Travel Retail State of the Nation Report 2015

Transcription

1 Putting the right detail into travel retail

2 STATE OF THE TABLE OF CONTENTS 1 INTRODUCTION p. 4 2 OVERVIEW OF THE TRAVEL RETAIL MARKET p MARKET SIZE AND PERFORMANCE p CHANNEL TRENDS p CATEGORY DYNAMICS p PAX ANALYSIS p GLOBAL p ASIA PACIFIC p EUROPE p AMERICAS p MIDDLE EAST AND AFRICA p. 15 GLOBAL PEST ANALYSIS AND THE IMPACT UPON TRAVEL RETAIL POLITICAL MILITARY CONFLICTS HEALTH CORE CATEGORY LEGISLATION ECONOMIC GLOBAL OVERVIEW ASIA PACIFIC EUROPE AMERICAS MIDDLE EAST AND AFRICA SOCIAL NON-TRADITIONAL FAMILY TYPES THE INCREASED REACH OF SOCIAL MEDIA EFFECTS OF THE EBOLA AND MERS CRISES CROWDSOURCING COUNTER INTELLIGENCE RETAIL LTD [2]

3 TABLE OF CONTENTS 3.4 TECHNOLOGY MOBILE DEVICES - ALWAYS ON AND ALWAYS AVAILABLE AIRPORTS EMBRACE APPLICATIONS REVOLUTIONISING THE IN-FLIGHT RETAIL EXPERIENCE 4 KEY RETAILER REVIEW 4.1 DUFRY / WDFG 4.2 DFS 4.3 LOTTE DUTY FREE 4.4 LS TRAVEL RETAIL 4.5 HEINEMANN 4.6 THE SHILLA DUTY FREE / DUBAI DUTY FREE 4.7 KING POWER / SUNRISE DUTY FREE 5 CORE DUTY FREE CATEGORY TRENDS 5.1 FRAGRANCES AND COSMETICS 5.2 WINES AND SPIRITS 5.3 TOBACCO 5.4 CONFECTIONERY 6 CONSUMER AND SHOPPER TRENDS 6.1 EMERGENCE OF THE NEW WORLD MIDDLE CLASS 6.2 CHINESE CRUISERS 6.3 AFFORDABLE LUXURY 6.4 CONSUMER AND SHOPPER RESEARCH HIGHLIGHTS 7 SUMMARY 8 SOURCES COUNTER INTELLIGENCE RETAIL LTD [3]

4 1. INTRODUCTION With the market continuing to evolve at tremendous pace, this report provides a resource for understanding the landscape of this buoyant channel This comprehensive review is designed to help shape and support strategic planning for your business, giving consideration to the following factors: An overview of market performance and its key drivers Highlights from CIR s Business Lounge service detailing the key drivers of change in PAX numbers and destinations by geographical region, and the dynamics of key nationalities An overview of the key Political, Economic, Social and Technology (PEST) factors having an influence upon the Global Market - investigating the impact of conflicts & crises, health policies, demographic shifts, and always-on technology A review of the latest trends emerging across core duty free categories, from consumer habits to product attributes to packaging In each section of the document you will find an overview of the following: WHAT DOES IT MEAN? RECOMMENDATIONS COUNTER INTELLIGENCE RETAIL LTD [4]

5 2. OVERVIEW OF THE TRAVEL RETAIL MARKET is a unique environment.with its own inhabitants 3.3bn Air travellers in bn Travelled internationally +200 Different nationalities.its own geography International areas Terminals Security checks Passport & ticket / Boarding card required.and a unique commercial landscape Operates 24/7 Language barriers Captive consumer base Time pressured shoppers Note: All CiR Business Lounge data is 12 months to July 2015 Global Traveller Statistics 200 Airport Database (c. 85% coverage) COUNTER INTELLIGENCE RETAIL LTD [5]

6 2. OVERVIEW OF THE TRAVEL RETAIL MARKET Travel retail is often referred to as a sixth continent, responsible for US$63.5 billion of sales globally. As set out in Fig.2.1 below, putting this turnover figure into context reveals an enviable position. This is a unique trading environment, with an ever changing roster of inhabitants encompassing over 200 different nationalities. The advantage of a captive consumer base being present 24 hours a day / 7 days a week is balanced with the unique challenges of language barriers and acute time pressures. Fig.2.1 A $63.5 bn market Growth projections for the market project that the retail sales buoyancy seen over the last decade will continue. Steady high-single-digit growth is forecast to be maintained over the next decade, which will create a market almost twice the size of that in which we currently operate (Fig 2.2). One of the key drivers of market growth is the increased in passenger numbers, driving a natural uptick in retail footfall and associated increase in consumer spending. The number of international departing PAX grew by 6.9% in the twelve months to July Section 2.4 details the key regions and traveller nationalities driving this growth. Bigger than the GDP of Luxembourg ($62.4bn US - IMF 2014) 9x the value of Real Madrid CF & FC Barcelona combined ($3.3bn US and $3.2bn US respectively - Forbes) Fig.2.2 Forecast Market Growth US$ $125 $85 $63 One third bigger than Coca-Cola s global revenue ( 46.5bn US - Fortune Global 500) (2014) Actuals (2020) Forecast (2025) Forecast Source: Generation Research COUNTER INTELLIGENCE RETAIL LTD [6]

