Travel retail beauty category watch

Carving up the space between best-sellers or established international players, while introducing new brands continues to be a balancing act for retailers. Travel retailer ARI reports that consumers want to find their favorites when they shop at airports, but that equally, there is a growing appetite for brands, including indie, sustainable and local labels. ARI Global Head of Beauty Deirdre Devaney comments: “We see from our results that there is a direct link between category and brand performance and the newness and innovation that’s coming through.”

The major trend for niche fragrances continues, reflecting travelers’ desire for unique and exclusive brands. At Istanbul Airport, for example, Gebr Heinemann indicates that niche fragrances saw a 42% increase in turnover in 2023 compared to 2022, already accounting for 20% of the total share in fragrances. “In 2023, we successfully launched new brands, such as Parfums de Marly in fragrance or Sol de Janeiro in skincare,” says retailer Gebr Heinemann Director Purchasing Beauty Britta Hoffmann.

Trending on social media

Last year, Heinemann implemented a ‘test & learn’ concept, whereby new brands known only on social media are presented for a limited period, thereby allowing them to enter the travel-retail market. “This is a genuine highlight for shoppers, as it enables them to discover products from brands like Transparent Lab or Theramid, which are usually not found in travel retail or that are only available in a limited number of locations,” explains Hoffmann.

At the same time, Hoffmann adds that due to the cost-of-living crisis, there is an increased demand for base price offers across all regions. The retailer has expanded its assortment in this area.

Fragrance continues to see strong growth in beauty travel retail, up 26% in 2023 versus the previous year, according to Generation Research. High-end and niche brands account for a growing share and attract new demographics to the mix. In Asia (traditionally a skincare-driven region), the fragrance offer is becoming progressively more sophisticated, with India earmarked as a bright spot for future growth. There is also a rise in the adoption of home and body scents. Polarization too is a key trend in fragrance, with both the very high end and entry price points or value brands working well.

For Gebr Heinemann, fragrances remain the strongest sub-category in beauty, accounting for two-thirds of sales, while cosmetics is showing the highest growth rates. Fragrance is also the number-one category at ARI, followed by skincare and make-up, with both performing equally well.

Wellbeing-based skincare

For skincare, Generation Research figures show sales declined in the double digits (-10% to -15%) in 2023, as the category was hit hard by the clampdown on daigou trading in Asia. However, ARI points out that new niche brands in skincare are performing well alongside new launches, such as Sol de Janeiro. Lower-priced skincare is also trending better than luxury.

For Heinemann, skincare is seeing strong growth, even though the level of Chinese travelers has not yet fully recovered. “The growth in skincare is driven by a general focus on wellbeing among consumers, the listing of new brands like Sol de Janeiro and Elemis, or social-media driven brands from Niche Beauty Lab, the stronger implementation of haircare products into the assortment, and new offers in our base price segment,” states Hoffmann.

In terms of haircare, ARI notes an increase in demand due to the skinification trend, whereby the scalp and hair are being treated in the same way as the skin. Consumers are looking for ingredients or products to meet very specific needs in haircare, according to Devaney.

As for make-up, sales rose 3% in 2023 versus the previous year, notes Generation Research. This year, Heinemann says sales of color cosmetics are currently still at a low level, even though the category is on the rise with brands that appeal to millennials, such as Kylie Cosmetics. The brand, which is operated by Coty, is expanding in the channel, with the latest opening at Singapore Changi airport terminal four in July, in partnership with the Shilla Duty Free Singapore. New brands in make-up also have much potential; ARI for example cites the launch of Sculpted by Aimee in Ireland.

DFS Group also has its eye on new areas, as it continues to expand its Beauty Collective niche concept, with Hong Kong and Macau on the radar for roll out this year. The Beauty Collective is positioned in high-footfall zones in flagship stores and it will add new categories to the mix, such as artisan perfumes, beauty tech and candles.

New categories are also a focus for Heinemann. “We want to break new ground by including growing categories such as supplements, self-care and wellness products in our regular assortment,” explains Hoffmann.

