Travel Retail needs to blend into the whole passenger hub experience, DFSs CEO said.

Travel Retail needs to blend into the whole passenger hub experience, DFS's CEO said.

Global Travel Retail operators are calling for wide-scale changes, as the channel struggles with an array of worrying trends.

The days of "the same brands presented the same way" are a thing of the past, the CEO of luxury retailer DFS, Philippe Schaus warned this week. Under pressure from e-commerce and Millennial apathy, Schaus believes GTR risks boring its passengers.

He called on landlords, retailers and suppliers to offer unique occasions that offer consumers "Instagram-able experiences".

Speaking at the TFWA China's Century Conference in Guangzhou this week, Schaus said Travel Retail must start "blending into the whole experience". Localisation is key, and airports and other Travel Retail retail hubs must "become destinations in their own right", he added.

"We strongly believe that the time of the usual corridors, the boutiques left and right, the same brands presented the same way all around the world; that is the way of the past," Schaus said.

King Power Group's MD for Travel Retail, Sunil Tuli, echoed Schaus' comments, claiming that stock is "flooding the market", landlords are charging retailers high rents and online retailers have the upper hand as mobile phones allow for easy price comparisons.

"The rules of the game have completely changed," he said yesterday. "If a consumer doesn't need to go into a store, how can we entice them into our store?"

Tuli said financial pressures on the industry are now starting to become apparent. "So often, you see companies disappearing from the scene," he said.

The comments highlight a challenging period for Global Travel Retail. In 2015, the channel's global sales were down 3%, compared to a 6% jump in 2014 and an 8% increase in 2013. Wines & spirits sales declined in 2015 by 3%.

The decrease was partly due to a dip in demand from Chinese consumers, although speaking to just-drinks this week, John Rimmer, director of research for Travel Retail trade group TFWA noted that early indications for 2016 are that the return of Chinese spending will lift full-year sales. According to Rimmer, Asia's TR, of which China accounts for the major share, saw sales jump in the first nine months of the year by double digits.

The end is nigh for Global Travel Retail - Click here for a just-drinks comment

Meanwhile, TFWA head Erik Juul-Mortensen said Travel Retail must embrace change if it wants to remain relevant to China's big-spending Millennial consumers.

Juul-Mortensen said the Millennial Chinese are Travel Retail's most important consumer, although their consumption habits differ greatly from previous generations. "The younger Chinese generation is more consumption-oriented and less frugal than their parents and grandparents," Juul-Mortensen said. "This is a generation in which the value of a product is not necessarily measured by its price."

He continued: "The pace of change in China is relentless. If our industry is to remain relevant to the millions of young Chinese travellers out there, we must be willing to change."

According to Juul-Mortensen, the spending rate growth of Chinese Millennials is 14%, twice that of people aged 35 and older. They are also the highest-spending generation in Asia, spending more than twice the average of an Asian Millennial.

DFS head Schaus also said that the 'Click & Collect' concept is not a game-changer for the channel, but an "essential service" that should come as standard. "We see it as a nice service, but we don't think it will create especially different behaviour," he explained.

Expert analysis

Global travel retail insights - market forecasts, product innovation and consumer trends

Global travel retail insights - market forecasts, product innovation and consumer trends

Modest growth for global travel retail: Global travel retail sales of wines and spirits, including pre-mix drinks, rose by a modest 1.8% in 2014, reaching 30.2m nine-litre cases in what was a year of ...read more