The report noted the future of travel retail will depend on technology, collaboration, and a deep understanding of the modern traveller.

Management consulting firm Kearney hosted a workshop on the new technologies driving innovation in travel retail at the TFWA World Exhibition & Conference in Cannes earlier this month.

Experts Marie Isquenderian, Senior Consultant for Innovation at Euromonitor International, Alex Liu, Partner and Chairman Emeritus at Kearney, Andrew Ford, founder of Paccaya Resources and chair of ANARA, Isabel Zarza, CEO Southern Europe for AVOLTA, and Ian Cesa of Horizon Consumer Science, joined moderator Michele Miranda, Conference Director, TFWA.

Kearney identified economic conditions and regulatory changes in North Asia as playing a prominent role in the slowdown of travel retail sales comparative to passenger growth, highlighting price as the biggest barrier to purchase, as well as dissatisfaction with the assortment.

Liu said: “North Asia has come down, Middle East has done well, India’s come back, Japan has done well, America has also come back a little bit, and intra-regional travel has gone up, more greenfield and more investment. The net effect is pressure on the topline and you’ll see the travel retail market value is about 84 index versus the 95 index from 2019 so it has not recovered on a per spend basis and a t a total level.”

There is now a value gap, what should be $81bn dollars in global travel retail value is only $72bn.”

International traffic in Asia Pacific (APAC) is still 12% below 2019 levels, though several APAC airports such as Tokyo HND are experiencing growth over pre-crisis level.

International traffic in Asia Pacific (APAC) is still 12% below 2019 levels, though several APAC airports such as Tokyo HND are experiencing growth over pre-crisis levels.

With world air passenger volume expected to increase by a 3-4% yearly average through 2040, this should indicate hope for the future of the industry, but although passengers are flying more, they’re spending less.

Liu noted the way in which people travel – and view travel – has changed. “You’re now competing with content. When people get to the airport, they only spend 25% of their time shopping, the rest is in the lounge, they’re eating, or increasingly using social media. The question for the industry is how can we make this trend our friend?”

Liu added technologies should reinforce the key pillars of travel retail: assortment; price; service; and experience, the development of which can be enhanced by the adoption of new technologies, and by a more focused use of available data.

In an interview featured in Kearney’s report conducted with Emmanuel Goulin, president of L’Oreal Travel Retail, Goulin said: “The travel retail industry is one of the data-richest industries but certainly the one levering it the least. This is clearly a major opportunity as a better use of data can lead to a better experience for the traveller, and therefore value creation for our industry.”

Liu suggested there was a missed opportunity in the pre-arrivals stage, with 40% of passengers desiring information and retail suggestions prior to arriving at the airport.

Liu suggested there was a missed opportunity in the pre-arrivals stage, with 40% of passengers desiring information and retail suggestions prior to arriving at the airport.

He went on to explore the move towards a pentarchic partnership model environment with equitable value-sharing models among key stakeholders, based on a mutual understanding of traveller’s behaviours and commercial economics.

Isquenderian continued with a deeper dive into traveller trends and what these mean for the future of travel retail, focusing on the concept of digital living, its regional manifestation, and the different traveller profiles driving these behaviours.

“Digital living is deeply embedded in our daily routine and our daily lifestyle. It’s as simple as using a blend of digital and physical, it’s no longer just about digital tools, rather we are living through these tools,” noted Isquenderian.

“This is the same for travellers, they expect that level of convenience from online check-in to shopping, and that transition from the digital to the physical,” added Isquenderian.

Naturally, Gen Z have been quicker to adopt and use technology-driven retail experiences than their Boomer counterparts. “If you look at the data, Gen Z and Gen Alpha will represent more than 40% of the population by 2030, these generations were born using technology, and the demand for convenience is thus not an option, it’s non-negotiable.”

Isquenderian noted while older generations were not as embedded, there is a noticeable move towards the adoption of everyday technologies which form this ‘digital living’ ecosystem.

Frank Waechter, Managing Director of TFWA, concluded: “As we look to the future it is essential to recognise the growing competition for travellers’ attention, not just from other retailers but from digital entertainment platforms as well.

This calls for a reimagining of the retail experience, one that blends the convenience of online shopping with the tactile appeal of in-person purchases. Initiatives like click-and-collect, mobile checkouts, and pre-arrival engagement strategies are crucial to staying relevant in this digital-first world.”

The full report is available to download using this link.

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