Horizon Consumer Science Says Outlet Malls ‘Winning Price Game’ With Airport Travel Retail
Friday, December 14, 2018
Global shopper spending has fallen by $15 billion in two years, with the Chinese now accounting for 40 percent of purchasing in travel retail.
The convenience factor and speed of the shopping experience means airport shops can’t compete with downtown outlets in categories attracting typically higher spends, according to Greater Irvine Chamber Leaders Circle member Horizon Consumer Science.
Responding to a question on the rise of liberalized tax and duty free regimes specifically in places like Hainan, China, Horizon founder Dr. Ian L. Cesa told TRBusiness: “[Airports] have decent prices, but they are not considered the best prices – outlet malls win the price game, by far.”
“But, they are typically located in inconvenient places and it is a bit of a gamble as to whether the long trip to an outlet mall is worth it.”
Cesa suggests airports will probably never compete with downtown stores in the likes of fashion and accessories aisles due to airports’ smaller footprints and time constraints.
“It’s risky to wait until the airport because there is nowhere else to go if the airport doesn’t have what you want,” Cesa added.
The comments come as Horizon releases its 2018 Global Traveler Report, which suggests the size of the global travel shopping market covering spending during the entire travel journey including duty and tax free is ‘slowly shrinking’.
Horizon’s research claims global travel retail spending has shrunk by $15 billion from $397 billion in 2016 to an estimated $382 billion this year, with the average travelling consumer spending nearly $170 less per trip than in 2012.
This is despite record air travel numbers, up from 415 million in 2012 to a projected 808 million this year.*
Chinese the Exception
On the other hand, Chinese outbound travel volumes have risen by 50 percent since 2016 and now account for 40 percent of travel retail spending globally, the report continues.
Chinese travelers’ propensity to travel and spend is contrary to a decrease in spending from other nationalities such as South Americans (bargain hunters) and North American and Eastern Europeans (destination shoppers).
Cesa says the latest findings denote a ‘worrying trend’, with multi-billion dollar decisions at airports in particular made on assumptions about what appeals to travelers.
As a result, competition for duty free spending is stemming less from other airports, and more from shops visited by travelers during the total travel journey.
“Chinese spending has been fairly stable at around $2,000 per person, after a precipitous drop from $2,700 to $2,000 between 2012 and 2014,” Cesa continued.
“Not coincidentally, Chinese President Xi Jinping’s austerity directive came out in 2013, so it appears that spending by Chinese international travelers is affected, so far, more by what the government wants than by what is available in the domestic market.”
*Figures based on international travelers. More than 31,000 travelling consumers from 38 countries surveyed in the Travel Retail Catalyst Studies (TRaCS) since 2012, which informs The 2018 Global Traveler Report.
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