for the luxury industry,” said Federica Levato, one of the study’s authors.

“They are the consumers who most indulged themselves with gratifying luxury purchases during and after lockdown. They are the most active consumers on the web and have been helping their grandparents to buy online. They have also been the first to go out shopping in stores after the end of lockdown,” said Levato. 

“They are the consumers who most indulged themselves with gratifying luxury purchases during and after lockdown. They are the most active consumers on the web and have been helping their grandparents to buy online. They have also been the first to go out shopping in stores after the end of lockdown,” said Levato. 

19th edition of the Bain & Company Luxury Study, published November 2020

Bain suggest price tiers are a key driver for diverse regional shopping behaviour. New age digital luxurians shop cross-category, favour affordable and entry-level designer products in Europe and the US; while in China their purchases are more diverse, driven by price and exclusivity ranging from entry-level to top-tier products. 

Digital luxe

The notion of VIP shopping for the likes of Burberry, Louis Vuitton and Cartier is not new. In today’s digital-first omnichannel global marketplace, talking to HNWIs is simply a matter of having a data-centric view to targeted marketing. 

This is why luxury houses such as LVMH, Richemont and Burberry have been investing heavily in digital infrastructure, for over a decade now. Lost among all the election news earlier this month was the move by Alibaba to partner with Farfetch – a direct line to China’s digital natives who consider online-to-offline (O2O) shopping via platforms such as WeChat or Alibaba’s TMall in the same vein as breathing fresh air. 

The $1.1 billion Richemont and Alibaba joint venture with Farfetch announced in early November is a sign of the huge potential luxury brands see in the Chinese online market. 

The investment deal with Farfetch is being described by the companies as “a global strategic partnership to provide luxury brands with enhanced access to the China market,” as well as a big step towards “accelerat[ing] the digitization of the global luxury industry,” as business fashion blog, The Fashion Law reports it. 

LVMH said its sales trends improved significantly in Q3 2020, driven by its key fashion and leather goods division, amid signs of a global upturn in activity, particularly in the US and Asia.

Although LVMH did not disclose the increase in online sales, the company said e-commerce had compensated for prolonged store closures through spring and summer.

“We’ve seen a big surge in the share of the business we do with online, I would say across the board,” chief financial officer Jean-Jacques Guiony told analysts.

“What this complicated period has shown us is that there is a validity in the vertical e-commerce system for all the brands,” he added. “Online will continue to develop, [but] certainly not at the speed we’ve seen this year, which was definitely a function of stores being closed.”

“Though the momentum we had built was disrupted by COVID-19 at the start of the year, we were quick to adapt, while making further progress against our strategy,” Burberry CEO Marco Gobbetti said in November when the British luxury brand posted double-digit sales growth in China for Q3 2020, which has helped to put it back on track to return to company-wide growth.  

“While the virus continues to impact sales in EMEIA, Japan and South Asia Pacific, we are encouraged by our overall recovery and the strong response to our brand and product, particularly among new and younger customers. In an environment which remains uncertain, we will continue to deliver exceptional product, localize plans and shift resources, while leveraging the strength of our digital platform to inspire customers.”

Richemont reported its sales for the first half of the year decreased by 26% year-on-year. But this was countered by its Q2 sales that were down only 6% following a 47% decline in Q1. Sales in China were up by 78%, which mitigated declines in Europe and the US. Online retail channel sales were down only by 4% for the first half of the year compared to 2019.

“A strong presence in China and an acceleration in digital initiatives have partially mitigated the consequences of temporary store closures and a halt in tourism worldwide,” said Richemont chairman Johann Rupert. “Our Maisons were swift to build on past investments in digital infrastructure and maintain direct engagement with clients, contributing to our Maisons’ resilience, with online sales growing at a triple digit rate,” he added.

Targeting digital natives in travel retail

Meanwhile in anticipation of global travel returning to pre-Covid levels once there is a mass roll out of multiple vaccines around the world, luxury fashion brands will need to act now in order to leverage new digital shopping behaviours. This will help drive traffic to their retail showcases at major airport destinations, to cope with pent up traveller demand. 

Building on their increasingly Asia-centric digital strategies, luxury fashion brands that are looking to reinvigorate their global travel retail presence should be taking lessons from major airport locations such as Istanbul, Paris Charles de Gaulle and Beijing Daxing or Hainan in China. Paying particular attention to how they are investing in their luxury retail offers that target travellers.  

Physical airport retail innovation

Major airport retail operators such as Lagardère Travel Retail and Gebr. Heinemann are investing in luxury airport retail spaces, despite reduced global travel, ahead of a recovery.

Lagardère Travel Retail has recently opened a number of luxury partnership stores at Shanghai Hongqiao and Shenzhen airports. The French duty-free operator says the new stores are strategically located to support the growth of travelling middle-class consumers in the region. 

