The luxury retail market outlook remains glum. Retailers are forced to rethink their game or close up shop. For at least the last two years, negativity has besieged the retail sector as news of its struggle continues to hit headlines.
But in the midst of the stormy weather lies a ray of hope – travel retail. This segment has become a lucrative and critical component for luxury brands in their business strategies.
About 6 per cent of luxury shopping now takes place at airports, up from 4 per cent last year, according to business consultancy Bain & Company. The forecast value of global travel market in 2020 is US$85 billion.
Philippe Schaus, chief executive of the world’s largest luxury travel retailer DFS Group, said “the advent of duty-free meant that people began to see airport departure and arrival terminals as shopping points.”
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Airports are of great importance for luxury retail because they draw a very large base of high income, savvy consumers. “The 45-minute window that I have while waiting to board my flight is really the only time I have to shop,” says Darius Cheung, founder of Singapore-based property-listing site 99.co.
Brands have taken to launch collections that are exclusive to travel retail points, like Hugo Boss’ traveller leather belts, which have metal buckles that do not set off the alarm during security checks and feature different colours on each side.
Landlords have also upped their game in the face of fierce competition. When it opens next year, Changi Airport‘s Terminal 4 will have a retail space of about 17,000 sq m, with more than 80 retail and dining outlets.
Retailers should treat all points of sale as an ecosystem, instead of individual entities. “Retailers should embrace an omni-channel model, and that includes online shopping. The goal for businesses is to improve bottom line and to get there, the point is to make it as easy and convenient as possible for the shopper to spend.”
(Source: The Peak Magazine)