With Travel Retail Expected to Be an $85 Billion Industry by 2020, the Future of Luxury Retail Is the Airport Terminal
Regardless of your reason for being on the road, life on the go means purchases on the go. The truth is, we are all traveling more. Rising international travel and culturally fluid shoppers find themselves in a similar position to my own, dining on Giordano's deep dish pizza in Chicago, vintage shopping for tulle skirts in Helsinki and souvenir shopping for a nice bottle of white vinegar outside of Zurich.
Airports Are the New Luxury Shopping Malls
A traditional global retail strategy meant a personalized approach to each market, but what happens when the same person travels through markets, without belonging to any single one?
As department stores continue to decline, a new contender comes to the forefront. As the kings of convenience and novelty, the future of luxury shopping today is tied to the future of airport retail.
Highly educated, affluent and active travelers influence major purchasing decisions at home, for their businesses, and social circles. Major international hubs have an advantage here. A study by the Ronald Reagan Airport in Washington D.C. found that its travelers were three times more likely to shop at Saks Fifth Avenue in New York than the average adult in the area.
Airports in London, Bangkok, and Dubai attract shoppers seeking both convenient connections and exclusive luxury goods. Are retailers ready to meet their customers at the same level of cultural and geographic fluidity of the shoppers they wish to cater to?
The Future of Travel Retail
Let's take a look at the numbers: Travel retail is projected to be an $85 billion industry come 2020 (Coresight Research). In 2016, approximately six percent of all luxury shopping took place in airports, with Asia leading the highest growth. With airports receiving a cut of duty-free revenue, terminals have a vested interest in the growth and development of their services and shopping offerings.
In the United States, major airport hubs are coming on board. In October, New York Governor, Andrew M. Cuomo announced plans to direct a historic $13 billion in redevelopment funds to John F. Kennedy Airport alone.
Among airport favorites are Louis Vuitton, Chanel, Cartier, and Gucci. And as Millennials, the largest generation of adults today, continue to prioritize convenience and access-over-ownership business models like Uber and Airbnb, it's not about what you buy but how. Regardless of your shopping preferences, airports are an experience we all share and it's an invaluable opportunity.
In London, Heathrow’s VIP service which includes a private entrance and lounge, dedicated security, and of course, personal shopping offerings attract time-constricted and affluent shoppers who on average spend more than $3,400.
Sit Back, Relax and Enjoy Your Layover
Shopping requires you to have one crucial ingredient - time, something you'll find yourself with plenty of between layovers and delays. 58% of people browse the shops just because they have time to kill and, of course, that is good news for the retailers because it is likely to stimulate sales. (Mintel)
In the future, you will be choosing your flight connections based on the shopping options available during your layover. And why shouldn't you? Airports are flooding with indulgent shoppers, business travelers and vacationers with particular tastes to unique items and local brands, making goods not available back home, a luxury in and of itself.
So, ladies and gentlemen, the Captain has turned on the Fasten Seat Belt sign. Sit back, relax, and enjoy the transformation.