Industry confidence levels shrink over 25% in Q3

By Faye Bartle |

Confidence Tracker Q3 2023

DF&TR industry confidence levels dipped significantly in Q3 2023 with 67.56% of respondents to the TRBusiness TR Confidence Tracker* feeling optimistic about the global travel retail industry over the next 12 months, compared to 93% in the previous quarter (Q2 2023), representing a shift in mindset among over a quarter (27%) of respondents. 

While feelings of optimism still outweighed feelings of pessimism overall, with the lion’s share of respondents either ‘very optimistic’ (13.51%) or ‘quite optimistic’ (54.05%) about the GTR industry over the next year, the share of those with a neutral or pessimistic viewpoint was markedly higher.

New on the radar was a sizeable 27.03% share of respondents feeling ‘neither optimistic or pessimistic’, compared to 0% in Q2. This perhaps reflect how persistent headwinds, such as inflationary pressures, are breeding uncertainty.

Almost a fifth (18.92%) of respondents expressed a degree of pessimism, compared to just 7% who felt ‘very pessimistic’ in Q2 (no respondents in Q2 expressed a ‘quite pessimistic’ view).

Confidence Tracker Q3 2023

The results also indicated, however, that many respondents believed their own companies/businesses would buck the trend, with an 81.08% share of respondents optimistic about their organisation’s performance in travel retail over the next 12 months.

Business optimism tracking above industry outlook in TR Confidence Tracker

Mirroring the the trend for more neutral views in Q3, 10.81% of respondents were neutral on the topic, feeling ‘neither optimistic or pessimistic’.

Just 5.4% of respondents said they were pessimistic (an equal split between being ‘quite pessimistic’ or ‘very pessimistic) and demonstrating a slight softening of the 7% who reported being ‘very pessimistic’ in Q2 2023.

For the first time in the Confidence Tracker’s history, ‘don’t know’ featured in the results, commanding a 2.7% share of respondents.

Confidence Tracker Q3 2023

Among the participants going on record for this latest edition of the TR Confidence Tracker are Dag Rasmussen, CEO, Lagardère Travel Retail, who cited the “US and Europe + network extension” of the retailer as factors helping propel the company towards its year-end goals.

Drilling down on the headwinds contributing to a shift in sentiment during the quarter, Sebastien Levi, VP Global Travel Retail Moroccanoil said: “Many uncertainties are piling up in the world.”

Yet business for the brand looks robust he stressed, with “a strong catalogue and strong initiatives.”

There was a wealth of comments regarding the positive effects of the continued bounce back of air travel while, at the same time, a number of influencing factors stifling business performance were highlighted.

“Air and cruise travel has returned to growth, but in 2022-2023 the choice of nearby destinations was the biggest trend, as was the desire to rediscover familiar places without straying too far from home,” said Fabrizio Canal, CEO, Food Accademia, who revealed that a “new professional” will join the company shortly to boost its presence globally.

“Restrictions on international mobility due to health and war(s) are still partially affecting our industry as well as inflation rate and these can be causes of recession for travel retail.

“Moreover, airports need to refocus their offerings on core passengers. To stay fresh, travel retailers should frequently reinvent their formats and adapt [the] assortment and merchandising to meet new passenger demands. A purely transactional approach to travel retail is no longer sufficient. Operators should develop concepts such as ‘the airport is a destination, a place to experience’.”

Confidence Tracker Q3 2023

Suppressed spend among travellers was also mentioned.

“In some areas, PAX travel has regained upward movement, but ticket spend has declined,” said Gus Valdor, International Commercial Director, Ay Mezcal / Mezcales Casa Armando SA de CV. “Just as the upward trend has started with more PAX, the ticket spend should start also moving upwards within the next 12 months.”

“When one sees how full the planes are these days and what one has to pay for flight tickets, there is reason for optimism – which could only get dampened by the (sad) new and one-year-old happenings in certain parts of the world,” added Patrick Dorais, Director of Sales, Al Nassma Chocolate. “The pent-up demand for revenge travel post-Covid is probably no longer a thing but still, as said, try to get a good-priced seat on a flight… good luck!”

Despite, the challenges, many who responded to our flash poll are seeing silver linings.