A need for polarity in price points continues, with players generally tweaking the mix to cover base, mid and high price points. Premiumization is still driving growth in categories such as fragrances. ARI’s Devaney indicates the share of price segments varies at each location, but that high-priced products are still proving popular.

“What we are seeing is a very strong movement in the exit price point, where we are introducing more niche fragrance in particular,” insists Devaney. “Our pricing policy, which offers a guaranteed saving of at least 15% versus the domestic market, is a really compelling offer, especially when investing in premium and luxury beauty.”

According to Beauty Shopper insights sourced from research company Pi Insight’s Global Shopper database travelers bought 2.2 beauty items and spent $114 (between May and November 2023).

As inflation levels surge alongside the added pressure of the cost-of-living crisis in many parts of the world, value-for-money is becoming increasingly important alongside a luxury offering.

Heinemann’s Hoffmann concurs that the product assortment needs to reflect the diversity of consumers, which means that it should include products from entry-level to luxury prices.

“We see that while value-for-money is becoming increasingly important, but premiumization is still driving growth, for example, in the fragrances category,” explains Hoffmann.

However, there is a risk that the trend towards higher prices, niche brands and luxury collections could put some consumers off buying in travel retail. This means that retailers need to make sure to highlight value for money and strike the right balance between ensuring broad consumer engagement and delivering a luxury experience that validates the cost.

When the issue of price is raised, the preference for travel-retail exclusives are always put forward as the weapon in winning the war in against lower prices in the domestic market and online.

Global passenger traffic in 2024 is predicted to surpass 2019 levels for the first time since the pandemic, reaching 9.7 billion passengers or 106% of 2019 numbers (+12% year-on-year growth rate), according to Airports Council International.

Statistics from Swiss-based research agency m1nd-set show that men, younger shoppers and Asia Pacific consumers have emerged as the driving forces behind luxury shopping in travel retail. Its research indicated that over half of luxury shoppers (57%) are younger than 35. Millennials account for 42% of luxury shoppers in travel retail, while Gen Z accounts for 15%. Gen Z has started to purchase luxury goods much earlier than the millennials, according to the m1nd-set study on Luxury Shoppers in Global Travel Retail released in May.

M1nd-set’s research demonstrated that luxury shoppers have a higher tendency to purchase all the main premium categories than non-luxury shoppers. Perfumes is the most popular category purchased with 42% of luxury shoppers, which is 4% higher than non-luxury shoppers. Significant differences between luxury and non-luxury shoppers are also seen in skincare, where there is a 20% delta between the two customer segments: 34% versus 14% respectively.

Connected consumers

Passengers have become more heavily influenced by social-media trends and this is driving success for niche brands. “Digital shopping pre- and post-flight are growing, and this is changing consumer shopping habits and bringing more convenience for travelers,” says Devaney.

Consultancy 2.0 & Partners’ Passoni confirms that personalization, sustainability and experience are the three key trends shaping the market. “Shoppers are more connected than ever,” states Passoni. “This means it takes more to engage them and they will not fall for simple tricks on price or sustainability. Only excellence is acceptable. These are points that are understood by all stakeholders across the market; however, in some cases we are still seeing people trying to find simple solutions, and that will always cheapen the offer and will damage the wider market,”he continues.

Kearney’s research on strategies to reinvigorate the marketplace published last year suggested that to regain growth and customer spending, travel retail must pivot from being price- or value-centric to being traveler-centric, focusing on assortment, price, service and experience.

The industry must also connect beyond the airport, retailer and brand trinity ecosystem, adding carriers and digital and media partners to drive change.

Heinemann underlines that turning travel time into valuable time with ‘unforgettable experiences’ has been implemented into its mission statement. “We are working with leading brands to bring more of these personal and unique experiences to the shop floor. “For example, in-store beauty services to try new products, including hair styling, hand and nail treatment, as well as skin and hair analysis,” remarks Hoffmann.