Retail Revolution   //   August 5, 2021

After a year of no travel, brands are investing in duty-free exclusives again

This story is part of a Modern Retail editorial series looking at the future of travel-based retail. 

As consumers return to travel, brands are looking toward airport-only products .

Brands have invested in travel retail exclusives for decades, creating unique products that could only be found in airports at duty free stores. However, the coronavirus pandemic demolished the travel retail industry in 2020: airport revenues decreased 66% and exclusive product deals dried up. Now, over the last few months consumers are slowly returning to travel and brands are again investing in travel-exclusive products and flavors that both give consumers a sense of uniqueness and allow brands to tap into new consumer segments. Despite the growth of the deadly delta variant of COVID-19, daily travel numbers are consistently high this summer according to the TSA, with 6.5 million more passengers flying in July than June this year and July 2021 pacing closer to 2019 pre-pandemic passenger levels than June 2021.

In the past, travel retail exclusives were popular options for accessories, beauty, food and spirits brands to capture new consumers willing to shell out for a perceived tax-free deal, a vacation necessity or a gift to bring home. In the whiskey category, for example, collectors would buy unique flavors from indie distilleries like Tobermory and major conglomerates like Diageo. Toblerone’s triangular chocolate grew in airport retail and the brand continues to offer exclusive travel products today.

Today, brands are returning to the travel exclusive model in droves. This summer alone, for example, Nestle, Nuxe, Ray Ban, Montblanc, Paco Rabanne, Le Labo, Bailey’s, Slipsmith, Larios, Macallan and Jim Bean all released new travel-only products and flavors. Their strategies behind these campaigns, however, are evolving. Nestlé banks on travel retail’s ability to drive discovery while Nuxe keeps gifting in mind. Going forward, travel retail experts predict exclusives will be even more important to consumers as travelers seek unique destination shopping experiences.

This year, Nestle released a new blueberry flavor of its travel-exclusive line Nestlé Swiss chocolate bars and four new limited edition travel-retail After Eight chocolate mint flavors. The new flavors are helping the brand to “build on our [travel] product launches initially introduced for 2020,” said Stewart Dryburgh, general manager of Nestlé International Travel Retail, over email.

Dryburgh added that the diversity of customers in “nationalities, ages and profile” is a particularly unique opportunity in airports and many of the brands’ top products in the space have an international distribution. However, the brand also considers regional differences in the creation of exclusives and in travel merchandizing more broadly: U.K. consumers in particular love Nestlé’s After Eight chocolate mints, for example.

Skincare and bodycare company Nuxe is balancing the sales of travel sizes of old favorites with two new travel exclusive sets launched this year, explained Constance Omnès, Nuxe‘s travel retail marketing manager. Travel retail is only an “incremental” sales channel for the brand, but is nevertheless important for customer loyalty, said Omnès. The new products are a return to old strategies: in 2019, the brands also released two new exclusive SKUs in travel retail.

For any new launch, the brand keeps both spontaneous and gifting-minded consumers’ skincare needs top of mind. Rehydrating skincare does well specifically for travelers given flights’ drying effects and attractively packaged sets are great for consumers hoping to gift products to friends or families after their flights, said Omnès. The company is hoping that the increased return to travel will help its products get in front of the right eyeballs.

An updated duty-free strategy

In the past, duty free shopping’s value proposition relied on deals — or at least at least a consumer perception of deals — said Robbie Gill, founder and managing director of airport architectural and design firm, The Design Store. However, in a digital age of easy price comparison, tax-free items still might not stack up to a sale on Amazon or at a consumer’s local grocery store. Instead, said Gill, airport retailers and brands are now focusing on creating “unique” and “emotional” experiences.

“There are people that go to an airport and they’ve decided that they’re going to buy that bottle of Johnnie Walker Black because they think there’s a discount, but [those consumers] are decreasing,” said Gill. “What really matters now are things like airport exclusives: you can’t buy it anywhere else.”

Moreover, airports offer brands a unique opportunity, explained Gill, to tap into a consumer stuck in an airport with nothing to do, who’ll make more impulsive purchases than in other shopping environments. Exclusives — that signal to consumers that its now or never — are especially potent in this environment.

Indeed, Nuxe’s Omnès highlighted that exclusives can’t be gimmicky or lower-quality than any other products offered by the brand. While they may be limited edition or packaged in non traditional ways, product quality has to be high to attract and maintain consumers, Omnès said.

Travel retail is an expensive output for brands, said Anne Kavanagh, managing member of retail firm Kavanagh Consulting LLC. However, the ability to draw new consumers via discovery and drive both gifting and self-gifting — which make up two-thirds of travel purchases, according to Kavanagh — makes the costs worth it. “Many big big brands [that] are in travel retail have been in travel retail for many years, and will continue to be despite the fact that there’s a real [COVID-19] crisis at the moment,” said Kavanagh. “They know that they’ve got this wonderful funnel of new consumers to engage with their brands and that’s the ultimate [goal] behind the business model.”

“Travel retail customers are highly discerning brand-aware consumers, and they expect limited editions and exclusives to be the best that the brand can deliver, not just gimmicks,” said Omnès. “The benefit to the consumer is the satisfaction in finding a product, usually from a brand they know and desire, that they cannot get elsewhere.”

As a result, the pandemic hasn’t wholly changed the travel retail exclusive playbook so much as paused it: many of the players have been in the space for years and are now offering a similar type of exclusive to a pre-pandemic past. However, what will shape the future of travel retail — and make exclusives more relevant than ever –is the push towards an increasingly customized travel retail experience, said Gill.

“The white box that is clean line with no passion… seems to be something that is no longer relevant [to travel retail] anymore,” said Gill. “Everybody’s looking for uniqueness and passion, and individuality and relevance.”