In some cases, the standalone stores represent the brands’ first entry into the Chinese travel retail sector. These include an 80 sqm Chanel beauty & accessories standalone store, a 58 sqm Gucci watches & jewellery store and a 93 sqm Sandro store at Shanghai Hongqiao Airport in addition to a 150sqm Cartier store, specialising in high jewellery, watches and accessories and a 134 sqm Burberry concept fashion store at Shenzhen Airport.

Lagardère Travel Retail’s Burberry store at Shenzhen Airport

Lagardère Travel Retail CEO of North Asia Eudes Fabre said: “China is an incredibly resilient market, it has been breath-taking to observe how fast domestic traffic has returned to pre-crisis levels, and how eager Chinese shoppers have been to come back to our stores. The growth of the country’s middle class and its appetite for luxury brands has supported a sharp rebound in our business here.” 

Speaking to The Moodie Davitt Report in October about the retailer’s global recovery plans, Global Duty Free CEO, Lylian Vignau said “As a retailer, our mission is to identify and adapt to new consumer habits.” During the crisis Lagardère’s focus when reopening has been to reinforce its phygital proposal, promote hybrid approaches to shopping including buy online, pick-up in store or contactless shopping experiences, he explained. 

“Once international traffic is back to normal, the travel retail market will have to adapt to it with added value offers, specific ranges, smart global distribution and digital dialogue. For example, we have developed sales livestreams via social media in China,” he added. 

Luxury Square, a multi-brand collaboration between Gebr. Heinemann and ATU Duty Free at Istanbul Airport

Luxury Square in Istanbul was opened at the end of 2019 and is a new multi-brand retail concept set over 1km of prime airside retail space, run jointly between duty-free operators ATÜ Duty Free and Gebr. Heinemann. 

ATÜ’s strategy for the Luxury Square concept space is one of growing a luxury portfolio, according to CEO Ersan Arcan, who told DFNI in April: “The brand mix depends on the performance over coming months. We project an 18- to 20-month recovery period in order to reach 2019 figures. Yes, we want to welcome more brands to join the likes of Burberry, Givenchy and Chloe, (in February there was a waiting list of 27 new subcontractors wanting to get into vacant space) but it’s too early to make those decisions. If there is a chance to move brands around, we will. That mix is our choice – the focus is on maximizing the Luxury Square potential. We want as many brands as possible to try out our new multi-brand concept.”

Heinemann’s Director Purchasing, Fashion & Accessories, Jan Richter said the area was inspired by luxury department stores in the domestic market of major global cities. “The luxury dynamic speaks for itself,” he explained. “We aimed to convince and execute a new perspective on luxury merchandising.”

Heinemann has increased its focus on the sunglasses category, which is an important pillar for expansion and has showed double digit growth in 2018, reported DFNI.  “The newest concept takes an ‘all under one roof’ strategy– sunglasses is next to leather goods and fashion categories. Now part of the strategy is to extend the sunglasses business with a roll out of stand-alone multi-brand stores,” says Richter.

Richter says the company is planning to approach its luxury retail offer at Moscow Sheremetyevo Airport in a similar fashion, replicating the Istanbul multi-brand experience but on a smaller scale. 

Downtown destinations

Richemont-owned Cartier has had a laser focus on upsizing its travel retail portfolio in recent months. In September the luxury jewellery brand launched its most progressive new look travel retail destination to date in collaboration with China Duty Free Group, at the retailer’s Sanya International Duty Free Shopping Complex, in. Hainan. 

Cartier flagship in collaboration with China Duty Free Group, Sanya

The brand said, “by placing the shopper experience at the heart of its travel retail concept, Cartier has truly established its Sanya boutique as a ‘must-visit’ downtown shopping destination in one of travel retail’s most innovative and rapidly growing global locations.”

Over the past 12 months, Cartier has increased its travel presence with a Cartier de Panthere ‘Into the Wild’ retail exhibition in collaboration with DFS in Macau and more recently with Harrods in London. The new look travel retail boutique concept was launched in Hong Kong International Airport in November 2019, ahead of Sanya. 

Cartier de Panthere ‘Into the Wild’ retail exhibition at Harrods, London

In July, Burberry launched a social retail store in Shenzhen, China that is designed to harness the power of social media interactions. The concept works within the parameters of social media to enable customer interaction with Burberry products and the brand both digitally and in person. This cross-fertilisation of brand exposure points to a game-changing way forward for in-store experiences in the future.  Marco Gobbetti, CEO at Burberry said: “When it came to innovating around social and retail, China was the obvious place to go as home to some of the most digitally savvy luxury customers.

