Food For Thought: What’s next for customer loyalty in travel retail?
The second of our Food for Thought columns, in partnership with Blueprint, looks at the key issue of customer loyalty. Travelling shoppers may not be as frequent as they are on the High Street, but many regularly pass through the airport – and they need more emotional connectivity.
Customer loyalty strategies in travel retail have been tried and tested. The question in the headline is therefore not easy to answer – much depends on whether operators, retailers, brands and above all travelling customers believe there is a loyalty benefit to be had.
“The short answer to the question is extraordinary hospitality; an emotional bond between travelling consumers and industry stakeholders – it transcends having the right product at the right price. Selling products at cheaper prices is no longer enough to excite customers.” said Blueprint Partner Thomas Kaneko- Henningsen.
Market research agency m1nd-set confirms that pricing is becoming less relevant to airport duty-free shoppers. “Between 2019 and 2024 the importance of pricing advantage has dropped significantly from 30% to 13%.
“It calls for more experiential retail in order to convert more travellers into customers” explained Peter Mohn, m1nd-set’s Owner & CEO.
Is travel retail facing catastrophic success?
Travel retail has, since its birth in 1947, developed into one of the fastest-growing retail channels worldwide. But yesterday’s success no longer guarantees future prosperity. In fact, past gains might even result in industry complacency.
According to Euromonitor International, global travel retail sales are set to hit almost $170 billion by 2027, but will only beat pre-pandemic levels from 2025. The industry’s current strong growth coupled with decades of success may induce a level of self-satisfaction. In other words, the channel may face catastrophic success, defined as ‘exceeding one’s own sustaining capacity resulting in the inability to respond to demand’.
“If the travel retail industry continues to rely on pricing as the main sales driver, it will not suffice going forward because it competes increasingly with global e-commerce and struggles with supporting store rent levels and margin requirements” commented Kaneko-Henningsen.
If the travel retail industry continues to rely on pricing as the main sales driver, it will not suffice going forward
– Thomas Kaneko-Henningsen
Global e-commerce has taken gigantic steps. According to eMarketer data, the global e-commerce market is expected to grow from $6.3 trillion in 2024 to almost $ 8 trillion by 2027. This represents 22.6% of worldwide retail sales, up from 20% in 2024. More than half of customers shopping online now order from both local and international websites. The channel is now stepping up its game by leveraging artificial intelligence (AI).
AI, as discussed in a previous article in this series will be a game changer. It mimics human-to-human interaction and mass-customises user experiences at a speed unlike anything the retail world has seen. To compete effectively against this, travel retail’s value proposition must evolve to keep customers’ loyalty.
What is ‘extraordinary hospitality’?
“The travel retail industry has tremendous growth potential when it comes to extraordinary hospitality, a hard-earned mix of exceptional experiences combined with extending a personalised and emotional service to travelling customers,” commented Kaneko-Henningsen: “If it is heartfelt, authentic and memorable, travelling customers are more likely to go back for more. They will enthusiastically share such experiences with family, with colleagues at work, and also post on social media. Customer-centric companies are leveraging social media to reinforce loyalty. Travel retail’s focus should be on mastering the extraordinary hospitality process with sales being the reward.”
Examples of extraordinary hospitality in travel retail
The travel retail channel is stepping up when it comes to extraordinary hospitality and this trend has not gone unnoticed at NACO. The past 75 years, the company has completed projects at 700 airports worldwide.
Adam Ekman Pedersen, NACO’s Airport Commerce & Customer Experience Advisor commented: “Unlike traditional retail environments, airports face the challenge of creating loyalty among passengers who are primarily focused on reaching their destinations. Airports can enhance the travel experience by securing intuitive commercial area layouts, establishing partnerships with brands that offer passengers efficient yet memorable services – and not least by integrating digital solutions that make the journey through the airport more enjoyable and memorable.”
A shining example of extraordinary hospitality is how the award-winning Qatar Airways’ premium class serves food when it suits the passenger not when it suits the cabin crew. Meanwhile, its home airport, Hamad International, has introduced industry-first Dior airport spa and Louis Vuitton lounge where the dining experience is an ongoing collaboration with the three Michelin star chef, Yannick Alléno, in partnership with Qatar Duty Free. Something to excite travellers and their taste buds.
Earlier this year Frankfurt Airport inaugurated the new VIP-Terminal servicing more than 30.000 guests annually. “With our VIP service in Frankfurt, we always focus on extraordinary hospitality. When traveling with us, our guests feel as comfortable as at home or in the best hotels. The fact that our guests keep coming back to us when traveling via Frankfurt is our incentive for the future. We make almost every wish possible and look after every guest individually” said Verina Zimmermann Head of Commercial & Sales VIP Services, Conference and Visitor Service at Frankfurt Airport.
Singapore Changi Airport offers tax-absorbed luxury shopping for customers who are not even flying. Shoppers just need to go online and chat with a concierge on iShopChangi who can suggest purchases from about 5,000 items across 60 designer brands.
Airports like Heathrow and Charles de Gaulle offer personal shoppers and Munich Airport extends a Bavarian welcome from mid-November and throughout December with its own Christmas market.
Fast Travel at Oslo Airport manages car services from the airport. It consolidates all taxi companies and Uber drivers into one seamless stream with full pricing transparency. Customer loyalty is reinforced as users can easily customise their car rides according to car type, pet-friendly, child seating, wifi connection, and more.
“We are not advocating for the travel retail industry to stop offering pricing advantage to travelling customers. Our intent is to fuel the ongoing debate in terms of how the industry reinforces customer loyalty by leveraging extraordinary hospitality” said Kaneko-Henningsen