With international passenger traffic rebounding, consumers are demonstrating a craving for sustainable and local products, asserts Lagardère Travel Retail Chairman and Chief Executive Officer Dag Rasmussen.
As Rasmussen shared exclusively with TRBusiness for the Global Industry Survey 2024, this will require elasticity to accommodate both consumers’ and landlords’ needs.
Read on for his in-depth contribution to our state-of-the-industry report…
What are your expectations for travel retail in 2024?
Dag Rasmussen: We expect travel retail to confirm its positive tendency in 2024, even though economic conditions and geopolitical stability will continue to impact consumer spending and travel patterns.
With the consumers being back, we observe a growing appetite for sustainable and local products.
The integration of technology for a seamless and enhanced shopping experience, both online and in physical stores, will remain a focal point.
Flexibility will be the key, accommodating customer needs, meeting landlord requirements, and providing a comprehensive and [a] memorable customer experience.
What do you think will be the biggest challenges facing the DF&TR industry in 2024?
On a global level, geopolitical instability will continue to be challenging for international travel in 2024.
The current economic uncertainty might also affect the affordability of travel and retail goods, generate lower consumer confidence, potentially reducing travel and retail expenditures. It will be up to each player to be sufficiently agile to adapt their strategy to these global challenges.
Furthermore, the emphasis on sustainability and corporate responsibility will remain high within the industry.
Consumers are now more conscious of their environmental impact, and this trend may influence the types of products and practices embraced by travel retailers.
We have positioned sustainability into our business model and will work with the entire ecosystem on the Scope 3 of our emissions to reduce our impact.
What do you expect will be the biggest opportunities for the DF&TR industry in 2024?
As far as opportunities are concerned, we see an increasing shift towards hybrid store concepts, demanding a high adaptability from traditional players. As we, at Lagardère Travel Retail, are already operating on all three business lines we are best positioned to respond to this trend.
There is also an interesting space to fill when it comes to innovation and personalisation. The omnichannel experience expected by modern travellers is a great opportunity to demonstrate the industry’s ability to pave the way to enhanced mobility.
The experience of the pandemic exposed the inflexibility of minimum annual guarantees, with many in the industry believing fixed rents should give way to more versatile, risk-sharing contracts. Are you seeing evidence that the concession model is changing, for better or worse?
We have always believed in flexible solutions, dedicated to continually enhancing landlord assets and revenue through optimal commercial agreements.
The growing recognition and consensus emphasise the need for closer collaboration between landlords and operators, a synergy that deepened in response to the challenges posed by the Covid situation and other challenges.
Our landlords have demonstrated stronger willingness to move beyond traditional MAG/fixed rent models, engaging in deeper collaborations to collectively generate greater value and enhance the overall customer experience.
This trend is evident in our increasing number of successful cases, such as the profit-sharing model implemented in Lima and the agreement in masterconcession in Benin.
Does ‘greenhushing’ pose a greater risk to travel retail’s development than greenwashing?
Both practices can pose risks to travel retail development. However, transparency and authenticity remain critical in fostering trust with consumers.
Balancing the need for accurate communication while avoiding greenwashing is essential to contribute to a more sustainable future for the travel retail sector.
For us at Lagardère Travel Retail it is a rule to link our CSR communication to hard facts.
Some would argue that the increase in passenger spend per head witnessed in recent years is reflective of increases in retail pricing linked to higher costs within the supply chain. At some point, consumers will push back on rising prices and softening demand in some categories illustrates this is already taking place. If we agree that it is not the responsibility of any one party to shoulder all the costs, how does the industry approach this dilemma?
The challenge of rising prices in the travel retail sector, linked to higher costs within the supply chain, is a complex issue that involves various stakeholders.
Meanwhile, I believe that the main responsibility to address this point lies with the retailer. Each retailer will have to optimise his pricing and promotion strategy to deliver a strong value proposition to consumers and maximise margin and turnover.
Of course, there is also an underlying collaborative element, as current times demand for an increased collaboration across the supply chain, strong partnerships and a flexible business model.
We hope you enjoy delving into the 20th anniversary year Global Industry Survey our January 2024 issue, which features contributions from an impressive roster executives from companies including Avolta, Lagardère Travel Retail, Aer Rianta International, Dubai Duty Free, Gebr. Heinemann, Lotte Duty Free, Groupe ADP, Heathrow Airport, Fraport, Qatar Duty Free, Duty Free World Council, TFWA, Newmark, Tallink Duty Free, and many more.
Stay close to TRBusiness for more extended versions of the responses submitted. Thanks to all those who participated for sharing their candid comments and views on the industry.
Note: The Global Industry Survey 2024 was conducted from 17 November 2023 until 4 January 2024. Some of the views expressed are representative of individuals, rather than their entire organisations.