The Ten Most Important Changes in Travelling Consumers: 2012-2014

We have completed our second survey of the Travel Retail Catalyst Study (TRaCS) in 2014 and can now report on the major things that are changing.  In this study we are tracking changes in the basic drivers of consumer behavior such as what motivates consumers to shop when they travel and what their preferences are about where to shop and what to buy.  We are also tracking what they spend their money on and where they spend it and what their opinions are of the various places they might shop when they travel.  We are tracking these changes for 37 different nationalities.  We expect these characteristics to change but we don’t really expect them to change rapidly.  So we are surprised at what we are seeing.  Here are the things that are changing the fastest: 

• Average spending is down 10% 
• The size of the total market is growing because pax increases more than offset spending declines
• With the exception of chocolate, cosmetics and watches, all product categories are showing declines in penetration
• Interest in buying Louis Vuitton is declining, but interest in some other brands is growing, most notably Hermes 
• Travellers are becoming more attuned to the destinations they are visiting when thinking about what to buy and are less likely just to be buying "famous brands."
• Travellers now prefer to shop grocery stores more so than airport duty free shops
• Airport duty free shops are improving in perceived convenience, and getting worse in price perceptions
• There is improving popularity for whisky brands, particularly Chivas Regal, and declining popularity of Vodka
• There is declining interest in buying Clinique and Dior in duty free beauty shops
• While Lindt maintains its popularity among the most popular brands of confectionery, Nestle, M&Ms and Cadbury are all suffering from weakening interest

For details, on each one please scroll down further.  Of course, each of these global trends mask what is happening at regional and national levels and with particular subgroups of travellers.  For more info on these, please contact me directly

Average spending is down 10%

In just the past 2 years average spending by travelling consumers on merchandise either to use on the trip or to bring home has declined by about 10% from 499 euro to 445 euro this year.  Average spending by nearly all nationalities is down in 2014 compared to 2012, but is down significantly for Australians, Americans and Swiss.  Chinese continue to spend more than four times the worldwide average.  However, although not statistically significant, Chinese seem to be reducing their spending on merchandise when they travel.  All of the indicators from China suggest that spending will decline further in the coming years - because of new laws governing "forced shopping tours," the effects of the austerity drive on ostentatious consumption and gift giving and the overall slowing of growth in the Chinese economy.

The size of the total market is growing because pax increases more than offset spending declines

Although average spending is down from 2012 to 2014, the size of the global travel retail market is growing, but at a slower pace than the growth in traveler numbers. We estimate that worldwide international travellers spent about 334 billion euros for the year prior to May of 2014.  This is up just slightly over the same period in 2012. Brand Boutiques and Department Stores capture about 1/5 of this total each whereas airport duty free shops capture only about 12%.

With the exception of chocolate, cosmetics and watches, all product categories are showing declines in penetration

While virtually all travelling consumers buy something when they travel, the % buying in specific categories is declining for all categories except chocolate, cosmetics and watches.  For these three categories, the % of travelling consumers buying has stayed the same.  There are no product categories showing increases in penetration.  The biggest declines in penetration are for books/magazines, souvenir apparel, cigarettes and men’s fashion.

Interest in buying Louis Vuitton is declining, but interest in some other brands is growing, most notably Hermes

Perhaps portending the future, interest in buying Louis Vuitton has declined dramatically from 13% of all international travelers in 2012 to 10% in 2014, taking LV from the third most popular brand worldwide with travelling consumers to the 8^th.  LV is not alone, with interest in Chanel, Calvin Klein, Christian Dior, Prada, Dolce & Gabbana and Versace, among the 20 most popular brands, also declining as is interest in Abercrombie & Fitch.  At the same time interest in buying Bulgari, Hermes, Hugo Boss, Tommy Hilfiger, YSL and Dunhill, among the 20 most popular brands, is growing.

Travellers are becoming more attuned to the destinations they are visiting when thinking about what to buy and are less likely just to be buying "famous brands."

Travelling consumers are tailoring their purchases more to the destinations that they are visiting and moving away from simply buying the famous brands they desire, regardless of where they are travelling.  Based on this shift one would expect to find that sales of famous French fashion brands will do better in France than they will in London and Prada and Gucci will do better in Milan and Venice than they will in Sydney, for instance.

Travellers now prefer to shop grocery stores more so than airport duty free shops 

Department stores are now the most popular places for travelling consumers to buy when they travel.  While department stores have improved in popularity, brand boutiques are remaining static in terms of preference, and the popularity of street markets appears to be declining.  Also, with substantial growth in the popularity of grocery stores, and no change in the popularity of airport duty free stores, grocery stores are now more popular locations for travelling consumers to buy than are duty free shops.  With an increasing sensitivity to what the destination may be well known for, it is not surprising that department stores and grocery stores, both of which will tend to cater to local tastes, are more popular with travelers than airport duty free shops.

Airport duty free shops are improving in perceived convenience, and getting worse in price perceptions

The factors driving purchases at airport duty free shops are product authenticity, speed and convenience, but no longer price.  While the perceptions of speed have improved modestly, perceptions of airport duty free having the best prices have declined dramatically.  This decline in the belief that airport duty free stores have the best prices may explain why travellers now prefer to shop everywhere else other than duty free shops when they travel.

There is improving popularity for whisky brands, particularly Chivas Regal, and declining popularity of Vodka

Popular whisky brands such as Chivas Regal, Johnnie Walker and Glenfiddich are either improving or holding their popularity among travelling consumers, whereas vodka brands Absolut and Smirnoff are showing sharp declines.  The single most popular product, Bailey’s Irish Cream is also showing in popularity that could signal declines in sales in the next few years.

There is declining interest in buying Clinique and Dior in duty free beauty shops

When travelers who bought beauty products on their last trip are asked to indicate what brands of beauty products they will buy on future trips, there are some important changes among the most popular brands.  While Chanel remains essentially unchanged in popularity, Clinique and Dior show a decline in popularity, as do Calvin Klein and L’Oreal.

While Lindt maintains its popularity among the most popular brands of confectionery, Nestle, M&Ms and Cadbury are all suffering from weakening interest

Travellers who buy confectionery when they travel are showing a declining interest in buying some of the world’s biggest brands when they travel, most notably Cadbury, M&Ms and Nestle.  Contrasted with this, Lindt is holding its own in popularity.