By Marco Passoni
It feels ridiculous to have to point out that price counts in travel retail. A price advantage is one of the foundations of the duty-free sector. It has been around since the start of the industry and, despite the attempts of many to sideline it to help resolve their margins and/or price structure issues, price remains central to our offer today. In fact, it is about to get more important.
We all know the oldest rule of retail: the customer is always right. While some of us may not want to focus on price and delivering a saving over other markets, the customer does expect that when they walk into a duty-free or travel-retail store. And it is their perception, not ours, which will ensure the future of our industry.
New figures from m1nd-set, outlined at the recent DFNI and TRBusiness conferences, underline this point very clearly. When looking at shoppers in the cruise industry, and the new demographic of Chinese shoppers poised to come into the market, price was pointed at as a key driver of footfall, while lack of a price advantage is a barrier to spend. These are two areas of the market, new shopper demographics and the cruise sector, which are flourishing and have great potential to create growth in travel retail. If price matters here, then it is certainly vital for our future.
Too often, at conferences and in meetings, price in travel retail is confused with value. Sometimes this is accidental, often it is intentional. Our shoppers do not make this mistake, they know the difference between the two, and trying to pass off a value offer as a price advantage is the same principle as greenwashing; shoppers can tell the difference and they will not forgive those who claim to deliver what they want while failing to do so.
Too often, price in travel retail is confused with value. Sometimes this is accidental, often it is intentional.
Value has a role in our industry. It is a key role. Alongside experience and exclusivity, it serves as an excellent way to generate excitement and engagement and, ultimately, spend. This is what generates a buzz in travel retail stores. Price is what brings people through the door.
The advent of the mobile phone is one of the biggest challenges facing travel retail today – we are constantly asking ourselves; how do we make these shoppers look up? The answer is that we deliver what piques their interest. On a basic level, that is exciting products with a price advantage. The new Chinese shopper demographics who are coming into the market will directly compare travel retail prices not just with what is available on the domestic market, but with what is available in Hainan. Competition for the price advantage now exists within travel retail – which is another reason why the UK Government’s ongoing failure to reinstate duty-free sales is foolish. But that is another topic.
Price is what sets the duty-free and travel retail sectors apart in shoppers’ minds. They can find experiential retail in downtown stores. They can find exclusivity online.
On a basic level, price is what sets the duty-free and travel retail sectors apart in shoppers’ minds. They can find experiential retail in downtown stores. They can find exclusivity online. Price advantages are what they expect to find in duty free. So we should stop hiding it away – and we must stop ignoring it. The price benefits of duty-free should be signposted online. This does not have to make it look like a cheap, clearance store – in fact, it should be nothing of the sort. Shoppers are checking online, so make the information available there. Price does not need to be the gloss which catches consumers’ eyes once they are in the store, it just needs to be there as a guarantee. A proof that the industry has not lost what first set it apart.
Travel retail and duty free must deliver a cost benefit – it is part of our DNA and part of our name.