There have been two really significant developments in China within the past two years that are thought to be impacting the spending patterns of Chinese when they travel. At the end of
2012, China's paramount leader, Xi Jinping, imposed new austerity
measures on Chinese government officials to crack down on bribery and corruption. Associated with this austerity drive has been
the enactment of new anti-corruption laws covering the purchase and use of luxury cars, the use of public funds for official dinners (including what can be served at these dinners), the handing out of special privileges such as VIP memberships, traffic permits and passes and the use of public funds for travel. This drive has resulted in the
gradual disappearance of evidence of ostentatious consumption from
public view and has now moved beyond its initial target
of extravagance and is affecting more basic practices in Chinese
society, even funerals, as reported by Bloomberg News.
In October 2013 the Chinese government passed the National Tourism Law outlawing the sale of tours below cost. These below cost tours forced travellers to shop on their trip, and the tour operator was compensated through commissions paid by the retailers. Outlawing these tours obviously changes the amount of pressure felt by travellers to shop on their trip and, therefore, potentially changes the amount they will spend.
The effects of these laws at home have been clear with growth in the luxury goods sector slowing to its lowest point since 2000, larger numbers of wealthy people saying that they will not be giving very expensive gifts (valued at $826 or more) this Chinese New Year and high end hotels in China reporting a drop of 50% in business.
A key question is how these changes at home are affecting the behavior of Chinese when they travel. We can answer this question with our data by looking at the changes in consumer behavior between the first two waves of our study. Our first wave of data was collected at the end of 2011 and the beginning of 2012, right before the implementation of the austerity drive and the National Tourism Law. Our second wave of data was collected at the beginning of 2014, more than a year after the changes began occurring.
The picture is not pretty. First, overall spending on merchandise while travelling has declined by 600 euro from an average of 2170 euro in 2012 to 1560 euro in 2014. Second, there are some significant changes in what Chinese are spending money on. Those items that tend to be higher priced are hardest hit in terms of the number of people buying them. Lower priced items are holding up better in terms of purchase penetration.
Some good news: while fewer travellers are buying some key categories, there doesn't seem to be any trade down to less expensive items among those who are buying. In fact, for watches, there has been a significant increase in the average that watch buyers are spending.
Importantly, there seems to be a substantial effect on the desirability of certain luxury brands. In our study we asked travellers to tell us which of a selected number of luxury brands they desire to buy when they travel. The two most desirable brands in 2012 Chanel and Louis Vuitton have declined significantly in desirability. Chanel is still the most popular brand, but Louis Vuitton has now fallen to 5th most desirable brand, with Hermes, Burberry, Dior and Chanel ahead of it.
Finally, we see are beginning to see changes in the priorities Chinese have when shopping while they are on a trip. The table below shows the relative proportions of different shopping style segments among Chinese travellers. The most frequent shopping style among Chinese is what we call the "Brand Shopper" who is focused on buying the latest styles and designs from the world's most famous luxury brands. While not significant, there is a decline in the prevalence of this shopping style from 38% to 34%. At the same time there is an increase in the style we call the "Practical Shopper." The Practical Shopper is one who is constantly assessing the value of what they might buy when they are travelling - if it makes practical sense, they will buy, otherwise they won't. They want to buy the latest styles and designs from brands that are familiar to them, but they are less likely to let their emotions dictate their purchases. They expect to find many good products at great prices when they are travelling, but if they don't, they are less likely to be tempted. We also see a slight increase in what we call "Destination Shoppers." These are shoppers who are sensitive to the reputation of the locations they are visiting. So, they might buy Louis Vuitton or Chanel or Hermes in Paris, and Prada or Gucci in Milan but they are less likely to buy any of them in Hong Kong.
