Navigating the Future of Travel Retail: Insights and Innovations Ahead of TFWA 2024
As TFWA 2024 approaches, the spotlight is on the travel retail and duty free industry, projected to reach $69.22 billion this year. Scheduled from September 29 to October 3, TFWA is the premier annual conference bringing together top brands, executives, creatives, and business leaders in the travel retail space. This event is a key opportunity for forging strong supplier-operator relationships and exploring innovative ideas within the industry.
Market Growth and Trends
With travel rebounding post-Covid-19, the increased spending power of younger generations is driving industry growth, particularly in the APAC region, which now holds nearly 50% of the market share. This trend is set to continue. According to the 2024 Moodie Davitt Report, beauty giant Coty has reported that travel retail now accounts for 9% of its sales, with the segment growing by 20% in fiscal year 2024. Other beauty, luxury, and lifestyle brands are likely to follow Coty’s lead, seeking to capture their share of the booming travel retail market across the globe.
At TFWA, one of the major challenges discussed will be how to effectively identify and engage with travelers. Industry experts will share their successes, challenges, and strategies for ongoing innovation. For leaders aiming to expand their market reach, understanding and connecting with customer bases is crucial.
This brings us to a key question: As the industry continues to grow, how do we expand our reach? Discovering new and creative ways to identify travelers is essential for marketers, advertisers, and companies involved in travel retail.
TFWA 2024: A Deeper Look
Critical Issues
This year’s TFWA will focus on critical issues such as geopolitical climate and its impact on global business. The event featured distinguished speakers including Stephen Sackur, BBC World journalist and presenter, known for his extensive reporting in the Middle East and as the Washington correspondent for BBC Brussels. Sackur will provide insights into the complex geopolitical landscape and its implications for international trade. Additionally, Hillary Rodham Clinton, former Secretary of State, will discuss current issues in international trade, foreign policy, and U.S. global relations, offering valuable perspectives on how political dynamics influence the travel retail sector.
The conference will also address the evolving demographics of the travel industry. With Gen Z emerging as a dominant consumer force and Gen Alpha approaching adulthood, the industry must adapt to these tech-savvy, social media-engaged generations. Sam Red will discuss strategies for staying ahead of these trends, while Anousheh Ansari, CEO of X Prize, will highlight the role of technological advancements in shaping the industry’s future. Ansari will delve into the impact of technology and digital innovation on travel retail. Discussions will explore how these developments can affect travel shoppers and industry stakeholders, and how new technologies can enhance the consumer experience.
As we prepare for TFWA 2024, it is evident that international relations, technology, and innovation are becoming pivotal issues. Stakeholders must develop strategies to address these challenges and seize opportunities for growth in a dynamic global landscape.
Creativity and Innovation: How to innovate and target travel retail industry
While the conference will address these challenges, Helios has a few recommendations from our own experiences in this industry. We want to zoom in and present to you some of Helios’s most interesting and frankly innovative ideas on how to overcome these challenges. With our expertise in travel retail with experiences across APAC, LATM, and MENA, we have adapted to different situations not only across different regions but also across different consumer habits and cultural attitudes. Let’s look at current case studies and hopefully we can explain ways for you to better understand how to creatively target new demographics and travers in the duty free and travel retail industry.
Technology: A Key Way to Access the World
In today’s global market, technology plays a crucial role in connecting travelers with luxury brands. As consumers become more discerning and seek high-quality products, the travel retail sector has embraced technology to enhance customer experiences and drive engagement.
The Rise of Technology and Innovation
Travelers, with their disposable income and a keen interest in both saving money and investing in premium products, are prime candidates for targeted marketing strategies. To capture their attention, we’ve leveraged cutting-edge technologies such as Virtual Reality (VR) and Artificial Intelligence (AI). These tools allow us to swiftly adapt to consumer preferences and offer personalized recommendations that cater to individual needs.
One standout application of this approach is Augmented Reality (AR). By incorporating AR technology, we’ve introduced virtual try-ons for popular beauty products, like a trending lip product. This innovation lets consumers experiment with different shades from the comfort of their homes, eliminating the hassle of in-store try-ons. Not only does this enhance the shopping experience, but it also helps consumers make informed decisions about their purchases before even entering a store.
Caste Study: AR and Virtual Tryons
To reach confirmed travelers effectively, we launched an ad campaign across Spain, the UK, and Ireland featuring AR try-ons on a premium publisher site. This campaign was strategically placed to capture the attention of users interested in travel and luxury products. The AR filter allowed users to use their phones to interact with various products and decide which one they liked even before entering the store.