Burberry’s social store in partnership with Tencent in Shenzhen, China

“Together with Tencent, we have pioneered a new concept that will redefine expectations of luxury retail. The first step in an exclusive partnership between our companies, Burberry’s social retail store in Shenzhen is a place of discovery that connects and rewards customers as they explore online and in store. It marks a shift in how we engage with our customers.”

TRP takeouts: For luxury fashion brands operating in travel retail, there is a marked shift from physical retail spaces to omnichannel and digital activity, thanks to pandemic-induced online shopping. The leathergoods and eyewear categories in particular will need to amp up digital retail strategy to encompass an online-to-offline journey and target younger Chinese consumers who are active in shopping the travel retail channel. 

In order to do this effectively, brands need to invest in data partnerships that will bear fruit for new levels of consumer engagement with key demographics in mind. And in anticipation of travel retail’s recovery there will be renewed focus on overhauling luxury retail spaces in airport locations – travel retail’s recovery is coming and it’s being led by digitally savvy Chinese.

Intra-regional travel to boost a gradual tax free shopping recovery

/

Global Blue forecasts a gradual recovery for global tax free shopper spending by H2 2021, driven by intra-regional travel trends.

Tax free shopping specialist, Global Blue has revealed a set of cautiously optimistic phased recovery forecasts that predict intra-regional travel in Asia then Europe, will drive a gradual return to pre-Covid luxury tax refund transactions volume by H2 2021. 

In its latest Observatory webinar, held on 19 November, in association with flight traffic analyst ForwardKeys, Global Blue said the overall volume of transactions remains low in Q4 2020 globally, despite encouraging signs of recovery from Asia and Europe. 

By Q1 2021, Global Blue said it expected a gradual recovery, mainly supported by the opening of multiple travel bubbles – especially in Asia for example between Hong Kong and Singapore – and supported by the primary source market of Greater China. 

It said the gradual recovery would gather pace by H2 2021 thanks to the potential massive release of multiple global approved vaccines that will encourage both regional and international travel to resume by the end of the year. 

While international travel is not possible for the majority of travellers, regional travel in Europe and Asia has been slowly recovering over the past 6 months, the company said. 

In Europe, over the past 3 months the percentage of issued tax refunds was 14-15% vs the same period last year. In Asia, the figure was 6% over the past 3 months (see infographic).  

In the 4 months to October 2020, regional travellers (short and mid-haul flight bookings) have been playing a strategic role in Europe’s regional recovery, with Global Blue highlighting the share spend of nationalities such as Greece, Turkey, Germany, Poland and Italy. For example, the percentage of tax free spend captured by Turkish travellers (in the region) has gone from 47% share in 2019, to 95% in 2020 for the same period (see infographic).   

During the webinar, Global Blue revealed the findings of its latest globe shopper travel attitudes survey, in which two-thirds of shoppers quizzed (from a pool of 16,000 shoppers across five countries), expressed a strong appetite to travel again in the next few months. This figure rises to 72% of elite or frequent travellers (up 5% compared to the company’s summer survey) with the Middle East (up 27%) and Russia (up 13%) showing the greatest rise in propensity to travel again soon (see infographic). 

With 75% of Chinese and 99% of Russian affluent and frequent travellers considering travelling internationally as soon as possible, Global Blue said it’s important to consider key seasonal promotions that target these nationalities.

In line with the overarching trend that intra-regional travel will spur recovery growth as global shoppers return to spending, Global Blue also highlighted the huge spike in retail sales at China’s Southern resort island of Hainan. Here, retail sales have jumped since the summer’s new duty-free policy that saw an increase of import quota to RMB 100K (€13,000) per person per year. According to the latest figures from the Hainan Tourism Bureau of Statistics, 146,000 tourists visited Hainan duty free stores during Golden Week (1-7 October) and spent on average €900 per capita. 

While Hainan is a convenient and increasingly attractive leisure and shopping destination, for Chinese travellers who are currently still unable to travel overseas, it does not yet deliver on luxury shopping expectations, according to Global Blue’s shopper survey findings. Close to a third of travellers (29%) say they visit Hainan to shop for the product range, while almost a quarter (24%) cite price as a reason for visiting, however both these factors do not manifest themselves strongly in reality, says Global Blue. A quick price index comparison shows an example luxury brand handbag is on sale in Hainan as 10% more expensive than in Europe (inc. tax free saving) vs in Mainland China, where it is 20% more expensive than in Europe (inc. tax free saving). This suggests that the travel expense and “intense” crowds in Hainan, combined with long queues for tax refunds at the airport, do not match the retail experience expectations of shoppers. 

A key point emphasised by Global Blue was the acceleration of omnichannel shopping in China (also called O2O), which is now an expectation of Chinese shoppers who look for brands that provide a seamless offline to online path to purchase.

