Travel retail recovery possible despite 29% average spend drop in 2022

Passenger volumes saw a marginal improvement by 75% of 2019 levels.

The travel retail market has seen a significant recovery globally, close to reaching pre-COVID levels, despite a 29% of average spend in 2022 paling in comparison to that of 2020 and 2021, according to a report by consulting firm Kearney.

While passenger traffic increased in 2022 by 75%, the market saw a shift in consumer behaviour, exposing a mismatch between traditional retail value and evolving consumer expectations. The recent pandemic and the growing inflation reshaped the market and directed its recovery.

The report, which involved 3,500 participants across 10 countries, indicates that customers highly consider price competitiveness and product assortment. Fewer than half of passengers perceive duty-free and other airport retailers as a choice for lower-cost shopping alternatives, with 50% seeing them as less competitive than domestic and online retail.

Even with the recovery, they are left challenged by the existing value proposition, with 20% to 40% expressing dissatisfaction with the assortment.

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To boost the market, new approaches are needed to serve the current consumer market. The report suggested a shift to a consumer-centric travel retail value proposition based on four means: assortment for variety, pricing and promotion, seamless service, and an elevated experience.

In addition, the market can adapt an improved model beyond just airports, retailers, and brands, adding carriers (airlines, transit lines) and digital and media partners (media outlets, digital advertisers, tech companies, app developers, travel agencies) to form a traveller-centric “pentarchy” with long-term partnerships.

“This is where I see a major paradigm shift. Indeed, we need to transform travel retail environments to enthral and delight travellers with the best value proposition, service, and experience,” Christopher Chaix, senior advisor and former luxury good and travel retail senior executive of Kearney, said.