By Marco Passoni
There is a problem coming in the travel retail luxury sector – and it is hiding in plain sight. Luxury has never been more important to travel retail and brands of all sizes are recognising the vital role this market can play in their global storytelling and engagement efforts. On the surface, this is good news. And if we look at the industry today it certainly looks that way.
In most of the world’s leading airports there are incredible luxury stores opening their doors – and they are getting bigger and more grand with each opening. Look at the latest examples from the likes of Louis Vuitton, Tiffany and Dior in places like Changi and Hong Kong; these are cathedrals to luxury. They have double facades and, in places, multiple floors.
So how can such grandeur be a problem? Well, travel retail is running out of space.
Travel retail and luxury have many things in common and share many similarities, but one of our industry’s most unique issues is space management. In airport terminals, every square meter must be fought for and optimised. Space is an absolute premium. But that is a problem because, in luxury, appearance is everything.
Leading luxury brands are incredibly sensitive to how they appear, and how they appear compared to their peers and rivals. So, when one of these leading maisons opens up a giant airport store, all the others want one too. This makes sense. It would also be great news for travel retail if the space was there. But it is not. So, the alternative is that brands feel they are being let down and consider their future in the market. That would be bad news for luxury, of course, but it would be incredibly bad news for travel retail.
Of course, this is problem which comes initially from the brand themselves; they want the biggest and the best at all times. But it must be the duty of airports and landlords to moderate this situation and take a look at what is available and balance the brand mix and wider offer.
This can be done, locations such as Paris Charles de Gaulle and Doha have created a balance which keeps all the major players happy. But not all airports are able to adapt like Qatar Duty Free can, so the French model of measured grandeur is one which more airports must properly consider.
Travel retail is always looking for the best way to create better brand experience and luxury is a great way to do that. But we do not have the flexibility that our domestic counterparts enjoy, so luxury brands cannot play by the same rules in this special market
Travel retail is always looking for the best way to create better brand experience and generate more profit. Luxury is a great way to do that. But we should always look at the whole offer, the space available and how best to use it. Travel retail does not have the flexibility that our domestic counterparts enjoy, so luxury brands cannot play by the same rules in this special market.
Going bigger may seem like the easy short-term win, but a lack of moderation could be very dangerous for travel retail – and we are already seeing examples of this in action.
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.
