By
Reuters
Published
Dec 19, 2014
Reading time
3 minutes
Download
Download the article
Print
Text size

Airports, stations provide captive market for retailers

By
Reuters
Published
Dec 19, 2014

BERLIN, Germany - Airports and train stations are home to ever increasing numbers of retail outlets, serving travellers who want to buy goods on the go and brands targeting a global and mobile audience.

Despite a recent downturn in the luxury industry, high-profile deals in travel retail have underlined buoyant long-term growth prospects for a sector driven by emerging market jet setters and the trend towards convenience shopping.


"There is a switch from destination retail to shopping on the way to doing something else: work, holiday, business trip. It's about squeezing it in to our hectic lifestyles," said Ben Perkins, consumer expert at consultants Deloitte.

The sector is enjoying 10 percent annual growth and should nearly double by 2020 from $73.60 billion in 2013, according to travel data firm Generation Research.

While airports have long been the preserve of luxury brands, mid-tier names like Spanish fashion chain Desigual and British department store John Lewis are now snapping up prime locations to raise their profile among travellers.

"Be in travel if you want to be a global brand," said Manel Jadraque, managing director of Desigual, which has helped its colourful garments gain a wider following by opening stores in top airports, hotels, resorts, ports and train stations.

"Nearly 50 percent intend to purchase while waiting to take a plane or a train. Those people are international, they are captive, they have two or three hours to kill," said Laurence Anne Parent, managing partner at Advancy strategy consultants.

Even supermarkets are joining in, opening convenience stores and pick-up locations in stations as customers shift from weekly shops at out-of-town stores to smaller, more frequent buys.

Tesco, Amazon and others are trialling pick-up lockers and vans for online orders at 42 London Underground stations, while John Lewis' grocery arm Waitrose also offers the service at Gatwick airport so returning holidaymakers don't have to go home to an empty fridge.

ASIAN GROWTH

Although falling demand from Chinese and Russian travellers, currency volatility and a weak European economy has led to the luxury sector's worst slump in five years, the travel retail sector continues to power ahead.

Much of the growth is coming from Asia, where more than 350 new airports are set to be built in the next eight years, while the number of outbound Chinese tourists is expected to double by 2020 from 100 million last year, brokerage CLSA predicts.


The world's biggest duty-free retailer Dufry sought to expand its presence in Asia earlier this year by buying rival Nuance, while German airport operator Fraport bought a U.S.-based manager of retail space in August.

The Chinese and Russians are the world's biggest spenders overseas, according to duty free tax refund firm Global Blue, but other nations are also catching the travel shopping bug, with strong growth from Thailand, the Gulf states and Nigeria.

Travellers are not just looking for high-end handbags and cosmetics, but also for books, food and treats, benefiting the likes of British stationery retailer WH Smith, which is expanding rapidly at airports in the Middle East and Asia.

WH Smith says over 240 million global travellers are exposed to its brand every year in airports alone, helping compensate for falling sales at home.

Louis de Bourgoing, WH Smith international director, notes that airport rental rates are high, at more than 40 percent of sales, but margins are better.

"There is a specific mood in the travel mindset. You are willing to treat yourself, your friends or family. You buy a lot of products because of that mood," he told the World Retail Congress in Paris.

© Thomson Reuters 2024 All rights reserved.