Money Talks: Don’t confuse ‘Price’ and ‘Value’ in travel retail

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By Marco Passoni

Price is a big part of travel retail. I know there are many in our industry who would rather this was not the case and prefer to treat the issue of price as a dirty secret to be swept away and ignored, but it has been at the heart of duty free and travel retail since the beginning and that has not changed today.

I have said before that price is a key part of how travelling shoppers see our market. They expect a price advantage – and how our customers see us is more important to our day-to-day business than how we would like to see ourselves. The customer, as we all know, is always right.

Recent research from m1nd-set has underlined this very clearly. Price now features in the top four barriers to purchase in travel retail as identified by shoppers. The latest figures show that higher prices than at home, at the destination and at other airport are three of the biggest reasons why travellers chose not to shop. The other reason is a lack of visible promotions. This is conclusive. Price matters and those who ignore the fact are driving away shoppers from the market.

Price matters in travel retail and those who ignore the fact are driving away shoppers from the market.

The issue was highlighted for me recently during a conversation on LinkedIn, where a story highlighting the importance of price drew commentary and debate from many respected industry insiders. But the truth is that there should be no debate: Like it or not, price counts in travel retail.

Some in our industry today try to get round this by talking about adding value for the shopper. This is not the same.

20partners 3Sixty-Mahuahal-Store-2-1024x659-1 Money Talks: Don’t confuse ‘Price’ and ‘Value’ in travel retail Journal

Travel retail exclusives, sets and special events are a huge and important part of this market and its offer. They enhance the shopper experience and drive engagement with travellers. They also improve the perception of the market and its offer. Indeed, travel retail has boundless opportunities to create added value, with novelty and excitement generated by unique collaborations and creations, alongside locally relevant experiences. But all of this is worth nothing if we are not delivering what shoppers want: A price benefit.

Travel retail exclusives, sets and special events are a huge part of this market and its offer – but they are worth nothing if we are not delivering what shoppers expect of travel retail: A price benefit

Shoppers today are more connected than they have ever been. We know this is true and it is the reason that price has become more important again. The m1nd-set figures show that in 2019 a lack of intention to buy, or appealing products, were big factors in travellers not shopping. Now it is all about price. Today’s shoppers expect travel retail to be cheaper and they are checking.

So, the truth is that we can make travel retail as attractive as possible, as loaded with experience and exclusivity, but if travellers can find their products cheaper by checking their phone then they will not buy. That damages the whole market.

As we await the probable return of the Chinese travelling shoppers in the coming months, this will become even more important. These are consumer who are used to the price and service they get at home and will expect it to be bettered abroad.

Value will always enhance travel retail and elevate the offer. But is can never be a replacement for price in our sector. A price benefit is at the core of duty free. Shoppers expect it of us, and we should expect it of ourselves.

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.