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Brands are finding success in airports and other transit hubs, with Estée Lauder bringing in more revenue from airports globally — they accounted for approximately 18% of its total sales in 2018 — than it did in department stores in North America last year, according to The Wall Street Journal.
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Other brands, including Bacardi and Gucci, have been targeting the space — and for good reason: The global duty free and travel retail industry grew around 10% year-over-year (YoY) in 2018 to reach $76 billion in sales, per The Data Circle as cited by The WSJ, while US department stores saw their sales fall 4.1% YoY to $149 billion, according to IBISWorld.
Here’s what it means: Travel retail is thriving while department stores falter because transit hubs have consistent foot traffic.
- Department stores have been trying to get creative to attract consumers and drive traffic. The rise of e-commerce means consumers don’t need to make as many or any visits to department stores, hurting their sales. To convince shoppers to make the trip anyway, Macy’s has rolled out new store formats and in-store attractions, mall operator Simon has tested rotating pop-up shops, and Kohl’s is experimenting with bringing outside retailers into adjacent spaces. But thus far none of these tactics have been a cure-all for their woes.
- Meanwhile, transit hubs have nearly guaranteed traffic, and consumers have time to wait around and browse while they’re there. There were more than 4 billionpassengers for flights globally in 2018, with the average traveler spending 72 minutes between security and their flight, according to Bacardi as cited by The WSJ, offering retailers and brands ample opportunity to make sales. And with the added potential of train stations, bus stops, and other transit hubs, travel retail has the chance to inspire an incredible number of sales.
The bigger picture: Retailers and brands should leverage transit hubs for their omnichannel capabilities as well to drive online sales too.
Outfitting transit hubs with omnichannel offerings like BOPIS and returns can bolster sales online and in-store. Having these kinds of offerings gives consumers more reason to make a stop and encourages them to buy products online.
This would be most valuable at transit hubs where consumers make regular trips, like train stations. But there are also omnichannel opportunities at airports: Consumers could order products online in a store for delivery, for example, to avoid having to fly with their purchases, which could be attractive for domestic travelers who wouldn’t have to deal with international shipping costs.
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