The Hidden Cost of Innovation in Travel Retail.
By Garry Stasiulevicuis, Pi Insight
The Hidden Cost of Innovation in Travel Retail.
4 minutes read
Introduction by: Peter Marshall
With the TFWA World Exhibition and Conference just weeks away, alcohol and confectionery brands are preparing to launch hundreds of new products to their retail partners. These new introductions are crucial for keeping categories fresh, exciting, and offering the innovation that travellers have come to expect in travel retail environments.
However, while innovation is vital for stimulating categories and engaging shoppers, the question remains: are brands and retailers managing this influx of newness effectively, or are stores becoming too crowded, making shopping a more challenging experience? This is an excellent feature by Garry Stasiulevicuis of Pi Insight.
In travel retail, (like other channels) space is limited and highly valuable, and maintaining the balance between product innovation and shop-ability is increasingly critical. This article explores whether brands and retailers are successfully managing their expanding product ranges while ensuring a seamless shopping experience for consumers.
The Challenge: New Products vs. Space Constraints
Introducing new products is essential for keeping travellers engaged and driving engagement, leading to impulse purchases in duty-free stores. Shoppers expect a mix of familiar brands and exciting, new offerings. However, as hundreds of new SKUs are set to enter the market, retailers face the challenge of ensuring their shelves remain uncluttered and easy to navigate.
According to data from Pi Insight’s global ShelfTrak tool, which tracks SKU-level execution across 50 airports and 75 travel retail stores, the average number of facings per SKU (how many times a product is displayed front-facing on a shelf) varies significantly across regions. As an example, for alcohol:
- Americas: 4 facings per SKU
- MENA (Middle East and North Africa): 4.5 facings per SKU (+2%)
- Asia: 5.4 facings per SKU (+23%)
- Europe: 5.5 facings per SKU
These regional variations highlight the differences in how shelf space is managed to optimise shop-ability. Regions like Europe and Asia, where facings are higher, focus on giving individual SKUs greater visibility, improving the shopping experience. In contrast, regions with fewer average facings risk cluttering their shelves as the number of SKUs increases, potentially leading to reduced shop-ability.
Brands’ Responsibility: Managing SKU Range with a Holistic Approach
Brands have a direct responsibility to ensure that new products are integrated into stores in a way that maintains or improves shop-ability. It’s not enough to simply launch new products – brands must also actively manage their existing SKU ranges by removing underperforming or outdated products from the inventory. SKU rationalisation is essential for several reasons:
- Reducing clutter: Removing slow-moving SKUs frees up valuable shelf space for new launches, preventing stores from becoming overcrowded.
- Improving visibility: Streamlining SKUs allows retailers to allocate more facings to high-performing or new products, making them easier for shoppers to find.
- Enhancing navigation: A well-curated product range helps customers quickly locate the items they need, which is particularly important in busy and time-limited airport environments.
More importantly, brand owners must adopt a total category view. Instead of focusing solely on the specific segments they operate in, they should work with retailers to manage the entire category (eg, total alcohol or total confectionery). This means taking responsibility for ensuring a balance between all subcategories rather than overcrowding the store with products from just one segment.
For example, a brand introducing several new SKUs to the market in one particular niche, they must work collaboratively with retailers to ensure that this expansion doesn’t encroach on other areas. By taking a holistic approach, brands can help retailers create a balanced and well-organised shopping experience, rather than one that feels cluttered and confusing.
Category Managers: Space and Positioning Are Key
Category managers in travel retail play a critical role in maintaining shop-ability by managing space allocation and product positioning within the store. As new products are introduced, category managers must take a strategic approach, ensuring that they are integrated effectively into the store’s layout without overwhelming existing ranges.
One of the key responsibilities for category managers is to ensure that new products are placed in high-traffic, visible areas, are integrated into existing executions, yet given the space to be visible, attractive and are logically placed within their relevant categories.
Strategic range and assortment management, alongside smart use of space, is essential to ensuring that stores can accommodate newness without sacrificing ease of navigation and shop-ability.
Are These Behaviours Seen Enough in Travel Retail?
The question is whether these behaviours—SKU rationalisation, total category management, and strategic space planning—are being implemented widely enough in travel retail. While some brands and retailers are working collaboratively to manage product ranges and optimise shop-ability, many stores still face overcrowding as brands push to retain old SKUs alongside new launches.
Brand owners are often reluctant to remove long-established products, especially those with loyal customer bases, even when these items no longer perform well. This creates a situation where old and new SKUs compete for limited shelf space, which can negatively impact shop-ability as shoppers struggle to navigate through a crowded store.
Similarly, retailers often face pressure from brands to stock a large number of SKUs to maintain strong supplier relationships. However, this can lead to diminished shop-ability if stores are overwhelmed with too many choices, causing frustration for time-pressured shoppers.
Conclusion: Innovation Needs Strategic Execution
As the TFWA World Exhibition and Conference brings a wave of new product launches to the travel retail market, the key to success will be managing this innovation without compromising shop-ability. The hidden cost of innovation is the potential for overcrowded shelves and a poor shopping experience if SKU management and space allocation are not handled carefully.
Brand owners must take responsibility for managing their ranges holistically, working with retailers to ensure that the total beverage alcohol category is well balanced and that space is allocated strategically across segments. SKU rationalisation, efficient space allocation, and intelligent product positioning are all essential to creating a shopping environment that remains both engaging and easy to navigate.
In travel retail, where every square foot is valuable, innovation must be balanced with careful execution to ensure that shoppers can continue to enjoy a seamless, enjoyable experience while exploring the newness that brands bring to market.