“While I do think there may be some headwinds, because of some regional issues around the world, I think we are still on a path of significant growth to edge closer to 2019 business levels,” said Rob Robertaccio, SVP, Global & Travel Retail Sales, E. Gluck Corp. “We continue to open new accounts and grow our existing ones, giving us confidence in continued future growth of our brands.”

Iraq Duty Free also weighed in on evolving dynamics.

“We can feel the interest of travellers for new destinations, [and the] increase in numbers of travellers as well,” said the retailer’s Procurement Manager Fouad Jabbour. “[We have] already passed the pandemic era with excellent results crossing 2019 numbers by double digit growth.”

As Hoj Parmar, CEO, Bitmore summarised: “Many industry commentators are suggesting we are well on our way to recovery.

“McKinsey suggests growth in travel retail is expected at 6% per year for the next 10 years. Judging by our meetings during Cannes, there is a real sense of optimism for growth in our channel being backed up by recent reports of increased revenue by some of the bigger players in the market.”

Confidence Tracker Q3 2023

What provided the biggest boost for your company in DF&TR during Q3 2023 and how is this helping to propel you toward your year-end goals?

In response to our question of the quarter, respondents revealed the following….

“We have developed a fantastic new TR store concept with a specific product assortment, VM guidelines and staff training to support. This, along with the great strength of our brand, is fuelling some excellent growth for the future.” – Erin Lillis, Travel Retail Director APAC, Lacoste

“2022 was a record year for us, in fact for us the (delayed) start of Expo 2020 (in Oct 2021) kickstarted an unbelievable growth spurt which has not stopped since – not only in our home market (UAE) but in all our ‘transit’ gateways throughout the Gulf, and this has not abated. We are seeing high double-digit growth in 2023 YTD versus a record 2022 year and with the opening of Abu Dhabi Terminal A and continued growth in our other airports we are very much optimistic for the months ahead, so we already see our year-end goals smashed and are very much looking forward to 2024.” – Patrick Dorais, Director of Sales, Al Nassma Chocolate

“We have developed a new mix of assortment, with a greater presence of typical products in line with the evolution of the passenger profile, with greater appeal for millennials and on a theme such as sustainability. Our portfolio is constantly evolving and demonstrates our commitment to developing products that are increasingly environmentally friendly, socially equitable, and at the same time cost-effective for our customers. The perception of healthiness, in addition to taste and price, is the most important predictive factor in food choice, and we are constantly seeking new products for discerning people.” – Fabrizio Canal, CEO, Food Accademia

“Together with our retail partners we launched new POS at Frankfurt Airport and are planning an additional POS at Munich Airport, too. Based on this, and our sales results, we see a strong demand for our fashion accessories. Travellers are looking for high-street products at affordable prices, not only luxury.” – Christian Rührschneck, Sales Director, FRAAS – The Scarf Company

“The launch of our intelligent trolley service in three major European airports created, for us, a dynamic platform for our future growth. Together with participation in the top four TR events of the year and beneficial media partnerships, it helped radically increase our future customers’ awareness of our unique value proposition.” Morten Pankoke, CEO, Intelligent Track Systems A/S

“We signed a major distribution contract with Kreole, which will grow our presence in the Middle East and Indian Sub-Continent. In addition to this, we also had very positive meetings in Cannes with new customers which we hope to convert during Q1 of 2024.” – Hoj Parmar, CEO, Bitmore

“The signing of one of our major brands Au Vodka has had a dramatic effect on our impact in travel retail. It is a brand like no other and just what was needed in the market.” – Garry Maxwell, Director, GMAX Travel Retail

“The excitement from TFWA was a huge boost that we are already seeing the benefits of.” ­– Rob Robertaccio, SVP, Global & Travel Retail Sales, E. Gluck Corp.

“Participation in the TRBusiness Travel Retail Awards and having great research results. Plus, sell out in key airport is very promising and useful as a reference.” – Steven Candries, Commercial Director Chocdecor BV / Belfine

“Acquiring the supply of our biotransformation tech to Change Group and Secure Travel.” – Graeme Stewart, CEO, Enviro-Point

“A focus on brand activation.” – Jana Stroop, Global Travel Retail Manager, Cloetta Global Travel Retail

*Results/data from a ‘straw poll’ of DF&TR stakeholders. 

READ MORE: Pessimism impacting confidence levels in Q2, shows TR Confidence Tracker

READ MORE: 89% of respondents ‘optimistic’ about their TR business, shows flash poll

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