Raoul Spanger, Co-CEO, Gebr. Heinemann says the retailer is observing a change in travel behaviour, bringing about a shift in long-established ‘peak seasons’ for airports.
He also emphasised the ongoing need for flexibility as supply chains remain ‘strained’.
Spanger shared his comments for the TRBusiness Global Industry Survey 2023*, including his assessment of the travel retail industry in 2022.
“2022 has proven that travel retail has a huge economic impact on the travel industry as a whole,” he said. “All active markets, i.e. those that are not subject to border closures by the war in Ukraine, made a strong comeback with regard to passenger numbers.
“Travel is a high priority for people; they want to treat themselves to something special. After a long time of mainly shopping online, they feel the need to interact, get advice from the shop staff, touch a product, try it out and take it with them straight away.
“However, business travellers have not yet returned in pre-Covid numbers. We are observing a change in travel behaviour and expect a shift in peak seasons.
“Whereas we are used to seeing a peak in business travel from March to May and again in autumn with another peak in holiday travel in summer, for example, we recorded steady sales numbers above our expectations from April to October 2022.
“Travel was heavily concentrated in this period, as passengers were afraid that Covid restrictions might come back in winter.
“We have experienced how important flexibility is when supply chains are strained. This is a capability that the industry has developed over the Covid years, and it will continue to be needed.”
Read on for Spanger’s answers to out top questions…
Question: What are your expectations for your business in travel retail in 2023 and what are the major challenges you anticipate?
Answer from Raoul Spanger, Co-CEO, Gebr. Heinemann: We expect a significant increase in demand compared to the previous year. Airline forecasts are generally positive, booking demand remains at a high level and airlines are increasing their average revenue per ticket. The changes of peak times we have experienced in 2022 will continue in 2023.
Europe may face a difficult winter season with Covid and a good summer season with fewer cases. After the Chinese government’s 180-degree change of strategy regarding its Covid policy, Chinese tourists will return to the international travel market.
However, it remains open for the time being when and to what extent long-haul travel can resume freely and without testing.
“After the Chinese government’s 180-degree change of strategy regarding its Covid policy, Chinese tourists will return to the international travel market. However, it remains open for the time being when and to what extent long-haul travel can resume freely and without testing.” Raoul Spanger, Co-CEO, Gebr. Heinemann
We may therefore initially see a cautious travel behaviour of Chinese holidaymakers with a focus on domestic or regional travel. If the Russian war against the Ukraine continues, these once important markets will remain missing.
The airport channel will continue to be number one and represent two thirds of sales in travel retail. Generally, Gebr. Heinemann is prepared to grow in the dynamic travel retail market, in various channels and business models. Changing shopping behaviour needs dynamic solutions.
How do you anticipate inflation and the risk of global recession affecting your business and the consumer appetite to spend in the travel retail channel in 2023?
The risk of flattening demand is certainly present under these parameters. However, we are currently experiencing unchanged high demand for international branded goods.
“Holiday travellers will become more aware of inflation in Q1/Q2 2023 and will need to reallocate their budgets. A decrease in inflation would have an immediate impact.” Raoul Spanger, Gebr. Heinemann
Despite inflation rising, leisure travellers have so far continued to enjoy shopping with spending comparable or higher than before the pandemic. Purchasing power is still available and people want to travel. They assign a high personal value to travel, which is possibly decoupled from the macro-economic situation. Based on the feedback we receive from airports and airlines, bookings are quite solid.
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Nevertheless, holiday travellers will become more aware of inflation in Q1/ Q2 2023 and will need to reallocate their budgets. A decrease in inflation would have an immediate impact.
Business travels have not been too much affected so far and we still expect them to increase as business partnerships are supported by travelling again.
CLICK HERE: To read the Global Industry Survey 2023 in full.
*The Global Industry Survey was conducted during November 2022 up until the second week of January 2023. Some of the views expressed are representative of individuals rather than their entire organisations. Some of the comments were also shared prior to China’s announced easing of travel restrictions from 8 January.