Where do travellers spend when they travel and how big is "the market?" The way that some companies are structured means that it is only meaningful to understand what travellers spend in airport duty free shops when they travel, but we all know that this is only a fraction of what travellers spend on merchandise when they are travelling. We also know that the competition for airport duty free shops in capturing a share of the travelling consumer's wallet is not non-airport duty free shops or shops in other airports, but shops in the places they visit. This goes even for those categories that are typically thought of as the key categories for duty free shops - alcohol, cigarettes, beauty, confectionery - where the majority of their spend is also outside the airport environment.
So, where do travellers spend and how big is "the market?" We answer this question based on our surveys of travelling consumers, tracking their spending during the entire course of their trip, from the time they get to their home airport on their outward journey, to the time they pass their final buying opportunity on their way home, which may actually be in their home airport. Worldwide in 2014, international travellers spent $453 billion on merchandise. To put this in perspective, the global market for handbags and purses is estimated to be only $101 billion and the global market for chocolate is estimated to be about $100 billion, so the total market for merchandise bought by people when they are travelling is estimated to be worth more than four times these well established and popular categories that include some of the world's most famous brand names.
Of the total spent by travellers, only $55 billion, or 12% is spent in airport duty free shops. Interestingly, almost that much is spent in other duty free shops, which includes inflight duty free as well as border stores and off-airport duty free shops. The largest amount is spent in boutiques, brand and specialty shops, which includes brand boutiques for the world's most famous fashion brands as well as specialty shops, for instance for watches and jewelry. Almost as much, 22%, is spent in department stores.
Keeping track of what travellers spend in duty free shops in airports is relatively easy because it is a closed market - everyone buying here is an international traveller who is qualified to buy in a duty free shop. Estimating the impact of travellers on any other category is much more difficult because travellers are not identified systematically or as precisely as they are in airports. Other means of estimation, such as by using tax refund requests or analyzing credit card information, must be used. As a result, the global market for what people buy when they travel is not usually captured and tracked in the same way. But, it is clearly big, and really important for many businesses in many locations, not just those in airports catering directly to international travellers. Further, if you look at the global travel retail market in its entirety, not just the bit that is easy to measure, what you realize is that, despite all the attention that airports get, not much is really happening there.
And, this market is growing. As reported in an earlier post, average spending by international travellers is down, but the total size of the market is growing because of the increase in the numbers of international travellers. From 2012 to 2014, the market has added $19 billion in revenues. During that time, department stores have added $7 billion, duty free shops have added $6 billion, as have grocery stores and discount outlets. Non-duty free shops at airports have been the biggest losers, declining from $47 billion to $37 billion, which means that spending on merchandise at airports overall is actually flat.
Which areas of the world are the most lucrative for the travel retail market? The map below shows where in the world travellers spend their money. This map is based on our knowledge of the journeys travellers are making and their spending along the way from their home airport to the airports they fly into and out of, and the destinations they visit. What is noticeable in this map is that North East Asia (China, Japan, Korea, Hong Kong, Macau), Europe and North America seem to be magnets for spending whereas South America and Africa are not. These figures reflect both the frequency of international travel to or within these regions and their desirability as places to shop. Those geographical locations that account for smaller amounts of spending tend to be regions where international travellers are fewer in number and where their preferences are to spend outside that particular region.
What do travellers actually buy when they are travelling? The graph below shows the latest figures. Men's and women's fashion capture the largest share of their spend, followed by alcohol and then leather goods and beauty products.
What is interesting about this pattern is that very little of it is spent in airports. The two graphs below show the proportion of each of these product categories that is spent in airports. Only for cigarettes is a majority of spend in airports. But, even for alcohol, which generally has such a strong presence in duty free shops in airports, it is still less than a majority of spending that happens there. For the other most popular categories - men's and women's fashion, airports play only a minor part in capturing consumer spend. Even for chocolate, which is also prominent in airports, only one third of spending is there. The key implication of this for any airport or airport retailer is that the big win would be in capturing spend that is currently going elsewhere. From an earlier post, we already know why this is happening - airports are convenient but they are not cheap and they don't offer much to choose from. It is instructive that two of the categories that have the best performance at airports - cigarettes and spirits - both offer significant price differences at airports relative to non-duty free locations and, in the case of alcohol, have for years differentiated their offering from non-duty free locations so that it is quite possible that the only place in the world where you can buy certain products is at an airport.
