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Travel Retail

Travel retail: what is it?

More people are aware of and familiar with the idea of travel retail than we can imagine.  The extent of travel retailing is also the same.  Even before the phrase was created, the travel retail business model was in place.  In its most basic forms, travel retailing can be found at bus stops, rail stations, and airports.  Who hasn’t noticed eateries, bookshops, drink stands, authorized foreign exchange counters, and other such establishments and services in these locations?  The selling points are situated in locations such as airports, train stations, bus depots, taxi stands, ports, or any other location that travelers utilize throughout their journey since travel retailing is a type of retail business model aimed at travelers.

Concerning the Retail Travel Sector

According to some experts, the retail travel business is expected to develop at a compound annual growth rate (CAGR) of more than 8% over the next ten years. The retail industry for international travel is projected by Statista to grow to USD 60 billion by 2023. The sector is expected to reach USD 175 billion by 2030. This will represent a significant increase from the meager USD 20 billion in 2020 if these predictions come to pass. Numerous reasons are anticipated to contribute to this expansion, including an increase in tourists, particularly from the expanding economies of Asia, Africa, the Middle East, and the Asia Pacific region.

Over 70% of the travel retail market is made up of the airport retail sector. With a variety of retail automation and digitization technologies, top worldwide travel retailing firms are focusing on providing an enhanced consumer experience.

Retail Travel as a Business Prospect

One market with significant room for expansion is the retail travel sector. It meets travelers’ shopping and emergency needs. These are some of the elements that contribute to the allure of travel shopping as a business venture.

More Passengers, More Journeys

It may not be necessary to use statistics to determine that the number of people using any kind of transportation for commuting is steadily rising.  An increasing number of people are joining the economy through the bus, rail, road, air, or taxi.  People travel for a variety of reasons, including education, employment, business, and profession, as well as for pleasure.  These figures are only going to rise.  All forms of transportation are experiencing a rise in traffic.  If shops are able to engage with their customers through tangible touchpoints throughout their travels, this presents a fantastic economic potential.  These touchpoints are specific locations found in bus stops, rail stations, airports, and other logistical hubs.

Tourism Promotion

For governments, tourism is a major source of income. Foreign dollars brought in by tourists from other countries add to forex reserves. Travel and tourism provide tax money for governments in a variety of ways. Prior to enterprises being established, tourism also offers a source of employment. Thus, governments have a lot of good reasons to encourage travel. They must therefore create an atmosphere that is conducive to business and draws in outside investment. Because of this, retail startups, established retailers, and even international retail brands now find travel retailing to be an alluring business prospect. An excellent illustration of this situation is Dubai, where people may go to international shopping festivals designed to draw clients from all over the world.

An increase in travel-related purchases

According to some analysts, almost 50% of travelers shop while they are on the road. They think this could be due to a variety of factors. Emergent needs can occur at times. At home, people occasionally forget things. Needs can occasionally be unmet until the product is displayed. Product unavailability can also be the cause at times. However, without the willingness and openness to shop while traveling, none of this would matter. Travelers’ purchasing habits have drastically changed during the past few years. Travel retailing was positively impacted by this development.

Electronic Payments

The travel retail sector has been impacted by the advantages of digital payments as they become more commonplace globally. The advantages of digital payments that apply elsewhere also apply to buying or shopping for travel. Travelers no longer have to be concerned about carrying less cash thanks to the implementation of digital payment alternatives. Their foreign exchange needs are also met by international payment options. Additionally, there can be limitations on how much cash a person can bring on a trip, which are also handled through online banking. Travel retailers find it easier as travelers’ payment and payment-related issues are resolved.

The Internet's function

The expansion of travel retailing companies has also been fueled in part by the internet. This serves as a source and validator of information for travelers in addition to enabling digital payments. Prior to making any purchases from travel retail stores, travelers can quickly verify information about stores, items, prices, and other online resources. This is similar to the number of consumers who shop on e-commerce. For instance, retail establishments in airports charge higher prices for their goods. A customer can make a decision more quickly if they can compare prices and see that the difference is not substantial. Customers did not enjoy this benefit prior to the internet.

Shopping Plans

Traveling and shopping don’t have to be random and spontaneous. If the right procedures are in place, travelers can plan their purchases. One interesting feature of travel is the suitcase’s weight. Travelers often choose to bring only essentials that are affordable and avoidable, either on the way or once they arrive at their destinations. This can be used by customers to schedule their purchases. Retailers might modify their merchandising strategies to meet the product requirements of tourists. As a result, retailers are strategically interested in comprehending and adjusting to their consumers’ demand-consumption journey.

The extent of innovation

There is a lot of room for innovation in the retail travel industry. There are many unexplored opportunities for innovation in the current business paradigms. Retailers must avoid adopting outdated mindsets in light of the times. People who frequently travel by air today, for example, cannot be classified using the same criteria that were applied ten or twenty years ago. The diverse demographics of today’s airline customers point to new economic opportunities.

Business Difficulties in Retail Travel

Forecasting Demand

Achieving accurate demand estimates is one of the biggest issues faced by travel retail companies. The transient and fluctuating nature of demand in travel purchasing is one explanation for this. Determining pattern-based consistencies in demand is challenging. It is difficult to create baseline forecasts due to the fluctuations and volatility of demand. The buyers’ behavior is also influenced by factors such as the time of year, frequency of travel, and the reason for the trip. For instance, travelers are more frugal with their spending when airfares are high.