ForwardKeys flight traffic trends

During the webinar ForwardKeys provided an overview of global flight data trends for Europe and Asia. While travel data for Q3 show inbound flight bookings in Europe have been marginally the least affected with a drop of 74.7% year-on-year, Asia is showing less resilience, with global inbound flights down 94.5% year-on-year for the same period.

However, ForwardKeys also showcased flight data that indicate domestic travel is the strongest recovery driver, especially for China, Russia and Brazil. Meanwhile the firm highlighted that some travel bubbles can act as a mechanism to boost recovery. 

ForwardKey’s VP Insights Oliver Ponti said domestic travel within China has successfully recovered with flights back to the same level as 2019 (see chart below).

A key driver for China’s domestic recovery has been the steady growth of travel to Hainan, which Ponti highlighted as the top performing destination province for the Golden Week Holiday period of 29 September to 11 October, when travel was up 25.1% year-on-year.

He also noted that duty-free sales for Golden Week in Hainan were up by 56.6% in October, with the highest spenders contributing to the biggest spike in average transaction value – sales over €2500 during Golden Week were up 181% year-on-year. This figure is likely to have been driven by the watches & jewellery category and the first time the Watches & Wonder Baselworld luxury product showcase took place in Sanya in collaboration with online luxury marketplace Net-a-Porter.

Ponti went on to talk about the effect of travel air bubbles development news on forward flight bookings. For example, when the Singapore Transport Minister expressed hope to begin talks with Hong Kong for a possible travel bubble, searches for flights rose 60% followed by a 30% increase in actual bookings when the air bubble plans were confirmed. 

An overarching travel trend that Ponti highlighted was domestic market recovery. This has been seen in China already, but also growing through consistent flight bookings in Brazil, Russia and also in the US as Thanksgiving Holiday bookings have grown in recent weeks, according to a separate report, also citing ForwardKeys data. 

The presentation is available to request via Global Blue here

Spirits & wine brands embrace consumer shift to e-commerce

/

Premiumisation, e-commerce lockdown sales and digital retail solutions have all helped the alcohol industry during the Covid-19 pandemic. 

Early on in the Covid-19 lockdown, shoppers shifted to e-commerce for their alcohol consumption. This trend was illustrated by the sharp rise in spirits sales – especially in the US – where according to market research firm Nielsen, online sales of alcohol rose almost five-fold in March through April 2020 compared to the same period last year, as consumers who were used to drinking in bars and restaurants were confined to stay-at-home drinking and some took to honing their own mixology skills. 

According to a Covid-19 impact report by the IWSR earlier this year, the US has seen the strongest upswing in retail alcohol sales (including e-commerce), which is the best performing global market in its top 10 countries analysis. 

All 10 markets included in the IWSR assessment saw a temporary element of panic buying and out-of-stock situations in retail. “While this is subsiding in most markets, the e-commerce channel has helped most businesses maintain growth potential,” notes Mark Meek, CEO IWSR Drinks Market Analysis.

“While many value brands have reversed declines during Covid-19, it’s not at the expense of premium,” notes Brandy Rand, COO of the Americas at IWSR. “All categories show a continued premiumisation trend as consumers transition some of their on-premise spending to at-home consumption.” Ecommerce sales continue to be significant due to stay-at-home orders and physical distancing efforts and it’s likely this will continue while the pandemic restrictions continue, states IWSR. 

By comparison in the UK, off-trade is up by 20% and e-commerce is up by 50%. The growth potential of e-commerce in the UK, however, is constrained by capacity issues and catering to the surge in demand, says the IWSR.  Ecommerce is increasingly joined by new arrivals to D2C in the UK, including craft producers looking to compensate for the closure of showrooms and visitor centres. 

The UK’s first lockdown period saw the country’s largest wine retailer, Majestic Wines grow its online sales by 300% and increase its market share from 4.5% to 5.3% during the first six months of 2020.

Diageo’s gifting concept space at Singapore’s Changi Airport in 2019 featured a host of personalisation options, driven by digital engagement

Volatile travel retail liquor sales

Alcohol companies operating in the travel retrial sector have not benefitted from lockdown – quite the opposite with the pandemic affecting the channel hard. The impact is expected to last for several years until global passenger numbers return to normal volumes. 

Diageo’s net sales plummeted by 46% as declines in the first half of its fiscal 2020 year were “further exacerbated by significant declines of travellers due to Covid‐19” and particularly in Asia Pacific and the Middle East, it said in August. 

Ivan Menezes, Diageo’s Chief Executive, commented: “Fiscal 20 was a year of two halves: after good, consistent performance in the first half, the outbreak of Covid‐19 presented significant challenges for our business, impacting the full‐year performance.”