As Incheon Airport calls for proposals for the duty free contracts that expire in February of 2015, in this post I analyze the consumer behavior of the nationalities who travel through Incheon to provide some insights that might benefit those firms readying their bids.
To do this analysis, I have adopted the approach I described in a previous post on Sydney Airport - we produce a composite profile of consumers by combining the data from different nationalities according to the number of travellers each nationality contributes to the overall traffic to Seoul. Koreans are also singled out for closer scrutiny because they are the "locals" and because they are so numerous relative to the other nationalities.
Here are the key insights that bidders might take into account as they develop their proposals for Incheon:
- Koreans love duty free shops in airports, visitors to Korea don't.
- There are more Destination Shoppers, Practical Shoppers and Brand Shoppers among travellers in Korea and fewer Cultural Explorers, Memento Shoppers and Bargain Shoppers.
- Koreans are spending signficantly less when they travel and those nationalities visiting Korea significantly more than average.
- Distinct merchandise strategies are required for visitors to Korea compared to local Koreans.
- Koreans plan their purchases more thoroughly than visitors to Korea.
- Chanel, LV, Gucci, Burberry, Prada, Hermes and Bulgari are more desirable than elsewhere in the world and Hugo Boss, Calvin Klein and Giorgio Armani, Tommy Hilfiger and Ralph Lauren are less desirable fashion brands.
- Visitors to Korea who buy alcohol are looking more for special edition products and less for discounts off products they would buy at home.
- Travellers in Korea who buy beauty products interact more with beauty consultants and they want the consultants to tell them what is new and what is trending.
- Chanel, Lancome, Burberry, Bulgari and Biotherm are more popular beauty brands in Korea than elsewhere
- Dunhill is about twice as popular a brand of cigarettes among Koreans as it is among visitors to Korea. The opposite is true for Davidoff and Kent.
- There is a much greater appetite among buyers of tobacco to buy brands that are different from home
- Travellers in Korea are more likely to buy boxes of chocolates than any other product type, including bars, blocks and bags.
- Hershey and Godiva are more popular among travellers in Korea and Toblerone, Lindt, Cadbury and Mars are extremely weak compared to other parts of the world.
For more detail and background on each of these topics, or to explore their implications please contact me directly: cesa@market-research.com
How do consumers shop in travel retail and what does that mean for marketing to them? More to the point, how might the answers to these questions change your thinking about how to approach winning a duty free concession? Our experience from the reviewing the few publicly available submissions for duty free tenders is that they are short on demonstrating much understanding of the travellers they are trying influence or in linking that understanding to important elements of the bids. On the other hand, our experience suggests that doing a better job of this can really help bidders to stand out.
Here, we illustrate answers these questions in relation to Sydney Airport, one of a number of hotly contested concessions in 2014. To do so we draw on the findings of the Travel Retail Catalyst Study (TRaCS) that is described in the first post on this blog. This study surveys travelling consumers from 37 different nationalities throughout the world about their shopping habits when they travel – what motivates them to shop, how they decide where to buy and what to buy, what do they actually buy, in what quantities, from where, for whom etc. Importantly in this study we take a broader view than just looking at what people do at airports. By placing their airport shopping in the context of their entire trip we are able to understand better how they view airport shopping and what levers to pull to get them to spend more as they travel through them.
Do’s and Don’ts in Marketing to Travelers Through Sydney Airport
You can read the detail of our conclusions and examine the data that support them further on in this post. But, here are the conclusions, in the form of "dos and don'ts" about marketing to consumers in Sydney Airport.
