Travel retail has been hugely impacted by the Covid-19 outbreak and the ongoing lockdowns in various regions of the world. With leisure travel reduced to almost zero and business travel substituted by Zoom calls, some question marks are coming up at regards to what will be the next “new normal”, when eventually Covid-19 outbreak will become only a bad memory for all of us.
According to a Bain study air-travel volume declined -90% during pandemic in EMEA and US, with expectation of a full recovery of the sector only in 2023, so the perspective for the future of travels (and all the industries around it) looks quite dark.
I had the chance to speak with Marco Passoni, Senior VP at TW.O & Partners and a long term expert in the Travel Retail.
It was a very interesting and enriching conversation, where we could exchange our point of view on the sector and the potential evolutions that may come next. Let’s see what he shared with me.
E: Marco, congratulations for your experience and for your career achievements so far in Travel Retail. Can you give me your vision of the transition we are living and what are the changes brought by Covid-19 in terms of purchase intention from the travellers, in particularly in the luxury sector?
M: The scenarios are obviously dark, right now, but I’m generally more optimist than other colleagues because I start from two assumptions:
People like travelling, this is visible from the exponential growth of leisure travels in the last years. Covid19 brought an obvious decrease of travels but the trend was still incremental until January 2020 and has seen a revamp during the non-lockdown period of this summer.
In addition, in the past the airports were “non places”, location of passing-by people aiming only to reach their final destination. With first transformation of the airports in real outlets, especially in Asia, they became real attractors for the luxury brands (which is now the biggest category present after F&B). The aviation/non-aviation rapport of turnover is now 47 vs 53%, showcasing that the airports became an additional shopping experience area for the consumer and travel retail a fundamental source of business for many brands. In my opinion it is just a question of time for the travel retail to “take-off” again, bouncing back to the usual profits.
E: I would add that probably, especially for the Asiatic consumer, the “revenge purchase” after lockdown, may be an additional source of growth in the future.
Do you think there will be an evolution in the way the Brands will conceive their customer experience after this pandemic?
M: Retail and Brand experience are now fundamental, even in Travel retail. There is a need of evolution towards a true Omni-channel purchasing offer. If Travel Retail stand-alone shops wish to continue to evolve and prosper, they have to focus on the Brand experience even more, because travel shopping is still a complementary activity in the airports.
E: Particularly as now the luxury consumer has discovered even more the convenience and simplicity of buying online, see the growth of Retail online stores like Farfetch and their collaboration with luxury brands (i.e., last one with Alibaba and Richemont).
M: The business model of Brands with a stand-alone shop in airports is, most of the time, based on the collaboration with external companies guaranteeing the operations, but the direct operation will be probably helpful to gain control of the customer and brand experience. To gain in engagement the luxury brands will need to “expose themselves” more and add sensorial emotions and additional services to their usual offer. This could become an essential source of growth, particularly in the post-covid era.
E: How much the airports are available to collaborate with the Brands to create a unique and unmissable shopping experience for the customers when they are in transit?
M: The airports are always very keen to offer a service that accompanies the travellers in their entire journey, from the arrival of the traveller to the airport, to the gate, until the end of the trip. Sometimes the Brand are not so much open to use the airport services, as they prefer to have unique access to their source of clients, forgetting this may be a source of business. Hopefully this opinion will evolve in the future.
On the other end, the airports should be opened to select new brands, as usually they tend to privilege established brands with a huge success and awareness, and sometimes not evolving concepts, as they guarantee solidity and a steady source of business. However, the consumer, especially the new generations, like Millennials and Gen-Z, are keen to discover new brands. Hopefully this will also change.
E: In your view, which will be the categories that may have an opportunity of growth in the new normal?
M: I’m hoping for the Brands which are working towards sustainability and to a new green direction, which has become a so much important element of choice for the consumer, as well as formats oriented to delivering a true wellness experience to the travellers, especially in the transit hubs, where travellers have to wait long hours. I believe this could bring a delighting advantage and an additional source of business for the airports.
E: What are your hopes for the travel retail of the future?
M: I hope there will be a step-up of the American airports in delivering a more delighting shopping experience to the travellers. There are so many opportunities over there that are still to be exploited and new concepts to open!
E: Thanks, Marco, for your time, your professionalism and kindness. I wish you best of luck for the post-Covid era, but I’m sure you and all the Travel retail sector will not need it.
After this conversation it is obvious to me that the say “The future is for the bold and brave” it may be an euphemism as it is certainly fundamental to rethink the rules of Retail, and particularly, Travel Retail, and to focus on a more holistic Omni-channel approach, which will keep always the people at the centre of the equation.
No future is possible without a real change of Retail perspective and strategy, focused on collaboration amongst Brands and airports and on bringing innovation in the relation with the traveller.
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If you want to know more about how Retail business can thrive in the post-covid era get in touch with me at eva@evap-associates.com
Sincerely yours, Eva
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