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Travel Retail – Sacha Zackariya

A Sector in Transit

Travel and tourism is in equal parts one of the most lucrative and most demanding areas of retail. As they travel, international customers typically value the experience of new things and tend to be willing to pay a premium as a result. This is the viewpoint of ChangeGroup CEO and Co-Founder, Sacha Zackariya as he spends some time discussing the industry.

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The 30 years I have spent in travel retail have taught me countless invaluable lessons and given me a unique insight into what the travelling consumer wants and what they spend their money on.

In 2023, customers want a personalised product. They want to feel connected to a brand whilst also being able to retain and showcase their individuality. Younger travellers are more likely to make a purchase if an exceptional personalisation service, which can be delivered in unique and exciting ways, is offered. For example, virtual ‘try-on’ services and ‘matching’ suggestions curated by AI can increase the likelihood of customers making a purchase.

The increasing demand for ethical and environmentally responsible products is also no secret. Shoppers are willing to pay premium prices for this kind of product but, in my view, there currently isn’t much on the market that fits this bill. Consumers are crying out for a new era in sustainable manufacturing and branding and there’s a huge amount of money at stake here for a brand that meets customers’ sustainable and ethical expectations in a way that is clear to those they want to influence.

Having ethical attributes of some products only viewable on a company’s website doesn’t provide consumers with what we might call ‘bragging rights’. There is often a disconnect between consumer research saying customers will pay a premium for a product and then not actually wanting to pay a premium in store. I sincerely believe this is because the moment the consumer leaves the shop, there is no visible marker showing that product has more sustainable attributes than another product. With cars it is different, electric models are clearly identifiable from petrol and diesel ones. The size of the opportunity is vast and with the unprecedented reach social media provides there is so much that can be done to promote a positive brand or item.

Customers no longer just want to buy products, they want to engage with a brand. Online shopping has become so popular over the last decade because it is easy and quick when customers know what they want. What makes travel retail unique is that our customers don’t know what they want until they can see it and feel it. Shopping at the airport or at a travel destination is an important part of the travel experience and with people having more time to discover brands and products they haven’t purchased before there is a huge upside for those who truly make the effort to engage with travel customers.

My work on my book ‘Leading Travel and Tourism Retail’, led me to conversations with some of the brightest and most-successful figures throughout the entire retail industry. In these interviews, they shared with me how they’ve been able to grow their businesses faster by forming a deep understanding of the major drivers of the industry.

Ravi Thakran, Group Chairman at LVMH Asia, gave a particularly interesting insight that you should “never sell a product demand fully, never push your product and never go on sale”. This was a statement I found especially fascinating since it reflects the philosophies of LVMH as a company. A common misconception is that the likes of Elon Musk, Bill Gates and Jeff Bezos are vying for the title of the world’s richest person but in reality, it belongs to LMVH CEO and Chairman, Bernard Arnault. It’s fairly remarkable that the richest person in the world is not a tech entrepreneur but a retailer selling leather goods and spirits, so there are definitely learnings to be taken from the vast opportunity. The interesting point here is that most of the people in the top 10 are disrupters of old industries and you can imagine that LVMH needs to keep reinventing itself if it is to stay ahead.

Michard Ward, Managing Director at Harrods, told me: “It makes an extraordinary difference to be targeted about who you are selling to and to know what these customers want.” Targeting is a critical element of retail and is an area in which Harrods represents the gold standard in to this day.

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Toulouse-Blagnac Airport
France

Vasiliki Petrou, CEO of Unilever Prestige Brands, hit the nail on the head when she said: “Consumers crave to be educated, to connect, to explore or to be entertained.” A huge part of the reason behind both people travelling and people shopping is to connect with other people. They want to learn about goods and services whilst at the same time exploring and being entertained. This is particularly true in the world of retailing to international shoppers, as it is all part of the holiday experience.

Travel and tourism retail is a complex and often misunderstood sector of the industry. It’s not the same as retailing to repeat domestic customers. For example, an advertising budget is compromised as a result of the audience location, because we’re essentially reaching out to people who may only be in the country on this one occasion.

Therefore, it is essential to train staff and particularly management teams to be able to accommodate this. These skills have a huge impact on the success and increasing profitability of businesses wanting to be a part of this sector.

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The unfortunate truth is that most brands have not invested enough in training, to increase the understanding within their teams of what travel retail is to different demographics and what people expect from it. To be a good leader in this space you need to be versatile, calm, empathetic and possess a clear vision of what you want to achieve and be confident in seeing that vision through to completion.

Retailers, domestic retailers in particular, who want to break into the market have to ensure they understand the complex differences between the two sectors. With intimate knowledge of the customer base, brands and businesses can take advantage of these differences by maximising their appeal in the eyes of this particular type of consumer. This includes offering all possible payment options, particularly cash, since research shows that around two thirds of international shoppers prefer to pay in cash for small and medium-sized purchases. This can be for many reasons including risk of identity theft, desire to keep purchase histories private, budgetary control, among others.

Travel and tourism retail is undoubtedly a tough business to crack, but with correct execution it is, I believe, fundamentally the most profitable sector of the industry.

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