By leveraging AR and VR technologies to target European markets, we’ve successfully increased brand awareness and attracted new consumers. This strategy not only enhances brand visibility but also caters to the rising demand for personalized and convenient shopping experiences in the travel retail sector. Consumers no longer need to worry about purchasing products that may not suit them or wasting money on items they won’t use. Our AR filter enables them to preview products before stepping into the store, ensuring they make informed choices efficiently.
In summary, technology is revolutionizing how we connect with consumers in the travel retail space. By embracing AR, VR, and AI, we’re delivering more engaging and personalized experiences, ensuring that travelers and luxury shoppers have seamless access to the best products and services right at their fingertips.
Product Seeding and Loyalty Strategies
Product Seeding and Loyalty Explained
Today’s travelers, especially Millennials and Gen Z, are increasingly discerning and digitally connected. These savvy consumers demand personalized deals, unique in-store experiences, and exclusive offers that cater to their specific travel needs. To capture their attention and build a loyal customer base, brands must innovate beyond traditional strategies.
One highly effective approach is combining product seeding with loyalty programs. In an era of economic uncertainty, consumers are cautious about spending on new products. To address this, many beauty brands are offering travel-sized samples at lower prices or even for free, allowing customers to try before they buy, ultimately fostering trust and encouraging future purchases.
Case Study: Hotel Partnerships
At Helios, we identified a key opportunity: travelers who book hotels are prime candidates for product seeding. We partnered with popular hotel chains to integrate our samples into their amenities. By offering these samples in hotel rooms, we provide travelers with the chance to experience our products in a comfortable, familiar setting.
Guests can use the products during their stay and decide if they want to purchase them. This approach not only enhances their travel experience but also subtly introduces our brand into their daily routine. By bringing our products into the luxury of their hotel room, we create a memorable and personal interaction that bridges their travel experience with potential future purchases.
This strategy is crucial for solidifying brand awareness and fostering customer loyalty. After trying the products in a positive, glamorous environment, consumers are more likely to develop a favorable view of the brand and become loyal customers. By associating our products with these premium experiences, we invest not only in a stronger brand image but also in a customer base that values high-quality, innovative products.
Leveraging Rideshare Apps to Unlock Travel Insights
The Dominance of Rideshare Apps
Rideshare apps have emerged as a game-changer in identifying new travelers. With over 500 million users globally and a market value exceeding $30 billion in 2023, rideshare services have become a vital part of urban transportation, especially in major cities. For companies seeking to connect with travelers, rideshare apps offer a unique advantage by serving as a key indicator of travel activity.
At Helios, we recognized the potential of rideshare apps as a tool for pinpointing active travelers. Frequent users of these services are often on the move, making them an invaluable segment for targeted marketing efforts. This insight helps bridge the gap in targeting ads to travelers, an area where traditional methods have often fallen short.
Case Study: Ride Sharing apps and Identifying Confirmed Travelers
To capitalize on this opportunity, we launched an in-app banner campaign targeting confirmed travelers heading to major airports such as LAX, JFK, and SFO. The banner featured a special deal for a product available at a nearby travel retail store, creating both urgency and a sense of exclusivity. This strategy significantly boosted foot traffic and sales at travel retail and duty-free stores.
Building on this success, we expanded our efforts to the UK market the following year. By partnering with a rideshare app, we refined our strategy with targeted ads that catered to user preferences, including gender segmentation. We focused on tailoring ads for men and promoting men's skincare and beauty products, aiming to attract a higher number of male travelers—a segment often overlooked by the industry.
To further enhance the campaign, we introduced exclusive in-app offers that created a sense of urgency. Users who clicked on the banner were directed to a landing page where they could easily download the deal to their e-wallet for convenient access.
By leveraging targeted app banners and data analytics, we can effectively reach confirmed travelers, particularly through channels popular with younger demographics who are eager to elevate their travel experiences. This approach not only drives engagement but also maximizes the impact of our marketing efforts by creating buzz around exclusivity and brand visibility.
The Future of Travel Retail
Looking ahead, the travel retail industry is projected to be worth over $145 billion by 2032, with continued expansion across diverse markets such as APAC, LATAM, and MENA. Innovation and adapting to new consumer behaviors will be crucial for companies seeking to grow their market share in this dynamic industry and especially among markets worldwide.
At Helios, we look forward to participating in TFWA, eager to share our insights and learn from industry leaders to refine our strategies and meet the evolving needs of travelers. Discussions on critical issues such as geopolitical conflicts, evolving consumer habits, and the adoption of new technologies will provide us with the resources and knowledge needed to better understand these macro developments. This will enable us to refine our strategies and effectively target the ever-changing needs of the travel retail industry’s prime consumer base.