We spend a lot of time in travel retail talking about what the market should be and what it should focus on. But have any of us thought about what our customers want? Because the answer to that is simple: they want great prices. That is what the duty-free market has traditionally always stood for.
We see travel retail and duty free as we know them to be: A complex ecosystem of retailers, landlords and brands working in diverse ways around the world to create stores and experiences which engage the shopper.
But that is not how travelling shoppers see our business. They see it as an opportunity to get something at a lower price because it is bought while travelling. Think back to the days before you joined this industry. What did you know about duty free and travel retail? I am guessing nothing except the idea of shopping at competitive prices because of the exemption from tax. This image of our market has been ingrained in people for years and is part of its very name and identity. So why are we now ignoring it?
Have any of us thought about what our customers want? They want great prices, because that is what the duty-free market has traditionally always stood for.
Our perception of our industry does not matter when it comes to delivering sales. Our customers’ perception matters more than anything.
We know that the demand for price in travel retail has not diminished. Every piece of research released includes price as a key driver. Yet we are all avoiding the issue and claiming that experience and exclusivity are what shoppers want. They are – but only because they improve the value proposition. Whichever way you look at it, shoppers want to be getting more for their money in travel retail.
Also, it is time we were honest with ourselves: shoppers can get experience in the domestic market where they have more space and more time. If we are not offering them great prices, then we are not offering anything they cannot find elsewhere.
Some will point to the high basket value in the market at the moment. That, I would say, is being led by wealthier travellers who can afford to face the testing costs and uncertainty of Covid travel. That will not last forever.
As travel recovery begins, we are increasingly trying to work out how to ensure our market plays a central role in both consumers’ travel and shopping plans. To try and do this without a serious discussion of the price offer and value proposition is madness. It is the thing which has traditionally set our market apart and the thing which will most immediately engage shoppers.
I’m not pretending this is easy to deliver. The cost of doing business has risen and we all know that the past two years have showcased the long-standing issues with the financial model in travel retail around the world. Stakeholders have to work closer together to ensure the deals made are viable for everyone – and for the shopper. This means that the model must allow for products to be offered at a competitive price and there is no way we can resolve this issue if we keep pretending price is not a factor.
This market should never shy away from trying to be innovative with exclusives and experiences. But we must also deliver what shoppers want from us – and that is great prices which demonstrate the tax exemption which is inherent to the market. Otherwise, they will shop elsewhere.