Do focus on the
practical orientation of Australian shoppers – Give them the prospect of
finding a bargain with better prices than they will find anywhere else
on their trip, on the products they want most to buy when they travel –
alcohol, men’s fashion, confectionery, women’s fashion
Don’t try to
market Australian cultural souvenirs or very high end fashion brands to
Australians. They are unlikely to be interested in either as they are
leaving through Sydney. They may buy cultural souvenirs from other
cultures and they may buy some very high end fashion brands, but more
likely at bargain prices at outlet centres in other countries than at
Sydney Airport.
Don’t expect to be successful at Sydney Airport with
Australians if the offer, whatever it is, does not have a strong
comparative price proposition. Australian travelers will not buy
something at Sydney Airport unless they think it is a bargain. On the
other hand, if Australians do believe things are a bargain, they will
improvise and buy things they were not planning to buy. If they believe
things are a bargain they may even buy things that will not be much use
to them until they come home, so think about keeping these for them
while they travel.
Do focus also on the practical nature of visitors
to Australia but also keep in mind their destination sensitivity and
their desire to buy well known brands. They are interested in buying
mementos of their trip, but are unlikely to settle for cheap Australian
souvenirs. Rather, they will be turned on more by high quality brands
and products that Australia has a reputation for that are different from
what they can get at home. Also, because of the orientation of
visitors more towards high end fashion brands, offering these will likely meet with success.
Don’t
assume that visitors will come prepared to shop at Sydney Airport
without being prepared before they get there. They will need to be
reassured that Sydney Airport is a reputable place to shop and that it is
worthwhile to take the time to shop there before returning home because
otherwise they will have done almost all of their shopping before they
get to the airport.
Do make alcohol a very prominent category for
Australians, both as they are leaving but also as they are returning.
But don’t try to get them to trade up. They are less interested in
trading up or using the duty free shop as a place to learn about the
different characteristics of alcohol products and they are more
interested in getting a bargain on something they would pay a lot more
for at home.
Do market beauty to visitors, but don’t place the same
prominence or emphasis on this category for Australians. Women’s
fragrance, skin care and make-up are all very desirable products for
visitors more so than for Australians. Also, given their desire for
authentic mementos of the destinations they are visiting, feature
prominently more local brands.
Do market confectionery and food
strongly to visitors, perhaps by creating more of an offer that
encompasses wine, chocolates and other confectionery, and other fine
food that is Australian. These kinds of products meet various criteria
that visitors are trying to achieve including buying products that
Australia is well known for as well as products that offer good mementos
of the trip.
Now for the detailed analysis that leads to these conclusions:
Who are the Travellers Through Sydney Airport?The
traffic through Sydney Airport, or any “home” airport for that matter,
is dominated by locals. Locals typically represent a different animal
than visitors and ought to be considered separately when using insights
to develop merchandising and marketing plans. First, they are departing
on the outbound leg of their journey. They have a long way to go and
plenty of places to shop before they come home. They recognize that
there might be other opportunities to buy that might be better than their
home airport, so they will have less enthusiasm than visitors who are
mostly returning home and therefore have fewer remaining opportunities
to shop. Second, they are locals, so their reference points are
different. Merchandise that, to visitors, is representative of
Australia, and perhaps a good reminder of their trip, is more likely to
be ordinary to locals. Further, they will have a much stronger sense of
what products are available outside the airport and what the prices are
simply because they are more familiar with the local market. Thus,
they are likely to have a different attitude to what is available at the
airport. For these reasons we separate out Australians from visiting
nationalities and discuss each profile separately.
Why Do They Shop at All When They Travel?
A question that is always worthwhile asking when thinking about appealing to travellers through airports is what motivates them to shop at all when they travel. Most of the time we assume that shopping is a given for travellers and that the key thing is to understand what they will buy and how to present it to them in a captivating way. However, in these days of global pricing, internet sales worldwide distribution, it is very much worth asking the question of why travellers bother shopping at all. If what you can find in your travel destinations is about the same as what you can find at home and for roughly the same price, why bother shopping when there are many other things to occupy the traveller’s time? And, what if you can find a better price online, even in another country? Just the uncertainty of whether or not you might find the same product elsewhere at the same price is enough to make some people have second thoughts about shopping when they travel. Another reason to ask this question has to do with the fact that the range of products that is feasible to buy when travelling is severely limited and becoming more so with increasing restrictions on product types, fabrication materials, size and weight.
