Is the travel retail beauty market about to recover?

Before the new crown epidemic, sales of beauty cosmetics had been “savage growth” in the travel retail market. With the gradual relaxation of the control of tourist travel around the world, the tourism industry seems to have ushered in the dawn of rejuvenation. In a lecture held by Cosmetics Design last week, many industry insiders shared their expectations for the future Asia Pacific travel retail beauty market.

“We are optimistic that the new crown epidemic will gradually end in two or three years. Of course, outbound tourism will still be the last industry to recover, but its future prosperity is also foreseeable – many are suffocating at home. Tourists are impatient to get out of the country and roam around,” said Sunil Tuli, chairman of the Asia Pacific Travel Retail Association (APTRA). “We’re going to see a long-awaited recovery in travel retail, and the Asia-Pacific region will play a huge role in driving that recovery.”

On the sidelines of the Duty Free World Association (TFWA) Asia Pacific conference in Singapore, Tuli also said: “We must not lose sight of the enormous opportunities this region offers, which is the ‘engine’ of the global travel retail market. If you are wondering about travel retail Where is the recovery going to start, then I can say for sure, right here, right under our feet.”

01 Brand side: travel retail is the best display platform

It’s no secret that beauty brands are keen on travel retail. Beauty giants such as L’Oreal, Estee Lauder, Shiseido and others have achieved significant success in the travel retail channel over the past few years. In addition, latecomers such as Kao and Pola Orbis are also accelerating their expansion plans, vying for a piece of the pie. 

“When most brands consider choosing some platforms to showcase their new products, they will never miss duty-free shops. Consumers from all over the world gather here, and product information will flow quickly to the world through them. Similarly, travelers can also Find all the big names by name and their new products in duty-free shops. The travel retail channel is a key platform for unparalleled convenience for buyers and sellers.” Anna Marchesini, Head of Business Development, travel market research agency m1nd-set Say. 

Marchesini also believes that in travel retail channels around the world, the Asia-Pacific region is a well-deserved core. “It’s the most dynamic travel retail market in the world — and the most important beauty market, by the way — and it’s an ‘explosive stage’ for beauty brands to hold pop-ups and launch new products.” She Say.

She cited Shiseido’s launch of the SENSE Beauty Pop-up at Singapore’s Changi Airport in 2019 as an example. The pop-up store aims to “transcend traditional retail”, using augmented reality (AR) technology to introduce products to visitors in an immersive way, helping brands reach consumers more deeply. 

These moves made Shiseido a resounding success in the travel retail channel in 2019, with the company hitting 102.2 billion yen ($936.8 million) in net sales, the first time its sales crossed the 100 billion yen mark. 

Melvin Broekaart, Global Director of Travel Retail at Dutch beauty and wellness brand Rituals, also recognized the importance of the travel retail channel as a showcase. “Travel retail offers brands the unique prospect of reaching consumers who have the time, the money (consumers who travel abroad are known to be less financially strong) and are more likely to make impulse purchases. Duty-free shops also offer Exclusive discounts and events that differentiate it from other online and offline platforms, so brands attract and engage with new consumers.” 

Broekaart also said that travel retail is often the first channel consumers engage with the Rituals brand.“For Rituals, before opening domestic retail stores, we will choose to enter new markets through travel retail to create brand awareness. Travel retail is an important strategic channel for Rituals’ overall business, which is not only a sales driver, but also a global An important touchpoint for travel consumers to connect.” 

Over the next few years, the company expects “strong growth” in the travel retail market in the Asia-Pacific region, Broekaart said. 

The company is planning to expand its footprint in China’s travel retail mecca, Hainan Island, adding three more stores this year. In addition, it is preparing to break into the travel retail market in Southeast Asia.

02 Consumers: Shopping is more in the mood when traveling than in daily life 

When  traveling, it is almost customary to leave the airport with duty-free items, be it chocolates, souvenirs, a bottle of fine wine or designer perfume. But what exactly motivates busy travelers to stop and shop?For Marchesini, the answer is obvious: People have different mindsets when they travel.

 “When traveling, consumers are showing a greater willingness than usual to discover new products, take the time to browse the shelves, treat themselves and enjoy the process,” she said.

 According to a survey the company conducted in the first quarter of 2022, 25% of beauty and cosmetics consumers said the appeal of duty-free shopping is when browsing the shelves and discovering new products. 

In the wake of the Covid-19 pandemic, Marchesini observed that more and more tourists are rewarding themselves by “buying and buying” when they travel. “The epidemic has changed many people’s living habits, and it has also made it more common to reward yourself for a trip and a shopping. In addition, consumers (especially women) seem to be more willing to treat themselves when traveling.” 

A similar phenomenon was observed by Rituals. The brand believes that its products have benefited greatly from the outbreak that has sparked an urgent need for healthy living among consumers. 

“For Rituals, travel retail is one of the most scalable channels in the world, through which we reach a huge group of tourists – especially those in the ‘post-pandemic’ era. Compared with before, I cherish every moment and enjoy the shopping process.” He also pointed out, “In the process of purchasing our products, the pleasure of travelers is not only because of how the product will bring more healthy elements into the product. The assumptions in their lives and travels also come from the very act of ‘buying’.” 

Marchesini also pointed out that in his company’s survey report, 24% of people emphasized that duty-free shops are a more convenient shopping location compared to places such as department stores. “It goes back to the factor I mentioned earlier: consumers can easily find all the big international brands in one place, instead of having to go through the whole mall. It also saves them more time browsing the brands,” Marchesini said. 

When beauty and cosmetics shoppers talked about the main reasons that motivated them to shop while traveling, price savings topped the rankings, followed by convenience. Other factors include brand loyalty, attractive displays, and differentiation. 

“Actually, the beauty category has been doing well in terms of foot traffic, but the challenge comes from declining conversion rates. This means that in-store elements have to play a huge role in capturing the attention of visitors and converting those visitors into buyers.” Marchesini said. These elements include attractive promotions, approachable salespeople, as well as eye-catching displays, advertising posters, piles, and more.

 “The world will slowly open up and many activities will start again. And in this recovering economic environment, there is a magic stage, and that is travel retail.” Tuli concluded at the end of the conference, “At the airport People are waiting for their flights and enjoying the selection process as they browse the latest beauty products from the world’s biggest names, all over the world.”

 The participants all held optimistic outlooks for the Asia-Pacific travel retail beauty market in 2022. Perhaps, as they said, 2022 will be a decisive year for economic recovery and transformation in the Asia-Pacific region. The beauty industry is expected to be the driving force behind the recovery of travel retail, which in turn will drive the beauty industry in Asia Pacific.