Travel Retail comes second in brand communications, although it is noteworthy that travelers account for 40 percent of global spending on personal luxury goods. Travel retail includes stores in airport malls, ferries and cruises and downtown duty and tax-free shops. However, airport malls hold the largest space in travel retail of approximately 60%. Few factors play a hindrance that may reduce the retailer’s operating leverage like the rent charged by airport authorities, absolute dollar amounts,consumer mix and execution risk. LVMH which comprises of duty free operator DFS and beauty products chain Sephora is the only luxury goods company with significant direct operations in travel retail , accounting to sales of about $10.38 billion. Salvatore Ferragamo is the most exposed brand with 138 duty free locations. Hermes comes second in the list with 60, Bulgari with 51 locations, Gucci Swatch and Cartier are some of the other brands in the list. Travel retail is growing at 8.4% per year for the past ten years faster than luxury goods market and the GDP. Asia pacific is the the largest and fastest growing region in travel retail ($24 billion), Europe ($21 billion)and Americas ($10.9 billion). Read full article here.
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