7 2.1 MARKET SIZE AND PERFORMANCE The travel retail market grew by 5.8% in 2014 according to Generation Research. This follows successive years of strong growth, with a compound annual growth rate (CAGR) of +10.1% experienced since Whilst this growth represents a slowdown versus the medium term, the market has continued to enjoy sustained growth. Importantly, all regions have seen sales growth over this period with the market some distance from saturation. The Asia Pacific region is the largest geographical region for travel retail sales - this area of the world has demonstrated market leading growth since 2010, and has increased its importance to the overall market as international PAX numbers grow. The second largest region by sales value is Europe - as a more mature market, this region has exhibited slow but significant growth due to its scale. The Americas represents 18.5% of global travel retail sales, with average growth behind the global market from 2010 to The Middle East & Africa is driven by the Middle East with a 9.2% share of global sales and 4 year CAGR just behind the market average. Africa makes a smaller contribution to the overall market with a 1.3% share and slow growth over the medium term. Fig.2.3 Geographical Region Shares MARKET SHARE % 32.3% 18.5% 10.5% $24.5bn $20.5bn $11.7bn $6.7bn ASIA PACIFIC EUROPE AMERICAS MIDDLE EAST & AFRICA Source: Generation Research COUNTER INTELLIGENCE RETAIL LTD [7]

8 2.2 CHANNEL TRENDS Airports remain the dominant channel within travel retail, and drives the market with CAGR ahead of the global annual average of 10.1% between 2010 and This has seen the channel increase its share of the overall travel retail market to just under 58%. Airlines and Ferries are the smallest sales channels and have also shown the slowest growth over time. This slow growth does not impact the overall market significantly due to the limited scale of these channels. Other Shops, which includes Downtown shops, Border shops and Cruise ships, have also grown at a similar rate over the medium term, and make up over one-third of sales. Fig.2.4 Channel Shares MARKET SHARE % 34.2% 4.6% 3.5% $36.6bn $21.7bn $2.9bn $2.2bn AIRPORTS OTHER SHOPS AIRLINES FERRIES Source: Generation Research COUNTER INTELLIGENCE RETAIL LTD [8]

9 2.3 CATEGORY DYNAMICS All categories have shown positive sales CAGR from 2010 to 2014, although the pace of this growth varies by category. Fragrances & Cosmetics are the clear number 1 category in the market, with a 30% share of the market. This category has also demonstrated some of the strongest growth rates over the last 4 years, ahead of the market average, meaning that it is responsible for significant value increases over time. Sales of Fashion & Accessories and Watches & Jewellery have grown at market leading rates over the last 4 years, increasing their share of the market. The slowest growth of all categories between 2010 and 2014 is experienced by Tobacco Goods. Confectionery & Fine Food have grown just behind the market CAGR in the medium term. The Wines & Spirits category has grown slightly behind the global average over the medium term, but continues to make a significant absolute sales contribution to the overall market. Fig.2.5 Category Shares 30.0% FRAGRANCES & COSMETICS 16.4% 14.6% 12.5% WINES & SPIRITS FASHION & ACCESSORIES TOBACCO GOODS Source: Generation Research 10.4% 8.1% WATCHES & JEWELLERY ELECTRONICS & GIFTS 8.0% CONFECTIONERY & FINE FOOD COUNTER INTELLIGENCE RETAIL LTD [9]

10 2.4.1 GLOBAL PAX ANALYSIS Global departing PAX has grown +6.9% over the last 12 months to July Europe is the most mature travel market in the world. Whilst growing behind the global growth at +5.9%, the region s year on year contribution to absolute PAX growth is substantial. Asia remains the key driver of PAX growth with +8.3% change year on year. MENA growth is also ahead of the global average at +9.6%, but from the smallest regional base. The Americas region delivers the lowest rate of PAX growth, but still delivers an increase of +5.7%. Fig.2.6 Departing PAX totals and % growth by region August 2014 to July 2015 Number of Passengers Millions % +8.3% +5.7% +9.6% Europe Asia Americas MENA Source: CiR Business Lounge Global Traveller Statistics 200 Airport Database (c. 85% coverage) COUNTER INTELLIGENCE RETAIL LTD [10]