CANNES, France — Cautious optimism. That’s how travel retail executives summed up their outlook on the recent TFWA World Exhibition and Conference.

The event in Cannes, France, which ran from Oct. 2 to six, was the second to be held following a two-year hiatus attributable to the coronavirus pandemic. Trade show organizers aptly branded the session this yr “Latest World.”

Travel retail really is a recent world today, because the industry welcomes people back into their stores after the business ground to a screeching halt shortly after the health crisis began in early 2020. There’s so much to contend with nowadays — from a modified consumer to deep geopolitical, economic and provide chain issues, to disruptions at airports, amongst other woes.

Yet, despite this, business is picking up.

“There’s definitely a great momentum within the industry, which is good after so many months of uncertainty,” said Benjamin Vuchot, chairman and chief executive officer of DFS. “The consensus is things are coming back.

“There’s a way of optimism,” he continued. “We’re guarded, after all, with the headwinds that we all know are present, on the subject of inflation or supply chain issues which are still prevalent.”

All the massive beauty players returned to the trade show this yr, including the most important U.S. corporations that were absent in 2021. There still remained a notable lack of attendees from Asia, nevertheless, especially from China, attributable to ongoing COVID-19-related restrictions there.

The coastal city of Cannes and its sprawling Palais des Congrès convention center were busy again, although with less fanfare than in past years. Not did dozens of massive billboards flank the buildings and boardwalk on the Croisette. However the Estée Lauder Cos. decked the Hôtel Barrière Le Majestic with pink ribbon-adorned posters to honor the thirtieth anniversaries of the corporate’s Breast Cancer Campaign and its travel-retail division.

“Now we have quite a lot of optimism by way of the long run of the channel,” said Israel Assa, global president, travel retail worldwide on the Estée Lauder Cos. “We all know that it has at all times been resilient and can proceed to be, and we see quite a lot of incredible growth opportunities. There’s quite a lot of vibrant spots.”

“The market is basically strong,” agreed Stanislas Archambault, executive vp international sales and digital at Interparfums SA.

“If we have a look at our numbers globally, we’re far over where now we have ever been,” added Frédéric Garcia Pelayo, a director and executive vp at that company.

This session of TFWA drew 5,983 visitors, up 77 percent versus the extent on the prior yr’s event. By comparison, in 2019, the trade show registered 7,215 people entering its doors.

In 2022, there have been 387 exhibitors, versus 262 stands from 272 exhibitors in 2021 and 504 exhibitors in 2019.

How quickly people start traveling broadly and buying in travel-retail shops again may have a significant impact on the business of firms selling luxury fragrance and cosmetics, which stays the channel’s number-one product category. Pre-crisis, it could generate as much as one-quarter of a beauty group’s overall sales.

The travel-retail market in 2021registered sales of $56 billion globally, representing a 25 percent gain versus 2020 and a 65 percent recovery against 2019. Of that, perfume and cosmetics sales got here to $32.3 billion, up 19 percent on-year and an 86 percent rebound against 2019, in accordance with Generation Research, which tracks the duty-free and travel-retail markets.

Passenger traffic is rebounding in lots of parts of the world, particularly in Europe, the Middle East and Americas, and in certain geographies the extent is the best ever.

Generation numbers show that in 2021 that the Asia-Pacific region fully attained pre-pandemic sales, while Africa and the Middle East registered a 50 percent recovery, and the Americas and Europe each had a forty five percent rebound.

In the course of the trade show’s opening conference, Erik Juul-Mortensen, president of TFWA, cited Airports Council International’s forecast that global passenger traffic is anticipated return to greater than three-quarters of its 2019 level by year-end. That, mechanically, should translate into higher travel-retail sales.

Already, some beauty firms, similar to Shiseido, have sped past 2019 revenue levels. Its travel-retail sales in the primary half of 2022 rose 15 percent against the comparable period in 2021 and 18 percent versus first-half 2019.

“For Heinemann, we consider that we could [this year] be back or near 2019 levels, and wonder not less than ought to be in line or overperform,” said Britta Hoffmann, director of buying for perfumes and cosmetics at Gebr. Heinemann, which operates travel-retail stores. “We’re really optimistic that not less than 80 percent of 2019 is feasible — even greater than that. It depends if we get the products.”

Travel retail’s shape-shifting comes as no surprise.

“After two years that threatened duty free and travel retail’s mere existence, it was inevitable the pandemic would bring change,” Juul-Mortensen said. “Traveler expectations have evolved rapidly from pre-COVID-19 times.

“We’re seeing a recent desire amongst travelers to interact with brands — especially people who share our values and concentrate on sustainability — in addition to the heightened interest in immersive actions,” he continued.  

Juul-Mortensen noted travelers’ nationality mix has shifted, with almost no outbound Chinese passengers yet and fewer Asians taking trips generally. At the identical time, there was a surge of Indians traveling abroad and of Americans flying to Europe.

“The variable is basically when the Chinese will come back traveling out of greater China,” said Jean-Christophe Babin, CEO of Bulgari, adding that’s not widely expected before late 2023 or early 2024.

