Travel Retail appeared in 1947, when the Irishman Brendan O’Regan founded the duty-free shop in the heart of the Shannon Airport. At the time, the Shannon airport was a mandatory stop on almost all flights between Europe and North America, as most aircraft stopped here to refuel before the trans-Atlantic flight. In those days, the products for sale were limited to cigarettes and spirits – mainly whiskey and gin.
Since that time, the product offering has expanded to include fashion items and leather goods, foods and luxury products. Perfume was one of the first high-end articles offered in this distribution circuit, foreshadowing the success of cosmetic products that would gradually become the most sought-after, along with fashion, accessories and leather goods. In 2011, perfume represented 31% of the Travel Retail market and reported annual growth of nearly 20%1.
In 1999, the closure of tax-free zones within the European Union provided a stimulus for Travel Retail to reinvent itself. Spaces devoted to luxury, with a major emphasis on cosmetics and fashion accessories, grew in importance. An example is the latest Satellite of Terminal E2 in the Roissy Charles de Gaulle Airport, where luxury brands are displayed just as they are on the major shopping avenues of Paris, in a floor space of nearly 6,000 m2. Far from losing momentum, this distribution circuit should continue to develop with the construction of new airports and the roll-out of new intra-regional connections. For example, China is anticipating the opening of 70 new airports in the next three years.
With an increasingly urban and interconnected population and markets that are more and more global in scope, the Travel Retail industry has a promising outlook and should continue its development, influenced by sociological and economic changes, in particular in emerging zones. In 2011 - and for the first time in the history of the industry - Asia Oceania was reported the biggest Travel Retail market (in sales, all categories combined) ahead of Europe, the very cradle of duty free2.
1 Growth in 2011 vs 2010 source Génération
2 Generation Research
Did you know?
1/ The two biggest Giorgio Armani Cosmetics boutiques in the world (by sales) are both located in the Dubai Airport. This airport has long since established its image around shopping, luxury shopping in particular. In these boutiques, the "Privée" collection, the most exclusive Giorgio Armani perfume line, achieved record sales with, on average, nearly 30 perfumes sold each day (at an average price of €180).
2/ The Japanese are the number one buyers of beauty products in the Honolulu Hawaii airport. In total, they represent nearly 60% of the international passengers of this airport1. Consequently, the Group's beauty advisers are trained to provide a Japanese-style service, which includes the ability to speak Japanese.
1 source Paxsmart 2012
3/ Chinese travellers devote more than 80% of their budget to shopping (in Travel Retail or at the place of destination). This average budget is estimated at €14,5001.
1 source Global Blue survey 2012