The key reason that Australians shops when they travel is because they want tangible and pleasant ways of remembering their trip. In other words, the products they buy signify something important about the trip. Also an important motivation for Australians is the expectation that they will, in fact, find a lot of products at prices that are better than at home. And, for Australians, shopping on a trip is a habit. It is just something you do and it is a good way to explore a culture. For Australians, most of these motivations will not be activated when they are in Sydney on their way out. It is unlikely that a purchase in Sydney at the beginning of a trip will be motivated by the desire to record a pleasant memory of the trip. It is also unlikely that the “cultural explorer” will be motivated to shop in Sydney as they are still very much in their own culture. The one that will be most activated is the expectation of finding lots of products that are at better prices than they can find either at home in the domestic market or elsewhere on their trip. So, what will get Australians into the shops at Sydney Airport is curiosity about the prices. Further, they will shop out of habit. Not to go to any shops at the airport would require a substantial amount of will power to resist the habit of shopping. But, getting them into the shops doesn’t mean they will buy. They will avoid shopping if the prices are not seen as clearly superior to what they see at home, or what they expect they might find on other parts of their journey. Once they return, Australians also have an opportunity to buy on arrival. Again, the same two motivations will most likely be activated – the expectation the prices will be better than in the domestic market and, out of habit.
For nationalities other than Australians, the key motivation is also to have good tangible reminders of the trip. However, although the expectation of finding good products at great prices the second strongest motivation for these nationalities, it is less strong a motivation than it is for Australians. Further, these visiting nationalities are more likely than Australians to be motivated by the desire not to miss a buying opportunity and less by habit or to use shopping as a way of exploring the culture. So, in the context of Sydney, the motivations most likely to be activated for these nationalities are the desire to buy things that will clearly signify pleasant memories of their trip to Australia. Beyond this motivation, these nationalities can be enticed to shop more if they believe they might miss a buying opportunity of they don’t shop. However, it is less likely that they will automatically, out of habit, venture into the airport shops.
Why Would They Shop at Sydney Airport?
A second key question that needs to be asked of travellers is how they decide where to shop when they are travelling and more to the point, why would they shop at Sydney Airport? What might Sydney Airport offer that is attractive, given their preferences about where to shop when they travel? The number one factor that will entice Australians to specific shopping locations when they travel is if they think they might be able to find a bargain by shopping there. This is followed by convenience. Australians are more likely to shop at places that are simply convenient when they are travelling and less likely than other nationalities to seek out locations for specific qualities offered by the location.
So, if they think they can get a bargain in the airport shops, they will be there. Almost by definition the airport shops are convenient, so they will probably go. But, this shouldn’t be taken for granted. Duty free shops at airports are well behind street markets, department stores, brand boutiques and discount outlets in terms of preference for where to shop. Thus, they are unlikely to seek out shops in the airport that they don’t walk past and they are likely to be fairly sceptical about what they might find in the airport shops. Unfortunately, Australians generally don’t believe airports are places where they will find a bargain but they do appreciate them for speed and convenience.
Visitors to Australia are more purposeful in how they decide where to shop and this has implications for Sydney Airport. First, they are more likely to shop in reputable places, such as major shopping centres. And, they are more likely to shop where they can buy things that the destination has a reputation for. Airport duty free shops are still well behind street markets, department stores, brand boutiques and discount outlets in terms of preference. For Sydney Airport then, the choice to shop there will be driven more by their overall expectations about the airport compared to other places they might shop in Sydney. They are less likely to shop at Sydney Airport simply because it is convenient for them. It will be important for Sydney Airport to convince them of this before they have made most or all of their purchases at their preferred places outside the airport. Importantly for this group, they are more likely than others to believe that airports offer a strong assurance of product authenticity, and they are also more favourable to the customer service at airports, so it is possible to entice them through these characteristics.