Pernod Ricard updated its 2020 outlook in July and said it expected a 15% decline in operating profit instead of the 20% stated previously. For its global travel retail business, the group said it expected an 80% drop for the period February to end of June, which is a huge contrast to the picture for 2019, which saw the group post 6% full year growth for the channel. 

“This unprecedented crisis has been a challenge and will have a long‐term impact on our industry and consumer behaviour,” Craig Johnson, Vice President of Marketing for Pernod Ricard Global Travel Retail commented. “However, we have taken this as an opportunity to collectively reimagine the future of retail. We expect to see strong growth in e‐commerce, with click-and-collect being a key driver, and we’re excited to continue expanding this channel.”

Digital-first strategies

Key stakeholders from alcohol brands operating in the travel retail sector agree that digital strategies are paramount in order to see growth during the continued pandemic. 

Pernod Ricard’s Johnson also says the company will be taking learnings from its domestic retail business and implementing them into travel retail. 

“We will be launching new digitalised retail experiences in the coming months, which will offer new experiences for our partners and consumers,” he says, adding the activity will focus on exclusive products and limited edition liquids that are due to be released in line with consumer travel picking up. 

Irish whiskey brand Teeling is also ramping up its digital activity in order to target consumers as they return to travelling. Travel retail was the brand’s third largest channel before the pandemic, following the US in first place and Ireland in second. 

Teeling’s near-future strategy will be about connecting to consumers before they have even arrived at an airport, says Stephen Teeling, Sales and Marketing Director, according to a report by The Spirits Business. 

“The speed at which people have become comfortable ordering online during the crisis has been incredible,” he notes. “People might not have the freedom to browse as much once they’re at the airport, so I think the time before they go to an airport will be more important than when they’re there.”

Teeling is working with Aer Rianta to upgrade the information about some of its travel retail‐exclusive products so consumers can browse what’s available before they travel. QR codes and other means of technology will play a crucial role in communicating brand information and messages to consumers.

“It’s a way to potentially plant the seed before they travel,” adds Teeling. “The challenge is people are nervous about engaging with someone they don’t know, so how do you tell the brand story without engaging directly with people? We’re going to have to try to get consumers into the shop, but also find ways in which they’re comfortable to engage. It’s an innovative retail channel; we’ve been here before with e‐commerce and other challenges. Buying before you go or click‐and‐collect will probably become a bigger part of the industry.”

Digital disruption is front of mind for several major wines and spirits brands recently canvassed by DFNI for its latest category report. 

Treasury Wine Estates launched a Penfolds ‘wine bar’ at Heathrow Airport

Simon Carter, General Manager Global Travel Retail at Treasury Wine Estates (TWE) highlights the wine producer’s focus on taking advantage of the growth in e-commerce since the pandemic hit and ramping up its brand presence on social media. “Across many markets, we have collab- orated to maximize availability of TWE brands in airport ‘Click & Collect’ programmes including duty-free and duty-paid products in arrivals terminals and downtown duty-free retail and on-shore tax-free initiatives in China.” 

Quintessential Brands Global Travel Retail Manager Oliver Storrie says the Nordics’ focus on pre-travel digital should be an important business model to follow for the travel retail industry. The region’s pre-order market accounts for a high percentage of travel-retail liquor sales. He also highlights the importance of using digital technology to target travellers at different touchpoints in their journey, from booking their ticket, to browsing in the store, the flight and their onward journey to the final destination. 

Virtual storefronts

Phygital creative retail solutions are becoming increasingly popular for travel retail brands looking to ramp up their online to offline marketing activities. 

Retail agency Jordan Design has launched a digital store design solution that has already been adopted by Whyte & Mackay’s The Dalmore whisky brand, which is using the digital showcase to convert clicks into footfall for its new travel retail exclusive Ensemble Collection in 2021.


Ben Jordan, Jordan Design, Managing Director says: “With this new initiative, our design and creative output can now be modified to convey a virtual rather than physical end-deliverable.

“Our dedicated digital strategy team is now able to complement physical GTR creations with a design that conveys brands’ DNA digitally to a similar level of impact.”

According to Jordan, the function of travel retail specific brand design is to attract people’s attention while they are in a duty-free store. He adds: “Now that the core dynamic of GTR has changed and there are far fewer people passing through the shop, brands need to make people aware of what is in the shop before they travel, essentially relocating the shop window.

“We are developing strategies [for clients] that reach out to consumers before they travel, engaging them through social media and other platforms in the domestic market to drive them into the airport shop. We do this in three stages: Connect, Educate and Experience.”

Pernod Ricard is taking a digital approach to transform its traditional physical environments. For the upcoming holiday shopping period, it will introduce new travel retail specific retail environments that engage the shopper via low or no-touch campaign activations and tap into the group’s seasonal promotional campaign programme by location.

