TRCF 2024: Reinventing premium and luxury in GTR

By Benedict Evans |

The panel discussed everything from ethical sourcing to scarcity for pre-loved luxury items.

The third panel from day three of the TR Consumer Forum 2024 focused on the re-invention of premium and luxury in travel retail, and how shifting consumer preferences, the desire for authenticity, and the global sustainability movement are influencing luxury shopping behaviour the world over.

Moderator Faye Bartle, Managing Editor, Digital & Marketing for TRBusiness, was joined by Anna Marchesini, Head of Business Development, m1nd-set; Hazel Catterall, Director, Newmark Retail; Nadine Heubel, Global SVP Revenue – Travel & Hospitality, Reklaim; and Adrian Hayes, Director Global Key Accounts Duty Free; Oettinger Davidoff.

 m1nd-set data

 Marchesini opened with key data insights on luxury shopping, revealing some surprising trends, notably that the majority of luxury shoppers were below the age of 35, and that same majority do not fall into the classic high-income segment.

“Luxury duty free shoppers do spend more, but they also browse and buy more frequently. It presents a great opportunity to increase basket size even beyond luxury,” noted Marchesini, who added: “This is reflected in performance indicators which cross-reference footfall  against conversion. Purchase rate and conversion rate are significantly higher in luxury compared to other categories.”

Marchesini continued to inform delegates regarding the best-performing categories within the segment, noting: “Skincare and FAWJ are massively over-indexed vs non-luxury, but the willingness to be engaged in sector is there but it’s not always reflected in means, only 1/3 of luxury shoppers have a high-income. Further, if a brand shows commitment to ESG then this is one of the main conversion drivers.”

Marchesini also touched upon the emergence of pre-loved luxury as a strong growth area; re-sale luxury has seen triple digit growth in the last few years as different typologies of pre-owned luxury shoppers, including aspirational luxury buyer, luxury connoisseurs, and eco-conscious buyers, come to the fore.

“There are certain barriers to engaging with luxury, such as product authenticity doubt and whether products are in good condition within pre-loved, which is enhanced with issues related to dwell time,” noted Marchesini, who added: “You must upscale the environment, clearly display its authenticity, allow for personalisation in terms of assortment, and use technology to facilitate categorisation and cataloguing.”

Bridging the gap

Hayes then took centre stage, focused on the notion of bridging the gap with consumers who aren’t connoisseurs or aficionados of luxury items.

“The primary barriers to purchase go back to an outdated sense of tradition. I’ve been on that retail element as well and it’s about a change of mindset, which is happening. Barriers are old and they’re slowly changing.”

Hayes suggested the keys to removing thees barriers for non-aficionados included a clearer sense of communication, navigation, visibility, and ease of shopping.

“In terms of the m1nd-set data, you have an increase in personal consumption. Guests entering that space are willing to spend, they want to spend,” said Hayes, adding: “There is so much potential in say India, where you’ve got thousands of people getting passports daily.

Uneasy premium

This is perhaps the first time the luxury market is being talked about by analysts as uncertain,” noted Catterall, adding: “A lot of the luxury brands are moving to DTC which is impacting wholesale and multi- category retailers, just look at Matches for example.”

Caterall continued with an overview of several major fashion houses like Chanel, LVMH, Hermes and Burberry, and their relative financial standings throughout 2024.

“If we take a quick look at Q124 results via the Mckinsey state of fashion report, the market should grow 2-4% on 2024, it’s still growing but slowing after being such a resilient market for the last 15 years.

The phenomenon of revenge shopping is over, and the shift to experiential focus, combined with price inflation which impact raw materials, and increased exclusivity for many brands, is being used to push prices, but the downside is it makes everything less accessible.”

Luxury is facing a challenging road ahead in terms of commercial performance as analysts see slowing growth in the sector.

LVMH’s +3% growth was its slowest since 2020, Kering was down 10% and its main brand Gucci was down 20%. “This feels like it’s linked to their change in designer and they’re finding new quiet luxury isn’t resonating with their customers,” commented Catterall.

Chanel saw +16% on Q124 revenues, with Catterall noting: “Price inflation was the actual reason for this growth. Figures from HSBC show a 52% increase in the price of luxury goods since 2019, and Chanel is actively excluding everyone but the top 1% of their customers.

This opens up opportunity for the pre-owned market, with questions surrounding the declining quality from luxury brands, and pre-owned may in fact be better quality. We have to make sure the offer we have appeals with the right brands and right price architecture and not get left behind.”

Scarcity theory 

Heubel continued the discussion surrounding pre-owned luxury, suggesting it was an ever more viable alternative for consumers, as sometimes it was the only option.

“Scarcity is really something I wanted to piggyback on and tell you a story. A few years ago my boss visited me in Miami and we went to the Rolex store. We could not find a single store which could sell us one. This is why pre-owned is on the rise, because for many consumers it is the only way to acquire certain brands.”

Heubel offered a simple prediction at the forum: “I believe pre-owned could be the next £1bn dollar category in travel retail, but we need the right model, partnerships and backing to achieve this.”

Heubel went on to hone in on the cruise segment, which she noted as being far ahead of other channels within travel retail: “When I was in North America handling cruise for Heinemann, we had more demographics wanting pre-owned than any other category, with Starboard as the real pioneer.”

She also commented on the necessity of checks and balances when it came to authenticity, and building trust with consumers: “More so than domestic, authenticity is an imperative in the travel retail industry. We cannot afford to sell counterfeit products. Selling a non-authentic product has a detrimental effect on the whole industry. It is important to create a shopping environment which does justice to the tradition, heritage and quality of the product.”

READ MORE: TR Consumer Forum 2024: Unlocking the new Chinese travel retail shopper

READ MORE: TR Consumer Forum 2024: Engaging with conscious consumerism

READ MORE: TR Consumer Forum 2024: Perfecting the path to purchase in travel retail

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