What Qualities Do They Look For in The Products They Buy?
Australians tend to shop without a list when they travel, responding more to whatever captures their attention in the places they are visiting. However, a brand name is not likely to be one of the things that will catch their eye as they are less likely to be interested in famous brands than other travellers. In the back of their minds is the expectation that prices will be better when they are travelling, so they are looking for things that they can buy at home but which are cheaper when travelling and things that they would not normally be able to afford at home but can abroad because the prices are better. When casting an eye over what is available to them at Sydney Airport, one can be sure that the question they are asking themselves is whether the price is better than what they believe they might pay on the same item either at home or somewhere else on their trip. They will begin with skepticism on this dimension and will need to be convinced, and they are likely to be reluctant shoppers at Sydney Airport, given that they have the whole trip ahead of them with the strong prospect of finding what they want at a bargain price.
The number one criterion that the nationalities visiting Australia are trying to satisfy is to buy things that are different from home. Also, they tend to be opportunistic, allowing themselves to be persuaded by things they see when they are travelling. Where they differ most from other travellers is that they want to use the expected price savings they will find when travelling to buy things that are better quality than they would buy at home. Interestingly for Sydney Airport, the nationalities visiting Australia are less likely to be swayed than other nationalities by things they learn about in the places they travel. Thus, it is not a given that Australian products that they find out about along the way will be high on their wish list. For instance, they might see a lot of Ugg boots being worn by the locals but that won’t drive their interest in buying them at the airport. They will need to be convinced independently of what they see, and waiting until they get to the airport is probably too late.
What Are They Likely to Buy in Sydney Airport?
The number one category that Australian travellers buy when they travel is alcohol, with nearly 2/3 of Australian travellers doing so. The next most frequent purchase, with 50% buying, is men’s fashion. For both of these categories, Australians are also significantly more likely to buy them than other nationalities. Apart from these categories, the most popular categories for Australian travellers are chocolates and women’s fashion where they have the same likelihood as other travellers, and souvenir apparel, shoes and sportswear, where they are also significantly more likely to buy than other travellers. Australians are significantly less likely than other travellers to buy specialty food items, general souvenirs (other than apparel) and cigarettes.
Thus, in terms of products to feature at Sydney Airport, alcohol, which is probably already number one, should be the number one category, followed by men’s fashion, chocolates and women’s fashion. Shoes and sportswear might also entice Australians to shop in Sydney as long as they are convinced the prices are better than at home or elsewhere they might visit, but souvenir apparel is unlikely to be motivating at Sydney Airport for Australians. Men’s and women’s fashion are two very prominent categories for Australians, but the big European brand names are unlikely to impress them. They are more likely to be interested in high quality local brands at better prices than home. As will be seen also, more casual oriented brands, such as Ralph Lauren and Tommy Hilfiger will be attractive to Australians.
Men’s fashion might seem to be a stretch specifically for Sydney Airport, but we believe that they will be interested providing their other requirements are met – that they believe they can get a bargain on products that they want, that the products are not so high end that they are beyond the reach of the most of the travellers and that the brands represent a certain level of casual masculinity rather than European high fashion.
In addition to these product categories, Australians index higher than travellers from other nationalities in their interest in buying all media and electronics – recordings, small electronic devices, electronic accessories.
The nationalities visiting Sydney have a very different purchasing profile than Australians. Their number one purchase category is chocolate, followed by spirits, women’s fashion, wine, men’s fashion, and beauty products – fragrances, skin care cosmetics. Shoes are another category they are more likely to buy than travellers in general. Like Australians, they are less likely to buy destination specific souvenirs. For visitors, the general category of food and wine could be a key drawcard, if one combines wine, chocolates, other confectionery and fine food.
