As the travel retail industry reaches a pivotal moment in the post pandemic recovery journey, it is facing its big ‘moment of truth’, as outlined by TFWA President Erik Juul-Mortensen, who delivered a rallying opening address at the 38th TFWA World Conference this morning.
 
The association’s president shared his perspective on its immediate and long-term future, at a time of considerable change.

As part of this, he outlined strategies to reinvigorate the marketplace and called upon stakeholders to do more to appeal to the core values of consumers, which have evolved tremendously since the pandemic.

It set the tone for the wider Conference theme, which delves into the forces shaping the world and the travel retail market today.

It was moderated by Stephen Sackur, broadcaster, journalist and the presenter of long-running BBC World current affairs programme HARDTalk, who saluted the resilience of the TR industry despite ongoing pressures including conflict in Europe, inflation of living crisis.

Testament to that is news that he total floor space occupied at this year’s TFWA World Exhibition is above pre-Covid levels, setting a new record. Plus, there are indications that visitor numbers by the end of this week will “compare favourably” with 2019, too.

“There’s plenty of positivity round DF&TR at the moment,” said Juul-Mortensen. “People are hungry to travel again but we are not quite back to where we were in 2019.”

Drawing on IATA global passenger data, he relayed how numbers for the first six months of 2023 are around 10% behind their pre-Covid level, although the deficit for June narrowed to 5.8%.

Impacting on this, he noted how staff problems persist with the move to hybrid working and 43% of airport workers worldwide left the sector during the pandemic, according to the Air Transport Action Group, making recruiting even more difficult.

He also raised how traffic recovery has been patchy including: “Traffic in Asia is taking longer to return, with the region’s airline passengers in June at three-quarters of their 2019 level, but China’s recent expansion of authorised destinations for group travel will help. Overall, ACI World predicts global air passenger traffic of 8.6 billion this year – 94% of the pre-pandemic level.

“But there are concerns in some quarters that rising airfares and the rising cost of living may dilute the demand for travel.”

The cruise and ferry sector is seeing a robust recovery, he added, with passenger numbers some 6% above 2019.

“Travellers are returning but buying habits have evolved,” he went on. “Average transaction values have risen but footfall and conversion statistics sometimes fall short of pre-pandemic levels.”

He referenced the Kearney report, which suggests industry stakeholders must work more closely together to build a true value proposition for customers.

“Even though traffic is recovering strongly, average spend per passenger is below pre pandemic levels,” he said. “Price perception compared to domestic market is more often negative and the product offer in  travel retail does not always match the expectations of the modern traveller.”

“The report suggests that out industry must transition from a one-size-fits-all approach to segmented value propositions, tailored to each customer segment across four pillars: assortment, experience, services and price & promotions.

This required input from beyond the trinity, as one senior airport executive told the authors of the Kearney report:

“Yes we are resilient and creative but is there a risk we are living in a bubble of self-congratulation,” said Juul-Mortensen. “In my view there are some basic topics we must address to re-establish ourselves as an industry that is relevant and helps connect people around the world. It requires, again in my view, some major step changes and initiatives that we should all embrace.”

A hot topic on the list was sustainability.

“We need to be more ambitious setting ourselves key targets for sustainability in our product assortment and communicating those targets and milestones more boldly to our customers,” he said.

The second issue was the need to show strong leadership.

“Every house, no matter how stunning it looks, must be built on strong foundations. Yet, as an industry, we consistently avoid some very basic issues – foundations that we need to fix. Our industry is one of the few in the world whose ability to operate depends entirely on the actions of government… How long will it be before our industry is targeted as another fiscal opportunity?”

“Nobody else is going to protect our industry – it’s up to us and we can do it.”

He highlighted the importance of reliable data to communicate the size and economic benefits of the industry, and pointed to the ETRC Index as a great model for what is needed in each region around the world and reference how data from retailers is key to this.

Juul-Mortensen also spoke of the need to stand firm in the face of allegations of illicit trade, specifically in tobacco products, with MOP3 in November.

Linking to this, he said: “My third ask is the Duty Free World Council’s which the DFWC and TFWA launched jointly last year is a crucial element in demonstrating the sound principles that our industry is built on. We need to reinforce our credibility and clearly and publicly position ourselves as a model business committing to the values that governments, regulators and our customers want to see of authenticity, trading honestly and taking a zero tolerance approach to illicit trading, counterfeiting and intellectual property theft.”

He concluded by encouraging stakeholders to sign the declaration and commit to a zero tolerance approach to illicit trade within their respective organisations.

“We can make a real different in the next 12 months – a lot is at stake. It  requires ambition, leadership and a willingness to work together. I know that this audience has those leaders and I call on those of you ready to drive this forward to stand up and be counted.”