Staying connected with and responding to the changing habits of consumers will be crucial for brands operating in travel retail as the sector continues its recovery from the disruption of the pandemic, keynote speakers have told guests at the Tax Free World Association (TFWA) World Exhibition and Conference in Cannes, France.
As the world readjusts to the economic, political and social shifts caused by Covid-19, this year’s conference speakers explored how new schools of thought, operating models, and technologies could deepen mutual understanding between brands and shoppers.
TFWA president Erik Juul-Mortensen gave a ‘state of the nation’ speech to the conference on Monday at the Palais des Festivals. He shared recent statistics from the International Air Transport Association (IATA) which revealed a 25.4 per cent drop in the air passenger market between 2019 and 2022. The Asia Pacific market was hit the hardest, experiencing a 46 per cent drop over the period. The overall tone of the presentation was optimistic – but there was a warning for companies regarding the “new world” of travel retail (the theme of this year’s conference and exhibition).
“It is the ability to react to changing circumstances…that will separate the winners and the losers,” Jull-Mortensen said. “That world [of travel retail] has changed fundamentally since 2019, and our own ability to adapt will dictate whether duty free and travel retail embraces change and prospers or fades into irrelevance for tomorrow’s travellers.”
Part of this ‘new world’, Juul-Mortensen explained, was the increasing use of digital services and experiences, a phenomenon which brands should work hard to capitalise on: “More than ever, the passenger and shopper data that drives customer engagement is the new currency for our industry.”
He added that the TFWA was confident that it would “play a constructive role by helping companies in travel retail plan for the future”.
Economist, broadcaster, commentator and writer David McWilliams, the conference’s first speaker, also reflected on the state of the world. He posited that one of the most effective, but also most challenging, responses to such unsettled times was “unconventional thinking”, suggesting that more rewards could be offered for those who consider solutions outside the orthodoxy.
After reading a passage from Irish poet W. B. Yeats that reflected on geopolitics in the 1920s – in which he claimed Yeats had more accurately predicted the global direction of travel than many economic and political forecasters at the time – McWilliams said: “Right now was are at a tipping point, and at a tipping point the artist gives themselves the permission to think unconventionally…in a non-linear attitude, and as a consequence they arrive at better outcomes than those of us who are paid to do so with our linear minds.”
For second speaker Raymond Cloosterman, founder and CEO of Rituals Cosmetics, unconventional thinking was a key tenet from day one. Founded on the principle of “affordable luxury”, the company opened its first store in Amsterdam in 2000 and now has just over 1,000 stores worldwide and around 3,500 concessions in locations including global travel retail, with roughly four new retail outlets opening every week. Digital augmentation has been at the heart of the brand since the opening of that first store, which included an interactive e-commerce experience for shoppers. To mark its 20th anniversary, at a time when many companies were shying away from the acquisition of large retail premises, Rituals opened its own department store. Alongside product showcasing and purchasing, Cloosterman said the facility became a “laboratory” for new product development as well as including a restaurant, body spa and revolutionary “mind spa”.
“We owe it to our customers to seduce them, to surprise them,” he said. “For [Rituals], stores remain crucial… we keep investing in them, we are opening lots of them because that’s where you can really feel what a brand is all about, but the functionality of stores is changing. Just having a store isn’t good enough any more… we have an open door, but how can we change that open door into something more powerful?… Can we go beyond product? Can we get to content, can we get to services?”
Cloosterman said the pandemic had wiped away the “guaranteed footfall and guaranteed high spending power” within the travel retail sector, and that without those certainties to fall back on, brands would have to think more laterally. In particular, he challenged brands to consider the generational suitability of their offering: he quoted statistics relating to intergenerational shopping habits in the travel space, which revealed that members of Generation Z (sometimes called ‘Zoomers’, born in the late 1990s to early 2000s) were now more likely to visit shops and to make a purchase while travelling than older Millennials or ‘Baby Boomers’.
The final speaker was Swan Sit, a digital and tech tzar who has managed global digital marketing operations for the likes of Nike, Revlon and Estée Lauder. Her topic of discussion was the concept of a ‘metaverse’ and the utilisation of blockchain technology (an electronic storage system which decentralises and democratises data records) in retail.
Sit described a metaverse as a digital world that “mimics or enhances real life”, but one that was not “constrained by the physics and geography” of the physical world – a concept that could have infinite applications in the retail and service industries. She said that such web-based systems, and the decentralised data storage and recall possible within a blockchain, could have huge benefits for companies operating in travel retail.
“You have less data on your consumers because you’re relying on them walking past in a specific location,” she said. “You now have the ability to directly add value to your consumers lives if they share data with you… The moments between purchases are where loyalty is built, so just imagine if you could track that journey. Those loyalty programmes not only let you have a better knowledge of the consumer they help you do more for them.”
Sit also made reference to the trending use of NFTs (or non-fungible tokens), which have been utilised by a number of drinks brands including Johnnie Walker and Ardbeg to add value and inimitability to some higher-end consumer offerings.