Currently, about 6% of the €715 that Australians spend on a trip is likely to be spent in Sydney Airport prior to their departure on a trip. For other nationalities going through Sydney, only about 8% of the €760 they spend on a trip is likely to be in Sydney Airport prior to their departure home. Thus, for both Australians and visiting nationalities, there is plenty of upside to growing their spending at Sydney Airport.
What Brands Do They Desire?
The brand preferences of the nationalities going through Sydney also present a profile that is distinct from the travellers elsewhere in the world. Australians tend to be interested more in non-tier one masculine luxury brands – Calvin Klein, Ralph Lauren, Hugo Boss, Gucci, Tommy Hilfiger. Visitors to Australia have a much stronger preference for French and European fashion brands – Chanel, Gucci, Louis Vuitton, Christian Dior.
Thus, in marketing to the travellers through Sydney Airport, the brands that will attract them will be different from those that attract Australians. Also, given the shopping orientation among visitors, high quality Australian brands of fashion and beauty will also be attractive to them if they haven’t already bought all they want before they get to the airport.
Marketing Liquor to Travellers in Sydney Airport
Already seen is that alcohol is by a good measure, the most likely product purchase of a travelling Australian. Also seen is the sensitivity that Australians have towards price and their scepticism about the prices they will get in airport shops. This translates into some very clear implications for marketing alcohol to them as they go through Sydney Airport. First, it is very clear that the kinds of things that will catch their eye and prompt them to buy alcohol are lower prices on exactly the same things they can buy at home. If the shelf price is not clearly lower than what they find at home, they will also respond to promotions at significantly reduced prices.
What they won’t respond to as much are “value added” kinds of offers such as GWP’s. Further, they are not interested in “trading up” or broadening their experience, having less interest in special editions, duty free exclusives or brands or products that are different from what they currently know and can get at home.
In terms of promotions, two things attract them – straight tastings and comparison tastings, where you can sample one product against another. They are less interested in finding out the new products from famous brands, and hardly at all interested in learning about what makes a product unique and different, or in getting help from an expert to help them find either the perfect gift or to find things related to what they currently like.
For visitors to Australia, the picture for marketing liquor is different. They too are most interested in lower prices and discount promotions. But, they have more of an open mind about buying products that are different from what they can get at home, they are more interested in seeing the latest products from famous brands and in learning about how to appreciate the uniqueness of different products.
The big international brands Australians most want to buy are Bailey’s Irish Cream, Johnnie Walker, Chivas Regal, Cointreau and Jack Daniels. Additionally, there is much stronger interest among Australians than other nationalities for Cointreau, Glenfiddich and Bombay Sapphire and less interest generally in cognac.
Visitors to Australia are interested in slightly different big international brands than Australians. Their number one brand is also Baileys Irish Cream but their interest is lower than for Australians. Further, they are more interested than Australians in cognac brands, e.g. Hennessy. They are also interested in Jack Daniels and Absolut, but are less interested than Australians in Chivas Regal and Johnnie Walker. Although we did not include local brands in the study, we suspect there is strong potential among visitors for high quality local versions of spirits as they seem to be more open to experimentation and these can satisfy their desire to buy things that are different from home.
Marketing Chocolate and Confectionery to Travellers in Sydney Airport.
Chocolate and other confectionery are high on the shopping list of both Australians and those nationalities visiting Sydney. Thus, they probably should be a prominent category at Sydney Airport, and for visitors there is merit in creating more of a “fine food” positioning that includes wine, chocolates, other confectionery and fine food, and expanding this category considerably to emphasize Australia’s reputation as a “clean and green” producer.
