A recent report by GlobalData revealed a wealth of potential in travel retail, with spending in airports reaching a global total of $38 billion in 2016. By 2021, that number is expected to grow by 27% and reach $49 billion, according to the report.
Asian-Pacific airports raked in the highest numbers in 2016, making $14.8 billion off of travelers, while European airports came in second with $10.7 billion.
The success of travel retail has led to an increase in the development of airport storefronts, which account for an astounding 83% of all spending in airports.
In a retail environment characterized by store closures, bankruptcies and a flourishing marketplace of e-commerce, the success of travel retail is welcome news for the future of brick-and-mortar stores.
With a large consumer base that often spends time waiting for flights, airports hold big opportunities for retailers. “This audience has time to kill and, especially when on holiday, is in the mood to spend,” Maureen Hinton, group research director at Global Data Retail, said in a statement.
Some retailers have already begun to take advantage of the waiting-room atmosphere that pervades airports by providing travelers with entertainment options far beyond just shopping, something Hinton calls “the airport equivalent of a modern shopping center.” According to Hinton, Singapore’s Changi airport offers not only traditional brick-and-mortar stores, but also more experiential opportunities: travelers can watch movies, play videogames or even go to the spa.
According to a 2016 report by Verdict Retail, the most sought-after clothing and footwear brands at airports will be Hugo Boss and Ralph Lauren/Polo for 2016-2017. Indeed, luxury brands seem to have made the most inroads into the travel retail arena, with Xpress Spa — an airport specific spa chain — boasting 53 store locations worldwide and airport stores more broadly accounting for 6% of the luxury shopping market.
Travel retail has the potential to be a great ‘reentry point’ — if you will — for brick-and-mortar companies looking to reconnect with consumers. In particular, companies who hope to capitalize on the move from traditional shopping to experiential retail might find a more captive audience at airports that, like Changi, recognize the need and willingness of travelers to engage in purchase behaviors while waiting for a flight.
That’s not to say that physical retailers are out of the woods. The United States remains oversaturated with retailers and many big-box retailers are closing hundreds of stores to compensate for over-expansion. Topping the list right now are Sears’ recent mass closures and the financial struggles of stores like J. Crew.