At TFWA’s second Research Workshop in Cannes earlier this month, travel retail analyst, Counter Intelligence Retail, warned that the duty free industry needed to keep up with swiftly-changing traffic patterns as well as behaviours of consumers in order not to trail behind other retail channels.

In an age of rampant digitalisation, Garry Stasiulevicuis, Managing Director of CiR, said that a ‘new consumerism’ was apparent and that attitudes to luxury are changing. “The meaning of value is being redefined and experience is more important than possession,” he noted. “Sustainability, authenticity, well-being and freedom are the new consumer priorities.”

Much of that change is due to younger travelling consumers, such as Millennials, coming through airports whose demands are different from previous generations. Stasiulevicuis said that while this remains a key target group, DF&TR operators should also start to focus on the even younger post-Millennial Generation Z age group.

He pointed out that, at first glance, the picture for DF&TR looks very encouraging give that ACI figures show a sustained pax growth of +5.2% for the next 20 years and that projected industry sales figures show that the travel retail industry will double in size to $125bn by 2025.

WORRYING INCONSISTENCIES

“However, for the last two years, despite significant growth in passenger numbers, we have actually seen a fall in sales,” he said. “Whether this is a period of adjustment or the start of a more sustained decline in the market is yet to be seen.”

To capitalise on the 9bn passengers travelling by 2025, much of it from Asia, the industry must drill down into the needs of Millennials who currently spend $200bn on travel per year and who are always online and highly-connected to, and influenced by, social media.

He added that while today, 26% of the global population is middle class, this will rise to almost 60% by 2030, which will drive huge demand for travel, with Asia the leading provider of hyper-connected consumers. He implied, however, that during this phase of rapid change an “outdated industry model” referring to the concession structure might hold the industry back, adding that it was “moving in the dark due to a lack of accurate data”.

On the plus side, aviation is looking rosy. The top 550 airports generate 6.5bn pax movements globally (both international and domestic) but he threw in a remarkable fact: a quarter of all international traffic currently departs from only five European countries (the UK, Germany, Spain, France and Italy).

ASIAN PAX LOOK TO BE THE FUTURE

However, the largest future growth to 2025 will come from Asia Pacific (at more than 70%), and from China in particular, where Stasiulevicuis said, 21 new international routes from the PRC had been established in the past 12 months alone. By 2025, the country will deliver an extra 74m Chinese travellers.

ACI also predicts that most growth will come from international traffic, which is currently only 42% of total traffic. This will reach parity in 2028, and will go on to account for 58% by 2040. “We’re going to see huge growth in international traffic in key markets such as India, China, Malaysia, Thailand and South Korea,” he said.

“All this growth is in only 10 years – that is not a long time for retailers and brands to restructure and accommodate,” Stasiulevicuis noted. “The planning and strategies need to be implemented now, or we could get left behind. We are at a tipping point, and the direction of the next phase in travel retail is very much in our own hands.”