Mohit Lal, Chairman and CEO, Pernod Ricard Global Travel Retail tells TRBusiness: “Our insights show that once shoppers are back in duty free, they will expect an elevated shopping experience, which takes into account safety concerns around physical touch-points.” The latest launch is an automated robot bartender, that was designed with an elevated experience in mind and embodies what Pernod Ricard has planned to future-proof its duty-free retail activities.

Additionally, Pernod Ricard has revealed the Martell Perfect Door, a digital merchandising wall bay for the premium cognac brand. “Designed in a GTR-specific retail feature format, the Perfect Door is equipped with motion sensor screens that activate brand content within the world of Martell. It allows consumers to learn more about products without physical touch,” Lal explains. The launch of the Martell Perfect Door digital travel retail campaign will launch in key locations in time for the Holiday period Martell Cordon Bleu limited edition bottle, which is exclusive to travel retail.

Beam Suntory staged an innovative virtual tasting of its new travel retail exclusive Suntory World Whisky Ao in October. The online event, intended to mirror the in-store tasting experience, profiled the product’s five distinct country blends, contributed from the company’s distilleries in Japan, Ireland, Scotland, Canada and the US. 

Beam Suntory Global Head of Marketing Travel Retail Ed Stening says the whisky is already on shelf in a few selected travel-retail markets, including Dublin airport. “We’ve aligned it with our House of Suntory wall-bays which are around the world. Any airport that has a House of Suntory wall-bay we will be incorporating Ao into it first in the roll out,” he notes.

DFNI Liquor Editor Joe Bates says: “The launch of Ao is a major statement by Beam Suntory of its continued faith in travel retail as it battles to recover from the effects of the pandemic. The innovative nature of this ‘world’ whisky’ is also likely to appeal to curious whisky loving travellers who might be tiring of increasingly identikit GTR whisky exclusives.”

Premiumisation

Premiumisation gives agency to increased digital marketing. 

Premium-and-above spirits are forecasted to increase their global volume market share to 13% by 2024 as consumers continue to search for “authenticity and status”, according to the IWSR.

The category’s growth will come from consumers looking for quality over quantity, including a focus on cocktails and high-end sipping spirits, according to the firm’s Global Trends Report 2020 that examines some of the far reaching impact on alcohol consumption further to the Covid-19 pandemic. 

By value, China is the world’s largest premium-and-above market for wine and spirits, although, by volume, the US trails it closely. In both countries, premium-and-above brands are forecast to increase their volume market share by approx. 1% between 2019 and 2024, as the premiumisation trend continues to influence market developments, despite Covid-19 restrictions on travel or going out. 

The IWSR expects niche spirits such as tequila (which has grown 15% year-on-year between 2015-2019) and spirit aperitifs, which it expects to recover well post-pandemic.

Rum is considered the ‘most under-premiumised’ category in travel retail and could be worth $400m in retail sales, according to the IWSR. Bacardi is the leading rum brand in the world based on sales value and the group’s Global Travel Retail Managing Director, Vinay Golikeri tells The Moodie Davitt Report that rum segmentation will be a growth driver in future years. “Bacardi boasts the position of number one rum brand in travel retail, where we have a premium portfolio, supported by 4, 8, 10 and 16-year old age statements to drive category premiumisation. We are exploring new digital ideas with travel retailers, including digital masterclasses and virtual tastings to engage consumers with the versatility of our rums.” 

According to new consumer research data conducted by m1nd-set for the industry specific Travel Retail Awards, 33% of travellers in the duty-free shopping channel mention value for money as the purchase driver. Clara Susset, Travel Retail Research Director, m1nd-set says this year’s research showed that value for money perception has grown year-on-year over the awards’ three-year history, adding: “value for money and uniqueness have the strongest positive impact on the general appeal of the products.”

Distell invested in brand campaign messaging for its Bunnahabhain World Traveller Exclusive range of whiskies at Hong Kong airport

Rachel Hawes, Marketing Director, Global Travel Retail, Distell agrees understanding consumer drivers for purchase are key for brands planning in a post-Covid travel retail environment.  “We are data rich, we know our consumers, especially in the domestic channel. But in travel retail, insights are never more valuable than right now. To understand more deeply the passenger mindset within the GTR environment allows Distell to join the dots between our products and our consumers. We know within our brand portfolio how our consumers behave in our domestic market vs in the duty-free channel and increasingly their digital journey to the airport store.” 

Premium brand activations at airports have been in short supply, but are now slowly returning to take up evolving phygital promotional retail space. One of the first liquor brands to make a statement with a new localised brand concept is  Mast-Jägermeister that partnered with Gebr. Heinemann for a new shop-in-shop to mark the opening of Berlin Brandenburg Airport.

The 23sqm store “merges the soul of Berlin with the spirit of Jägermeister”, according to the brand.

