Luxury brands increasingly focus on travelling shoppers

Luxury brands are stepping up the battle for travelling shoppers with more outlets at airports and on cruise ships, tapping into one of the fastest growing sections of the market that looks set to keep booming thanks to soaring numbers of Asian tourists. Revenues from travel retail, which also includes sales on airplanes, rose 9.4% in 2012 to Є43 billion, according to market research from Monarch Capital Partners and others. It should reach €50 billion this year and nearly double in size by 2020. "This channel is becoming more and more important," Bonno van der Putten, Managing Director of retail experts Monarch Capital Partners, said. "People are spending more time in airports where the shopping experience and environment has become increasingly entertaining." Lingerie and beauty product supplier Victoria’s Secret for example recently opened a couple new beauty and accessories stores across Europe. Victoria’s Secret and Monarch Capital co-operate these stores in partnership with other local travel retailer groups The new Victoria’s Secret stores aim to surround travellers in luxury and have modern façades with dynamic storefronts that boast an air of sophistication. The stores will also showcase both its brand identity and range of products with a “gallery of iconic black and white images and video walls broadcasting footage of the Victoria’s Secret Angels”, according to Victoria’s Secret The airport stores obviously will focus on a fashion-forward range of beauty products and accessories designed for the modern traveller. Shoppers looking for beauty products will find fragrances like the Victoria’s Secret Bombshell, the newly-launched Fabulous collection and other products. Travel-ready items such as signature lip glosses and body-care products will also be available. Monarch also co-operates other airport concessionaire operations among which the French luxury brands Hermes and Chanel, the latter, the world's 2nd-biggest brand behind Louis Vuitton by sales, and has boutiques in four Asian airports and one at London, whereas there are plans to open a boutique in Paris Roissy Charles de Gaulle airport and another in Dubai. Chinese tourists, who barely featured in luxury brands' customer statistics a little over a decade ago, now make up 29% of global luxury spending, according to market information That trend is set to continue, and forecasted is nearly half of all air traffic in the medium term will come from the Asia Pacific versus 37% now. Though most luxury brands raised prices, particularly in the €-zone and in Japan, to make up for currency moves, van der Putten estimates that over 2/3 of luxury spending by mainland Chinese was made overseas in 2013, due partly to local duties. According to Monarch Capital, Europe remains the cheapest market for handbags with prices 9% below those in Hong Kong and 28% below mainland China, while the yen's weakness has played in favour of luxury shoppers in Japan. Monarch Capital expects the Chinese travel market will grow at a compound annual rate of about 11% from 2012 to 2030. Chinese urban travellers took about 500 million domestic and outbound trips in 2012, spending about €200 billion, and it expects those numbers to increase to 1.7 billion trips and $1.8 trillion in spending by 2030. Hermes, which has 50 boutiques in airports around the world, is turning these into proper free-standing shops to better tap the booming market. Van der Putten says that this channel affects the customers that are more interested in luxury than the average and that travel retail represented a significant portion of Hermes's total sales. According to van der Putten is also L'Oreal, the world's biggest cosmetics group and maker of Lancome creams and Yves Saint Laurent lipstick, strongly committed to travel retail, creating a dedicated division to travel retail Sales from travel retail generate 15% of total revenues at L'Oreal's luxury division and 12% for rival Guerlain (LVMH). Perfume and cosmetics represent the biggest product category for travel retail with 28% of the market, ahead of wines and spirits with an 18% market share, fashion and accessories with 13.5% and then watches and jewellery with 12.2%. Monarch Capital’s retail division works with LVMH on plans to launch a new retail concept called Galleria, specially designed for travel luxury shoppers. It was already pointed out earlier that the global luxury and cosmetics product makers are there to get their piece of the cake in new and emerging markets, cutting their dependence on mature markets in Europe and the U.S, where they are facing a lower consumer spendings, depressed economic environments amid the general macroeconomic slowdown.