While malls are shuttering and retail stores are being eaten alive by Amazon, there is one holdout where retail is still thriving: airports.
Consider that global travel revenue, which includes duty-free sales at airports, has more than tripled since 2000, rising to $69 billion in 2017.
Why?
- The rise of budget and low-cost airlines
- Two billion travelers flew in 2002; four billion flew in 2017
- Travelers average 56 minutes of “free time” before their flights
- On average, 25 minutes of that time is spent shopping in duty-free stores [I find this hard to believe…how about you?]
- In the Asia-Pacific region, retails sales have averaged a 14% annual growth since 2002
Those statistics are frankly startling and are prompting big names to invest in their airport presence.
Big brands like Moncler, Jack Daniel’s, Colgate and Estée Lauder are expanding their footprints in airports around the world to get travelers to buy impulsively while they wait around for their flights.
Earlier this month, Colgate bought Filorga, a luxury anti-aging skin care brand that has become a big player in airports. Colgate CEO Noel Wallace said the brand would help Colgate enter the “fast-growing and sizable travel retail channel, particularly in Asia.”
CNN caught up with Montogmery Wilson, the head of global travel retail for Brown-Forman, a company whose portfolio includes Jack Daniel’s whiskey and Woodford Reserve bourbon.
Travelers are in the right mindset.They are on holidays and they are open to discover and explore new things.
That..and the fact it is one of few places where brands truly have a captive audience. And that has spurred innovation…or at least gimmicks. For example. Jack Daniel’s now has a special airport-only line called “Bottled-in-Bond”.
More Than Alcohol
And of course it is not just alcohol.
Estée Lauder CEO Fabrizio Freda said, “Travel retail is, to me, the most exciting channel,” said in May. The key with Estée Lauder, like most companies, is simply to hook a customer in for the first time…then they keep buying. Estée Lauder estimates that 59% of its “first-time” customers purchase products in airports.
Thus, Estée Lauder is pouring in research and development into expanding that market. In Korea, it is testing in-seat delivery on a passenger’s flight, though I would think a customer would want to take the product with them directly from the store.
Even Brookstone (yes, I too was surprised to learn the chain is still alive) is still sputtering on in airports. When Brookstone filed for bankruptcy last year, it closed all 101 of its mall stores. But its 35 airport stores were kept open and remain open.
CONCLUSION
I never thought retail would totally die, but I am surprised it has continued to flourish in airports. I just returned from a quick trip around the world and frankly I never saw the high-end brand stores busy as I passed through East Asia and Europe.
Do you go shopping at airports?
25 minutes in duty free stores? Maybe it’s just me but the ONLY time I venture into duty free is when there is no choice but to proceed thru them to the boarding gates. FCO?
Also SJD!
“On average, 25 minutes of that time is spent shopping in duty-free stores [I find this hard to believe…how about you?]”
Yes, I absolutely do. When I head abroad by myself, I fully plan to buy something for my wife and son, and a box or two of local chocolates or candy for the office. And inevitably, I end up packing my days so full of activity I don’t have time to hit up a store until I head back to the airport. So yes, the duty free almost always ends up being one last pit stop before hitting the lounge.
Meanwhile domestically, I’m always hitting up an electronics store, because I realize when I get to the gate that I forgot my headphones or phone charger at home. Again…
To me the interesting things I find or don’t find for sale in airports are:
1. Why are porn magazines still sold in airports? Seems weird and even more so in 2019. It’s not like you could comfortably “read” these on the plane and there is this new thing called the “internet”.
2. Why more lingerie stores aren’t doing business in airports. Even when I spot an odd Victoria’s Secret store like at LAS they only have makeup and non-lingerie products. You’d think this would be a huge sale item for travelers for various reasons.
3. I’m surprised Walgreens hasn’t gotten in on the action in airports.
4. Coat, Luggage and firearm storage seems like it would be a good business curbside at airports, but maybe I’m crazy.
The one airport I do love to do a bunch of shopping in is Narita. The stores there are designed for travellers buying gifts (“omiyage” in Japanese) in mind with shops filled to the brim with a myriad of exquisitely packaged and boxed treats which work great as gifts for family and friends. Last time we went a bit overboard and ended up spending close to $300 on this sort of stuff.
Increasingly, airports are designed to force all departing passengers to run the gauntlet through a rat-maze of “duty free” shops hawking overpriced “luxury goods” (M&Ms, really?). I HATE HATE HATE this – you are forced through a long snake of S-curves, wasting lots of time, and being assaulted by perfumes (gag) and crap I would never want near me. It sucks. Give me a direct path to my @#*! gate and leave me the fark alone, dammit!
While the success of certain stores does not surprise me (e.g. duty free), I am always asking myself how high-end retail stays alive in airports. Never have I met anyone who seeks to buy a Hugo Boss suit or an expensive Luis Vuitton handbag while on a layover. Perhaps in a pinch if something is lost, damaged, or stolen, but otherwise I don’t see it happening. And these stores also always seem to be empty.
I read an article once about high-end stores in Singapore, some of which never seem to have any shoppers in them. The staff at one of the stores said, we get customers who come in (in this case, they were from China) and spend $100,000-$200,000 in one go. All it takes is one of these per month and we’re set. I imagine that’s the business model for a lot of these luxury outlets. I recall a while back in Honolulu, that the premium branded goods stores shut after all the Asian (mainly Japanese) flights departed.
I’ll add that luxury goods are often marked up in Asian countries, so Asian customers are incentivized to buy duty-free where they can as opposed to in their home countries. I reckon if Americans or Europeans had to pay 20%, 50% or even 100% more for the same goods at home, they’d be buying in airports too.