Social-commerce

One of the most important social-commerce brand initiatives recently has been Pernod Ricard’s 2019 partnership with Chinese price comparison app, Jessica’s Secret.

The ongoing digital collaboration means Pernod Ricard can amplify its global travel retail product listings across the duty-free price comparison app direct to Chinese travellers.

As part of the partnership, Pernod Ricard has unveiled a revamped wine and spirits section on the Jessica’s Secret platform with up-to-date product and price information.

It will also include a dedicated section driving awareness of travel retail promotional offers; and a calendar of media partnerships to deliver Pernod Ricard brand news and promotions to a captive audience via home page takeovers, voucher ad and IP-targeted push notifications, as well as extension offers via Alipay International allowing an even greater audience of consumers to benefit from the partnership.

Leveraging its expertise in travel trail, Pernod Ricard will also launch a pre-ordering service on Jessica’s Secret for Chinese travellers. The partnership will provide travellers with a one-stop travel retail e-commerce shop, from price comparison, ordering and paying online to airport pick-up.

Pernod Ricard Global Travel Retail Digital Manager APAC Janice Chan says: “We are always looking at ways to explore innovative technologies that enhance consumer journeys. The partnership enables us not only to leverage the reach of the app, but also to connect with Chinese travellers, in a meaningful way by tapping into an existing consumer behaviour and offering them content and offers to match.”

TRP Travel Retail Style Index: November 2020

/

Welcome to my latest travel retail shopping column for DisneyRollerGirl.

As global travel slowly picks up, we look at the business and shopping trends of the travel retail world. In recent weeks we’ve seen a spike in beauty sales in Hainan, China; K-beauty going global and a luxury brand experience with phygital appeal. 

Golden Week holiday spending

This year’s National Day Golden Week (1-7 October) holiday in China was all about Hainan and increased domestic tourism to the island resort in the south. The annual autumn holiday period usually sees millions of Chinese spend their week overseas in other nearby Asian countries or in Europe. Traditionally, it’s second only to Chinese New Year for gifting and spending on going out. As global travel is still significantly down for Chinese consumers, they have flocked to the duty free destination, especially after the Chinese government tripled the personal shopping allowance there in July. This year’s week-long holiday saw duty free sales jump up 142.7% year on year to RMB880m ($129.6m).

No wonder then, that we are seeing bigger and bolder brand campaign launches dedicated to the vast duty free shopping space of the Haitang Bay Duty Free Shopping Complex in Hainan.

A key launch for this year’s Golden Week focus was YSL Beauté’s ‘sustainable retailtainment’ pop-up store to promote its newly launched Pure Shots skincare range. The pop-up drove footfall for visitors to try the YSL Urban Skin Check tool that offered a five-minute AI skin diagnosis and tailored skincare recommendations within the slick glass box made from recyclable retail units. This latest campaign activation showcases how customers are drawn to digital interactive options in a physical environment and can help build sales.

TRP Takeaway: All eyes are on Hainan, as the Chinese resort proves to be a resilient shopping mecca through our inter-Covid times of reduced travel retail activity. The west is watching as big beauty brands launch pop-up activations here ahead of global rollouts.

MAC x BlackPink collab

MAC Cosmetics has named K-Pop star Lisa Manobal of Blackpink as its latest global brand ambassador with a string of product collaborations planned as part of the partnership.

Lisa, as she is known to her 40m+ Instagram followers, has a ‘strong influence on pop culture and speaks to a wide range of audiences both in and outside the beauty world,’ says the cosmetics brand that is known for its challenging brand ambassador choices. MAC and Lisa will collaborate on ‘risk-taking’ product ranges – starting with a Frosted Firework Holiday collection indicative of the K-Pop star’s poised yet trend-setting personal style.

I like MAC’s choice in Lisa – her impactful make-up style talks to a Gen Z demographic that is looking for the nuanced K-Pop aesthetics of Asian beauty but with global appeal. There’s also something about the strong colour palette in the campaign imagery that moves from purposeful purple to fierce fuchsia and says ‘I mean business’.

TRP Takeaway: A clever global ambassador choice that puts diversity and empowerment centre stage for the brand.

Cartier Archive

Retail theatre is back on the agenda at Harrods. The London department store has just launched an intriguing Panthère de Cartier pop-up, comprising both ‘phygital’ exhibition and retail sales within the brand’s existing 5200 sq. ft in-store space. The multi-room Cartier installation features a series of immersive digital attractions – such as a history of the brand’s muse and former artistic director, Jeanne Toussaint and her ideas around creating the brand motif of the Panthère with its emerald eyes and striking black and white gemstone patterns. A digital corridor displays iconic pieces through the decades, dating from 1914 to 2020. In a separate area, visitors can try on current Cartier jewellery pieces that are cleaned after any physical human contact.

