Pandemic has changed the market for airport tax and duty free operators

Opening the 37th TFWA World Exhibition & Conference in Cannes, TFWA president, Erik Juul-Mortensen, said he believed that the concept of ‘going back to normal’ following the pandemic is no longer a possibility.

“After two years that threatened duty free and travel retail’s existence, it was inevitable the pandemic would bring change.

“Traveller expectations have evolved rapidly from pre-COVID times. We are seeing a new desire among travellers to engage with brands, especially those that share our values and focus on sustainability, as well as a heightened interest in immersive activations.

“The nationality mix is changing too, with almost no outbound Chinese passengers yet and fewer Asian travellers in general, although numbers are starting to increase. Meanwhile, India is experiencing a surge in connectivity as new routes open up.

“Travelling shoppers are getting younger, with the proportion of Generation Z and Millennials who purchase in duty free and travel retail rising from 19% in the period before Covid to 30% in 2021-22, according to a recent study by travel retail research specialist, m1nd-set.”

Juul-Mortensen went on to discuss the growing emphasis on sustainable practices within the industry, noting that “mindsets and attitudes” have changed since pre-pandemic times, and that this “includes a higher interest in and attention to sustainability”.

He said: “But sustainability is not just about products, it’s about our society. Our industry serves customers from all nationalities, backgrounds, beliefs, but do our management teams include members from a broad range of cultural backgrounds and regions?

“Are there enough women in senior roles within our companies? In short, does the duty free and travel retail industry today reflect the people we sell to?”

Forming partnerships will enhance the customer experience


Juul-Mortensen praised the recent partnerships that have been formed throughout the industry, stating: “The business landscape is being reshaped by alliances or initiatives that innovate and blur the boundaries within our industry.

“Dufry’s planned combination with Autogrill would create a new entity with over 5,000 retail and F&B outlets across 350 airports worldwide, all underpinned by a new digital platform.

“Extime is a new joint venture between Groupe ADP and Lagardère Travel Retail that likewise brings together retail and hospitality, starting with around 140 outlets in Paris and expanding internationally from 2024.

“Both linkups will create opportunities to cross-sell and provide new services for travellers. Gebr Heinemann’s Gharage is a vision hub that aims to seed new ideas to enrich people’s travel time using a blend of technology, design and entrepreneurial flair.

“These are all recent examples of a trend to create a more seamless, integrated and connected experience for passengers.”

He then highlighted the increasing reliance on digital services and experiences and how it has created a new sense of urgency across duty free and travel retail.

Indeed, Juul-Mortensen stressed that the industry must do more to capitalise on the opportunities presented by this demand.

“More than ever, the passenger and shopper data that drives customer engagement is the new currency for our industry.
 
However, one thing that has unfortunately not changed is the industry’s reluctance to share that information and seize the opportunities it offers duty free and travel retail.

“Access to accurate, timely traveller data is essential to make informed decisions not least in volatile times like these. Preventing wider use of this data means we are limiting our own ability to grow, and limiting our ability to engage with politicians and others to defend and advocate for our industry.”

Global trafic recovery

ACI World forecasts that global air passenger traffic will return to more than three-quarters of its 2019 level by the end of this year, however, delays and cancellations continue to negatively impact on duty free and travel retail sales, admitted Juul-Mortensen.

“Preliminary figures from the European Travel Retail Confederation’s helpful Index show that, after a positive year in 2021 when sales increases easily outpaced passenger growth, spend per head went into decline in the first quarter of this year, dropping by over a third,” he told delegates.

“The summer’s difficulties will almost certainly add to that decline. It is the ability to react to changed circumstances, like a sudden upswing in passenger traffic, that will separate the winners from the losers in this new world.”