ForwardKeys travel retail experts Gordon Clark and Marina Giuliano discuss a new era for the sector and explain how Traveller Statistics can help duty-free operators decide when to reopen their stores.

While the impact of the Covid-19 pandemic on airlines, tour operators and destinations is well documented, the disruption faced by the travel retail sector is perhaps less widely acknowledged.

Even now, as travel restrictions are lifted and passenger volumes rebound, many airport shops and restaurants remain closed, and the immediate future of travel retail remains uncertain.

The issue for these businesses is that the recovery of the travel industry is unpredictable and varies between markets, making it difficult to ascertain the best time to reopen stores.

Yet amid all this uncertainty, there is some good news for airport retailers. According to Gordon Clark, Vice President of Business Development, Travel Retail at ForwardKeys, the current pent-up demand for travel – on which ForwardKeys recently reported – extends to airport shopping.

“The companies that have chosen to reopen their stores are reporting a decline in footfall as compared to pre-pandemic levels, which is hardly surprising given the circumstances,” he says. “What is interesting, however, is that some of these brands are also reporting that those who do visit their stores are more likely to make purchases and are spending more on average.”

Despite these positive signs, not every travel retail company can bank on increased conversion rates and higher average spending immediately after reopening their stores. Duty-free operators that depend on markets currently unable to travel will have to be patient – or rethink their strategy.

“There is an expectation, based on pent-up demand, that the Chinese market will bounce back strongly when the country eases its restrictions on travel, with volumes surpassing pre-Covid levels,” continues Gordon. “But airport retailers can only wait so long – those that rely on Chinese shoppers and are planning to reopen their stores soon may have to look elsewhere in the meantime.”

He points to the United Kingdom as an example, explaining that a large retail brand has revealed its intention to target the UK market following the post-Brexit introduction of a tax-free shopping law, which, the company anticipates, will encourage British travellers to spend more at airports.

“This illustrates how travel retail businesses can benefit from targeting new markets according to who is able and eager to travel,” he concludes.

Knowing-your-audience 2.0

Before the pandemic, established patterns and peak seasons gave duty-free operators and other airport-based businesses a fairly good idea of the kinds of travellers frequenting their stores and when they were most likely to be there.

“At that time, ‘knowing your audience’ in travel retail meant understanding the profile of these visitors – their purchasing power, buying habits and preferences – and adapting the instore offering accordingly,” says Marina Giuliano, Director of Retail and Travel Retail at ForwardKeys.

However, against a backdrop of volatility, this perennially pertinent marketing maxim has taken on new significance, she adds: “Now more than ever, knowing your audience means paying close attention to market conditions to determine whom you can reasonably expect to enter your store and when.”

Since constantly changing rules and fluctuating consumer confidence could be preventing or dissuading your main audiences from flying, now might be the time to adopt a more flexible approach.

Data to open doors

Traveller Statistics gives duty-free operators and travel retail brands the insight they need to inform key business decisions, such as whom to target, which locations to focus on and, crucially, when to open stores based on the latest travel recovery data.

Designed especially for the travel retail sector, the intuitive ForwardKeys tool comprises four modules – each with its distinct features – and numerous filter options, allowing users to home in on the markets, traveller profiles, airports and even terminals that matter most to their business.

Through the ‘Executive Summaries’ and ‘Forecasting’ modules, travel retail companies can chart the recovery of the global air travel industry with insight on the total number of travellers by nationality and airport, and the development of these figures over the months and years to come.

Following a recent update, the Forecasting module features a daily report offering a view of departure traffic by day for the next three months, as well as an extended monthly report covering the 12 months ahead. These new forecasts allow users to detect market volatility and establish short-term business strategies by predicting the evolution of traffic at key locations and key seasons.

Meanwhile, ‘Advanced analysis’ reveals additional information about travellers, such as the reason for travel (business, leisure or group) or if travel is domestic or international by nationality/airport/terminal and how this changes year on year; while ‘Seat and route capacity indicates the potential of regions, countries, airports, and terminals in terms of the total addressable market they offer.

“Equipped with this information, airport-based businesses can gauge not only when footfall at their stores is likely to reach pre-pandemic levels but also when the shopping audiences whose customers they most heavily rely on can be expected to fully return,” comments Giuliano.

“And where key markets are prohibited from travelling, retailers can analyse the data to identify promising alternatives.”

Whichever route they take, users of Traveller Statistics are well placed to make informed decisions on when to open their stores again. Once they do, insight into daily airport passenger flow enables them to plan and adjust staffing, product selection and samples to benefit from pent-up demand, maximise profits and accelerate their business recovery.

“In addition to supporting the reopening of individual duty-free stores, relevant and accurate traveller numbers and forecasts will play an integral role in shaping the future of the entire travel retail sector,” Giuliano concludes.

For more information on Traveller Statistics, download the brochure here or contact us for a free demonstration.