Cartier has ramped up its investment in travel retail spaces in 2019/2020 and this renewed focus on London follows on from the brand’s Into the Wild storytelling installation with Hong Kong retailer DFS last December. The Harrods pop-up launched on 26 October and may now run longer than its original four-week duration, due to the latest national lockdown store closure.

TRP Takeaway: Experiential retail campaigns with a core digital element are key for luxury brands to harness the power of social media combined with tourism footfall.

Rituals for wellness

Dutch beauty and wellness brand, Rituals Cosmetics has opened its first flagship concept store, The House of Rituals in central Amsterdam to commemorate its 20th anniversary. The new holistic lifestyle store is set over four floors and this month the beauty brand known for its ritual-themed skincare, make-up and spa treatment lines, opened the Rituals experiential retail and restaurant floors. Two further floors dedicated to the Rituals mind and spa concept are due to open next summer.

TRP Takeaway: Experiential wellness retail concepts will be brand extensions to note as the wellness movement looks set to continue into 2021, accelerated by the health pandemic.

Digital transformation: shopper expectations for more retail interaction

/

Driven by the pandemic, consumers now have higher expectations for retail brands to introduce digital shopping options, according to two new pieces of market research.

88% of US customers expect companies of all kinds to accelerate digital initiatives due to the pandemic, according to a study by Salesforce and 83% expect retailers to provide flexible shipping and fulfillment options such as buy-online-pick-up-in-store.

Meanwhile, 68% said Covid-19 has elevated their expectations of companies’ digital capabilities, 61% expect to spend more time online after the pandemic compared to previously and 60% said Covid-19 is changing their relationships with technology.

For the travel retail sector, how companies digitally interact with their customers – physically at the airport or online pre-travel – is a top priority among 1,500 consumers who had travelled internationally in the past 12 months, finds a new study by market research specialist m1nd-set.

Travel retail tech trends

Advancements in technology and how consumers are likely to benefit from them, were the top factors that will drive increased digitalised shopper behaviour, says m1nd-set. The key views on future trends include:

Click-and-collect has seen significant growth in recent months with over 25% of shoppers expressing the importance of this feature among delivery options.

Same-day and next-day delivery services have grown during the pandemic and will become more commonplace, forcing retailers to become more flexible around their supply chain logistics.

Greater personalisation, including AI and facial recognition technology, was cited as an influential new trend and will need to be more widely adopted in brands’ marketing and product offers.

Visual Search, cited for its ability to meet consumers’ instant satisfaction and product fulfilment, emerged as a key trend in the research.

Augmented Reality (AR) shopping applications were a popular choice with more than three-quarters of shoppers in some developed markets highlighting that they expect retailers to provide AR as part of the shopping experience.

Contactless solutions including payment, delivery and frictionless stores, where QR codes and robotics are used more frequently were named as key trends with shoppers expecting to see these options more often in the travel retail space as a result of the pandemic

Social shopping has become increasingly expected within travel retail as younger consumers – Millennials and Gen Z demographics – prefer to see their choice of brands available to purchase from shoppable Instagram or Pinterest posts as well as via video platform live-streams.

“The research underlines the growing importance the pandemic has had on technology in retail as well as the importance of unique in-store experiences,” Peter Mohn, CEO & Owner at m1nd-set commented.

“It’s estimated that the pandemic has accelerated the shift to digital by around five years.  Even when analysing the findings about the importance of the retail experience, we see that shoppers are looking for a more integrated experience, which combines both physical and digital – they want to experience in-store and purchase online. The growing focus on digital has implications for the travel retail sector too of course.

“The ‘immediacy’ trend regarding delivery, with the growth of same-day delivery, click-and-collect options and the curb-side pick-up model we see in high-street retail, will need to be mirrored in travel retail with a greater emphasis in the future on out-of-store pick-up locations between security and the gate or even seat-delivery on board the aircraft,” Mohn continued.

Re-emerging inflight offers

The m1nd-set study also looked at the re-emerging relevance of a digital inflight offer for airlines that are adapting their data-mining capabilities and updating their online catalogues along with home delivery.

“The greater emphasis on digital is even likely to put the ‘inflight’ retail offer on a more level playing ground with airport retailers,” said Mohn, “especially given that airlines benefit from having direct access to the passenger data including highly valuable information such as travel class, frequency and whether a passenger is travelling with their family.

Airlines with a more data-centric mindset could be a game-changer for the industry, said Mohn. “This contextual and circumstantial data, when properly ‘mined’ and managed, will be the new gold. All stakeholders are being forced to rethink their business models and revenue strategies. If airlines start to capitalise on their unique asset and invest more in the data management for ancillary revenue purposes, this could be a game-changer for the industry.”

Twitter