Trinity Forum and travel retail opportunities
Ekelem Airhihen, a trained mediator, chartered accountant, certified finance and IT consultant, certified in policy and public leadership, and an airport customer experience specialist, has an MBA from the Lagos Business School. He is a member, ACI Airport Non-aeronautical Revenue Activities Committee; and is certified in design and implementation of KPI for airports. He can be reached on ekyair@yahoo.com and +2348023125396 (WhatsApp only)
It has been a season of meetings and conferences in aviation. Singapore in the first week of November hosted the Trinity Forum 2022. It is the world’s most influential airport commercial revenues conference which has not been held in the last three years due to the pandemic. The event was hosted by Changi Airport and co-organised by the Moodie Davitt Report, Airports Council International, ACI World and ACI Asia-Pacific.
A question put to panelists from major brands was: “As travel retail emerges from the pandemic and recovery accelerates, how are the world’s leading brands reshaping the travel retail channel?”
The panel engaged in scanning the environment in which the world now operates: The world and the industry are coming out of a pandemic. Things are changing continuously globally, the outlook looks good though it is going to be choppy and there are opportunities which call on retailers to understand the customer.
The food category was seen as a key growth category with coffee and wellbeing being two untapped categories in food which offer plenty of potential. Quoting Stewart Dysburgh, general manager, Nestle International Travel Retail (NITR): “77% of packaged food is confectionery in travel retail. This creates a huge opportunity for us by leveraging the untapped part of the food pie, especially coffee and wellbeing.”
The global travel retail market size is forecast to reach $96.11 billion by 2029, says Fortune Business Insights. For the forecast period 2022 to 2029, it is expected to exhibit a compound average growth rate (CAGR) of 8.1 percent. The market size was $51.28 billion in 2021 and $55.74 billion in 2022. The growing number of passengers as air travel operations resume has helped the market retain traction, says the report.
Other factors that have aided travel retail are improving income levels and increasing expenditure on travel by the millennial population which are key factors expected to stimulate growth. Promotional campaigns by key companies to lure customers into buying duty free commodities will raise travel demand and boost travel retail.
The increased adoption of eco-friendly and sustainable practices such as biodegradable packaging, reduction and recycling among others by air travel retailers is expected to complement the growth of the market, says the report.
Again, at the Trinity Forum, Dysburgh says: “regeneration from a Nestle standpoint goes beyond sustainability. We are focused on regeneration to protect, renew and restore. We are committed to responsible sourcing, committed to achieving carbon neutrality by 2050 and transitioning to 100 percent sustainable packaging”. Travel retail in Africa needs to take sustainability and emerging regulations into their planning process going forward.
The world has only just finished discussing climate change in Egypt. Travel Retail in Africa should not sit back and see it as just the business of airports and airlines while theirs is just to dispense products to customers. The means of production of goods sold will experience changes, airports will transition from using fossil fuel generators as stand-by power supply to renewable energy sources, among others. These are changes that will impact the businesses of travel retailers and they should adapt their business models and collaborate with the airports.
A recent statement by African Airlines Association (AFRAA) gave an advisory on the ban on Single Use Plastics Products by the Indian authorities, as well as the implications for airlines and catering partners. Now, these restricted products were no longer going to be sourced locally in India by them. So procurement planning will be impacted by such a regulatory requirement. Similarly, the African Continental Free Trade Area, Single African Air Transport Market and Arrivals Duty Free Shopping will impact travel retail in Africa. Businesses should take a close look at them and prepare to meet the challenges and opportunities they will present.
However the Future Business Insights report points to the dampening effect of high prices of products which may lead to low demand that will hinder the growth of the market.
Now that terminal buildings are getting bigger across some African countries, which I see in some airports I have visited lately, there is an opportunity to accommodate increased footfalls into them without compromising safety and security. Increased footfalls and positive customer experience will enable travel retail to exploit these opportunities across airports in Africa.