Expensive Rentals

It can be very expensive to rent commercial space for retail establishments at locations like metro stations and airports. Additionally, these are subject to yearly increases, just like any other rental property. With each year that goes by, this puts an ever greater commercial load on enterprises. Therefore, things might get nasty in terms of businesses’ commercial performance if sales do not increase at appropriate rates. For other running expenses, the same phenomenon holds true.

Extended Hours of Operation

In many cities and nations, locations such as train stations and airports are open around-the-clock. Additionally, it is typical to observe that retail establishments in these locations continue to operate in accordance with the latter’s timetable. While some stores might close at night, most of them are open all day and all night. This calls for shift labor, which is taxing and unpleasant for both workers and company owners.

Restricted Room

There is little room for businesses to make layout or visual merchandising changes in their stores. Retailers have relatively little leeway in their merchandising because of space constraints. Some establishments don’t even have a back area where tiny amounts of backup merchandise can be kept. For small business owners, this makes retailing travel considerably more intimidating. Additionally, limited stocking capacity has an impact on the range of products and variations that can be made available to consumers.

Longer Employee Onboarding

As previously stated, there are strict laws governing working inside critical locations such as ports and stations. The rules and regulations established by relevant authorities and other regulatory bodies controlling hiring and other employee-related matters of travel agencies in certain areas must be followed in addition to the independent checks and measures of enterprises. As a result, the hiring and onboarding process may take longer than usual.

Refunds and Returns

The process of handling returns and refunds once travelers depart a travel hub, such as an airport or train station, turns into a nightmare for both customers and merchants. As a result, several retailers post notices stating that they do not accept returns or issue refunds. However, that is only effective until a rival develops a remedy. Customers are consistently drawn in by the ease and capability of returns and refunds.

Relocating but Restricting the Clientele

For extended durations, the number of passengers traveling stays rather constant. This implies that while shops may have access to a steady stream of consumers, their clientele is likewise constrained. Additionally, not every traveler may represent the desired market. Travel retailing is constrictive in that regard. Additionally, drawing in traveling clients is not an easy task. Consumers are aware that goods are sold at comparatively high prices in locations such as airports, and they are wise enough to avoid making planned purchases there.

Extended Replenishment Duration

Travel retail businesses located in vulnerable locations, such as metro stations or airports, are required to undergo rigorous security screening before selling their products. Because of this, replenishing inventories can occasionally take a long time. Additionally, procurement procedures must begin significantly earlier in order to guarantee that goods will be on store shelves on schedule. This also means that changing product combinations or merchandising requires careful consideration.

How TRS can help

Among other things, TRS is a retail and eCommerce business consulting company that specializes in creating process SOPs. Over the years, we’ve worked with numerous clients across various industry sectors. We hope to keep up our scaling initiatives on the international scene in the future. For the design and implementation of our services, we work with specialized retail and eCommerce warehousing specialists. Our staff of warehouse design experts follows established planning and procedures from conception to completion.

In this specific service, we help companies create their operational and process blueprints. Businesses that own their own fulfillment centers and/or warehouses are the target audience for this service. For inbound, outbound, and control operations for warehouses/FCs, this service develops strong, SOP-based processes. All aspects of warehouse operations are essentially covered by SOPs. In order to accomplish this, we must collaborate closely with our clients to better define their needs and expectations. In addition to giving your warehouse or FC operational dominance, these straightforward warehouse SOP solutions can assist in implementing best practices and utilizing our position in accomplishing your business goals.

Why TRS

Established in 2000, TRS is a retail and eCommerce consulting firm focused on delivering business solutions aimed at sustainable growth and expansion. With a growing international presence, Over the years, we’ve worked with numerous clients across various industry sectors. Our services are led by experienced retail consultants who bring professional expertise and hands-on project knowledge, all executed through structured, proven methodologies.

In the domain of travel retailing, TRS brings deep, cross-functional retail expertise that caters to a wide spectrum of business needs. Below is a snapshot of the services and solutions we offer to travel retailers.

When it comes to business model development, we help define clear and compelling value propositions. Our consultants map and design value chains that detail the most effective routes for delivering those propositions to the intended customer segments.

In financial and commercial planning, TRS evaluates the key commercial elements required to implement and sustain these business models. Our analysis covers everything from demand forecasting and procurement strategies to sales projections, CAPEX/OPEX planning, profit and loss estimates, ROI, and break-even analysis—along with any other relevant financial metrics.

Space optimisation is critical in travel retail environments, where every square foot counts. Our layout planning experts offer multiple design options that factor in each client’s unique business requirements, ensuring an optimal balance of customer experience, functionality, and visual merchandising.

SOP-driven operations are essential for consistency and regulatory compliance. In travel retail, SOPs help streamline inventory control and ensure adherence to relevant laws and operational standards. SOP development and implementation remain one of TRS’s core strengths, ensuring clients benefit from structured, scalable operations.

To explore more about TRS’s consulting services for travel retail or to get in touch with one of our expert travel retail consultants for a business query, feel free to send us a message. We’ll be happy to connect with you.

FAQs

One type of retail business strategy aimed toward travelers is travel retailing. The locations of the selling points include ports, taxi stands, train stations, bus depots, airports, and any other location where travelers stop along the way.

Some industry analysts predict that the retail travel sector will develop at a compound annual growth rate (CAGR) of more than 8% over the next ten years, following a high progression curve. In 2023, the global retail travel market is projected to reach USD 60 billion, according to Statista. The sector is predicted to reach over USD 175 billion by 2030. According to some analysts, almost 50% of travelers shop while they are on the road. Travel shopping offers a huge opportunity for innovation. Many opportunities for innovation exist in the current business models that have not yet been explored.

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