International Travel Retail is Booming

According to the Reuters News Agency, revenues from travel retail, which now also includes sales on airplanes, should reach $60 billion this year and nearly double in size by 2020.

Those revenues rose 9.4 percent in 2012 to $55.8 billion, the last available numbers compiled by Generation Research, the European company that surveys, analyses and documents the global duty free and travel retail market. The boom is driven by the soaring numbers of Asian tourists all over the world.

Reuters reports that tourism spending is up 12 percent worldwide since January 2013, while spending by Chinese tourists in Europe is up closer to 20 percent. Chinese tourists now make up 29 percent of global luxury spending.

As a result, said Reuters, “luxury brands are stepping up the battle for travelling shoppers with more outlets at airports and on cruise ships.”

The big European luxury brands – LVMH, Gucci, Hermes, etc. – are all opening new outlets in airports around the world and testing new retail concepts. L'Oreal, the world's biggest cosmetics group, has described it as the “sixth continent.”

“This channel is becoming very important,” Bruno Pavlovsky, chairman of Chanel fashion, told Reuters. “Customers are spending time in airports where the environment has become increasingly sophisticated.”

LVMH is planning a 2016 launch of a new retail concept called Galleria, specially designed for travel luxury shoppers, first in Venice and then perhaps in the former Samaritaine retail building in Paris, which is due to be converted into a five-star hotel.

Sales from LVMH’s travel retail network, which includes duty-free shop chain DFS and Sephora cosmetics shops, had a 19 percent same-store sales growth in the nine months ending Sept. 30, 2013. That surge included contributions from LVMH’s new DFS concessions in Hong Kong.