travel retail: the sixth continent
TRANSCRIPT
TRAVEL RETAIL: THE SIXTH CONTINENT
THE OPPORTUNITY FOR ISRAELI BRANDS
ESSENTIAL COMMUNICATIONS
Essential Communications is an award-winning integrated public relations and marketing agency with a proven track record in travel retail/duty free and international wines & spirits.
OUR CLIENT PORTFOLIO: SNAPSHOT
WHAT IS THE SIXTH CONTINENT FOR L'ORÉAL?
"The travel retail distribution channel is a strategic market for the development and visibility of our brands, and contributes to the quest of one billion new consumers."Barbara Lavernos, Managing Director of L’Oréal Group Travel Retail
WHAT IS TRAVEL RETAIL?
SHANNON – WHERE IT ALL BEGAN
DFS – CATERING TO THE JAPANESE TRAVELLERS
1999: THE END OF INTRA EU DUTY FREE
PANIC STATIONS!
TRAVEL RETAIL GROWTH
$34bn
20162008 2020 2050
$62bn
$85bn
?????????
THE INCREDIBLE GROWTH IN AIR PASSENGER TRAFFIC
Over the past 35 years there has been a tremendous growth in international tourist arrivals, from 277 million in 1980 to just under 1.2 billion last year,
1980
277 million
2015
1.2 billion
TOURISM WILL CONTINUE TO GROW
“International tourism reached new heights in 2015. The robust performance of the sector is contributing to economic growth and job creation in many parts of the world. It is thus critical for countries to promote policies that foster the continued growth of tourism, including travel facilitation, human resources development and sustainability” UNWTO Secretary-General, Taleb Rifai.
GLOBAL TRAVEL RETAIL SALES BY REGION: $62.1BN
39%
32%
2%
18%
10%
Regions
Asia Pacific
Europe
Africa
Americas
Middle East
MUMBAI DUTY FREE
THE AMAZING SPENDING CHINESE
“Chinese tourists spent $215bn outside mainland China in 2015, up 53% on 2014” “ There were some significant shocks last year in the stock market and the currency, but it didn’t slow the growth of travel and tourism” World Travel & Tourism Council.
GLOBAL TRAVEL RETAIL SALES BY PRODUCT CATEGORY: $62.1BN
25%
21%18%
13%
11%
11%
Product sectors
Fragrances & Cosmetics
Wines & Spirits
Fashion & Accessories
Tobacco
Watches & Jewellery
Confectionery & Food
Electronics, Toys and Other
MAKING EVERY DAY PRODUCTS SPECIAL
LUXURY BRANDS AT AIRPORTS
GROWING CATEGORIES: SKINCARE, SUNGLASSES, NICHE FRAGRANCES, HAIR CARE, FINE FOODS.
PREMIUM PREMIUM PREMIUM
“Travel retail’s endemic premiumisation drive continues apace, with retailers keen to avoid any possible cannibalization of their upscale portfolio.”
The Moodie Davitt Report
GLOBAL TRAVEL RETAIL SALES BY CHANNEL: $62.1BN
57%33%
6% 4%
Where to buy?
Airports Downtown duty-free stores
Airlines Ferries and cruises
THE AIRPORT RETAIL ENVIRONMENT
DUFRY – THE WORLD’S BIGGEST TRAVEL RETAILER
A SENSE OF PLACE
DOWNTOWN DUTY FREE – WHERE THE GROWTH IS
CRUISE SHIPS – A CAPTIVE AUDIENCE
AIRLINES – A VARYING APPROACH
KOREAN AIRLINES SKY SHOP
INFLIGHT EXCLUSIVES
SO WHAT DOES THIS MEAN FOR ISRAELI BRANDS?
3.5BN PASSENGERS AND GROWINGBRAND SHOWCASE PRODUCT LAUNCHPAD BUILDING BRAND AWARENESS DESIRE FOR NEWNESS, EXCLUSIVITY
BRAND SHOWCASE
LAUNCHING OR RELAUNCHING BRANDS
Galaxy,
Galaxy Relaunch AtDubaiDuty Free
BUILDING TR PRESENCE – THEN DOMESTIC
WHAT DOES TRAVEL RETAIL MEAN TO GODIVA
"Travel retail is the window to the world for us; this is where consumers get to first interact with us if we are not present in the domestic market. We learn more about where the potential markets are and we learn more about what consumers like. We tend to plan our growth through the window or the lens of travel.” Godiva CEO Mohamed Elsarky
THE ESSENTIAL ELEMENTS
RIGHT PRODUCT RIGHT PACKAGING RIGHT INVESTMENT RIGHT SUPPORT
CHALLENGES
High marginsPrice
competitionBrand
awarenessHigh investment
Category competition
Listing feesVolatile industry Distribution
limitations
TRAVEL RETAIL IS NOT A QUICK FIX
THIS BUSINESS SHOULD BE LOOKED AT FOR MID-LONG TERM BRAND EXPOSURE/PROFIT, NOT SHORT TERM GAIN.