Australians have a stronger propensity than other travelers to buy chocolate and confectionery on their way out of the country, (10% vs. 6% of spend for travelers as a whole) and they are more likely to be buying for their own personal consumption than for any other reason – 44% vs. 37% for travelers in general. Nearly half of Australians who buy chocolate or confectionery are buying blocks or tablets and a further 40% are buying bars of chocolate. So, it looks like they are buying on their way out more to consume either in the airport or on the plane. However, 40% of those buying chocolates are also buying at least one luxury box and 30% are buying plain boxes suggesting they are also buying for gifts – either to give to people they will visit on their trips or to bring home.
In terms of brands, the key brands Australians want are Cadbury, Lindt, Ferrero Rocher and Toblerone,. There is also some interest in Nestle, and M&Ms and more interested than average in Mars. Australians also have a slightly disproportionate interest in Kitkat.
Thirteen percent of those nationalities visiting Sydney are likely to buy chocolate before they leave for home. Their needs are balanced a bit more between personal consumption (37%) and giving (34%). Blocks, bars, luxury boxes and pouches are the configurations that visitors are most likely to buy. When making a gift of chocolate or buying something that they will share, visitors to Australia clearly have the eating pleasure of the recipients in mind, with the number one message they are trying to send with their purchases being that the believe the recipient will love it and it is a pleasure to give or share. Thus, the buyers will need to be convinced that the product tastes good, either because it is a brand they know and trust (in the case of international brands) or because they are able to taste it beforehand (in the case of locally made products). Also important to visitors is to provide the recipients a relatively small memento of the trip, one that does not engender big obligations for reciprocity from the recipient. These products do not need to be elaborately packaged or very expensive, although they should nicely gift packaged or packaged in a way that facilitates sharing, e.g. with individually wrapped chocolates. For visitors to Australia, key brands to stock are roughly the same ones to satisfy Australians.
Marketing Beauty to Travellers in Sydney Airport
Fifty one percent of Australians will buy at least one beauty product when they are travelling. Thus, while not as popular as alcohol or fashion, this is still an important category for travelling Australians. Most of what they will buy will be for their own use. Nearly 2/3 of their spending will be for personal use, whereas travelers in general are spending just slightly more than half for their own use.
Interestingly, 12% of their spend will be on the way out on their trip, which is slightly higher than for other travelers. Australians who buy beauty products when travelling are more likely to have made up their mind before they leave, so trying to entice them at the point of purchase with something they were not planning on buying will be less successful than for other nationalities.
In merchandising beauty products, fragrances (men’s and women’s), skin care and cosmetics should be in roughly the same balance in terms of availability as Australians buy these different product types at about the same rate. While Australians, like others travelers, are interested in famous brands, they give the brand name less emphasis than other nationalities. Further, they are less interested in products and presentations that are differentiated in the duty free shop from what they can buy at home. Australians are more likely to respond to a price advantage at duty free on exactly the same product they might buy at home.
Sales consultants are an important, but perhaps underutilized resource, in the beauty shopping that Australians do. About half have some interaction with a beauty consultant. More often than not, consultants are directing traffic – telling buyers where to find what they are looking for and what things are on special. For about 1 out of every six shoppers, though, the consultant is important in telling them what is new and helping them pick the products that will make good gifts.
The “must have” beauty brands for Australian men are Calvin Klein, Hugo Boss, Chanel and Ralph Lauren. For Australian women, key beauty brands are Chanel, Estee Lauder, Dior and L’Oreal.
Beauty products are a more frequent purchase for the nationalities visiting Sydney than for Australians leaving. However, the majority of their purchasing will be in department stores and specialty stores before they get to the airport. 16% of their spend will be at the airport before they go home. $5 of every $10 will be spent on products for personal use, but more than $3 out of $10 will be spent on items to give to others and a further $1 will be spent on products to share. Nationalities visiting Australia have less definite plans about buying beauty products and are more likely to be influenced in the store. For visiting men, “must have” beauty brands are Chanel, Calvin Klein, Hugo Boss and Gucci and for visiting women key beauty brands to give prominence to are Chanel, Dior, Clinique, l’Oreal and Estee Lauder.
