Well, our shoppers are talking about it. They are talking with their wallets. Before the pandemic we were consoling ourselves that revenue and the value of the travel retail industry was going up. We were using that to hide from the important fact that average spend was going down. Our shoppers were spending less. And they will still be spending less again when they come back after the pandemic.
The rate of conversion in our market has dropped about 50% in a decade. That is a horrifying statistic. It was not brought on by the arrival of digital. It was brought about by a lack of interest from our shoppers.
Low cost carriers have changed the passenger model in our airports. These are consumers who want a quick deal, who want to be wowed, and they expect duty free to offer them a price which will wow them.
We can talk for hours about the fact that travel retail and duty free are different, or that the rules of the sector have changed. But the truth is our customers do not care. They want a good price or they will go elsewhere. If our price is not better, then why should they carry it with them? If they are going to shop online, then why would they do it with our retail platforms rather than the ones they use every other day?
Travel retail must reclaim what made it special in the first place. We must reclaim the one thing that our shoppers expect from us – we need the best value proposition.
The current business model we use for concessions is a big part of this issue, as it so often seems to be today. Rising rents and Minimum Annual Guarantees have forced prices up and we have all been so focused on getting the best space and the best contract that we have forgotten to offer shoppers the best price.
A big, shiny state-of-the-art store is no use if shoppers do not want anything that is inside. I am not suggesting this is a problem which we can just fix, but it is one which we must discuss. We must address how to overcome this. All our favourite topics will always be important. But to ignore pricing is foolish. No, it is suicidal.