By Marco Passoni
Sometimes I feel like I am shouting into a void in this market. No matter how often I, and others, speak about the importance of price in travel retail, it is regularly swept away or dismissed as ‘less than’ or an issue the industry does not want to engage with. Of course, I am not foolish enough to suggest that price is the only issue in travel retail, but it is big one for the future of the market – despite what some people say.
This is why I was happy this week to uncover a report from Kearney for the TFWA which not only recognises the importance of price, but puts it at the heart of shaping a future for travel retail. The report says:
Overall, customers value price competitiveness and product assortment.
Conducting their studies for the report, Kearney found that price is a top purchase driver for shoppers across all categories in travel retail: 41% of tobacco shoppers put it in their top two reasons for making a purchase, and 39% of wine & spirits shoppers did the same.
When you look closely at it, price becomes a key issue to not just consider but properly understand. Like many traits, nationality impacts how important it is, with Kearney discovering that French and German travellers care more about price than their counterparts in China or Japan.
The concept of price is changing too, and this is another reason why we must properly consider and understand it. Shoppers, the report found, are not just looking for super-low prices, they want a range of options. To deliver what these shoppers are after can only be done if we put price and its impact at the centre of our considerations, alongside all the other factors.
As the data from Kearney clearly shows, to me, price is not just one of the dominant reasons to buy across all travel retail cateogries – which is certainly is – it is also a big block to sales if it is got wrong. More than a third of shoppers – 37% – in the fragrances and cosmetics sector said high price is a major turn-off for them in making a purchase in travel retail. For me, it is very clear that this is a part of the discussion which we must stop avoiding and start properly engaging alongside other defining factors such as digital, experience, range and sustainability.
But I am not, unlike some others, going to ignore the rest of the conversation. As the Kearney report shows, assortment is a vital part of planning for our future. In the fashion & accessories category, 34% of shoppers say the range is vital in convincing them to buy. This is why I am very pleased to see the number of new, exciting boutiques opening from luxury brands in the market today – especially from our partners. These openings drive experience and variety in the airport retail setting and create something special to convince travellers to become shoppers.
Creating a good assortment also means making space for new products and fresh brands, to create the range shoppers have said they want. Too often, the aim to deliver a strong assortment is suggested as a way to get round the issue of price, but the two are completely linked: the whole offer must be attractive, in range, cost and presentation.
It is also no surprise to see that Kearney, in their report for TFWA, found that service and convenience can be major blocks to sales. The need to carry too much, or wait too long in a queue, account for between 12% (in the watches and jewellery category) and 38% (wines & spirits) of the reason why people decide not to shop in travel retail. I have often cited the figure from ACI which shows that a 1% increase in customer satisfaction leads to a 1.5% increase in revenue.
The fact is that this is stuff which we must be getting right – and we have to get all of it right, not just pick the bits which are easy, or cost us least. Today more than ever, price is a part of that all and something we should not overlook. If you want expert help on how to enhance your engagement and spend from your shoppers, our Customer Experience Management team would be happy to help – contact me to find out more.