For tax-free shopping, 20% off is not a discount, it’s a prerequisite

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By Marco Passoni

Travel retail will pay a high price for not focusing on price.

I feel like I am repeating myself, or maybe shouting into an echo chamber, but I feel I must share once more a fact which, to me, is vital to the recovery and rebuilding of the travel retail market: Price is king in travel retail.

The idea of reduced pricing against the domestic market has been a central part of our sector since its inception. When you speak to those outside the industry, as we always must when developing plans that meet the needs of our shoppers, you find a few constant ideals associated with travel: The glamour and excitement of flight, the stresses of baggage drops and baggage claims, and the thrill of duty-free pricing and shopping.

This is not an outdated image. Recent research from m1nd-set put visible promotions as the third biggest driver of store visits in airports. But despite this, so many in our industry refuse to speak about price or take the issue seriously.

I cannot believe we are so blinkered as to believe that price does not matter

The recent Trinity Forum in Singapore was an excellent event which highlighted many of the key issues surrounding our market today, but price was – as ever – missing from the bill. I simply cannot believe that we are all so blinkered as to believe that it does not matter.

In fact, price and the perception of it in our industry, are more important than they have ever been.

The world is in a period of well-documented financial hardship and challenge, with the cost of living creating problems for many. The excitement of travel remains an alluring escape for many and that plays into the hands of those of us working in travel retail. But creating excellent experiences, though still vital, is not enough alone. That can happen in the domestic market. We in travel retail must be offering prices which speak to the expectations of our shoppers. And we must remember that they cannot be fooled – they are too well-connected.

In the past week there have been questions raised over whether luxury brands should be indulging in price promotions to engage shoppers and many have argued (I would suggest correctly) that reducing prices takes away value from the brand and therefore is damaging in a luxury sector.

20partners shopping_frankfurt_airport For tax-free shopping, 20% off is not a discount, it's a prerequisite Journal  travel retail price

The opposite is true for the wider travel retail market. Ensuring a price advantage over the domestic market – and ideally the digital one too – is not damaging to the allure of travel retail. In fact, it is central to it. It would be delivering exactly what our customers want and need from us at a time when they are battling hardship in other areas.

It would also reignite a USP for travel retail which has become lost in recent years.

It is crazy to me that the travel retail market is willingly ignoring one of the biggest advantages that it had for many years. I understand, of course, that experience and exclusivity, partnership and personalisation are vital in our industry, but they are key components of other markets too. The expectation of a price advantage is unique to travel retail – it is the benefit which balances some of the challenges for shoppers.

It is crazy to me that the travel retail market is willingly ignoring one of the biggest advantages that it had for many years

Our customers agree with me. A report from the DFWC and m1nd-set highlighted “price advantage” as the second highest driver to purchase in travel retail, with 17% of shoppers citing it. Furthermore, 17% also said that higher prices compared to the domestic market was one of the biggest barriers to purchase.

In retail there is that age-old adage: The customer is always right. For our customers, price is a key issue in travel retail. Maybe we should start listening and stop pretending that we do not need to talk about it.

Marco Passoni has decades of experience in the travel retail sector. He has spent the majority of his career in senior leader positions throughout the market, including a 12-year tenure as CEO of a leading international Duty Free distribution company and a further 8 years running a retail firm that operated fashion mono-brand stores in several international airports.
Today, as Senior Executive VP and founding partner of 2.0 & Partners, he leads the company’s efforts in developing and innovating services which create new opportunities and partnerships for all members of the travel retail Trinity. A former elite-level sailor, with a World Championship to his name, Marco now spends much of his time airside, experiencing the changing travel retail industry first-hand, to better guide partners and clients on the best way to do business in this vibrant and unique market.