Meanwhile, traveling shoppers are skewing younger, with the proportion of Generation Xers, Zers and Millennials who purchase in duty free and travel retail rising from 19 percent pre-pandemic to about 30 percent in 2021 and 2022, in accordance with Juul-Mortensen, citing data from travel research specialist M1nd-set.

“So it’s getting more essential for us to grasp the purchasers — who they’re, which is different in accordance with the region; what they need, and the way they purchase,” said Guilhem Souche, senior vp global travel retail and managing director China at Coty Inc.

Coty, for example, has a partnership with Alipay in Asia to assist glean such insights.

M1nd-set has tracked another behavioral shifts over the past five years, including people moving from gifting to purchasing for their very own consumption, a stronger preference for planned shopping versus impulse purchases and a recent willingness to interact with sales staff.

“What you see is the category mix is coming back a bit of different, since the Chinese aren’t traveling,” said Peter Jueptner, president international on the Estée Lauder Cos. “So it’s a much higher mixture of fragrances, versus what was more skincare. And makeup is recovering nicely, as well. Then, clearly, there shall be more opportunity for hair care.”

The ever-changing traveler corridors have informed what’s stocked on Lagardère Travel Retail store shelves. Since its European locations today have high passenger footfall from the Schengen Area, the operator has adopted its beauty assortment accordingly and allotted more room to European skincare brands, similar to Caudalie, Nuxe and L’Occitane.

“We’ll proceed until the Asian [passengers] come back,” said Carla Troadec-Morishita, head of makeup and skincare at Lagardère.

One other notable trend is the polarization of consumers’ appetites between high-end and accessibly priced beauty products.

On the luxurious side, La Prairie’s business is growing from strength to strength.

“In 2021, we gained market shares,” said Sabine Fagan, business development director global travel retail at La Prairie Group. She added that for this yr, “we’re almost at 2019 level and even above [that] in travel retail Asia.”

La Prairie now owns 2.5 percent market share in skincare, regardless that its distribution was reduced by 10 percent. It’s a top 10 skincare brand globally, with 250 travel-retail doors.

“What now we have done is to be more selective where we’re and far more focused on our high-value clients,” said Noelle Goris, vice present travel retail at La Prairie Group.

That features offering elevated skincare services, starting from 10 to 90 minutes, similar to facials in a highly selective number of personal areas, mostly in downtown duty-free stores. The menu of treatments there’s customized for the channel.

On the opposite end of the wonder spectrum, L’Oréal Paris is in high demand.

The brand’s parent company L’Oréal conducted a study this July, interviewing 700 beauty shoppers in Paris and Dubai airports. They were asked which brand had motivated them to enter a travel-retail store’s perfume and cosmetics department. L’Oréal Paris got here in the primary position, with 13 percent of respondents.

“Clearly, we’re recruiting recent travelers to the P&C. And greater than that, we’re increasing the basket size, because 68 percent of them brought one other [prestige] product on top of L’Oréal Paris,” said Karina Behar-Lecuiller, general manager of the Consumer Products Division Travel Retail Worldwide at L’Oréal. “So we’re also a complementary offer to luxury brands.”

Consumers said they were drawn to L’Oréal Paris products for convenience, exclusive offers and impulse buying — especially for makeup. To up the brand’s visibility, recent L’Oréal Paris gondolas are being rolled out.

In keeping with Stéphanie Garnier, head of category management, animations and merchandising for fragrances and cosmetics, duty free global at Lagardère, consumers “are searching for good value for money and cheaper prices.”

Dufry, which repeatedly surveys passengers, noted travelers’ growing interest in well-being and sustainability.

“It’s accelerating very fast,” said Antonin Carreau, global director of beauty at Dufry Group. “So it’s becoming a priority.

“We’re strongly committed to promoting sustainability and well-being within the travel retail and airport sector,” he continued, adding Dufry has been partnering with beauty brands similar to Augustinus Bader, Drunk Elephant and This Works, to that end.

Dufry created a recent shop-in-shop concept called Mind, Body and Soul, which shall be tailored by location to suit consumers’ specific needs and desires. It encompasses various product categories, with beauty playing a very important role. The primary location was piloted within the airport in Amman, Jordan, and a second one recently opened in São Paulo.

“We’re taking a look at several locations worldwide progressively,” Carreau said. “The primary results are very positive.”

At TFWA, Groupe Clarins showcased its natural, CSR-based heritage with a new-look store layout, which incorporates plant jars on display and picket wall paneling. That shall be rolled out to Heathrow and Charles de Gaulle airports by the top of this yr, and to Istanbul within the near term. Five boutiques have already got the brand new design in Hainan, the Chinese island that’s turn out to be a duty-free shopping Mecca.

Latest competition

Whereas prior to now, the largest competition for operators and types selling beauty products in travel retail got here from one another, today it’s the likes of Netflix and Spotify. Subsequently, the race is on to lure travelers off their screens and into shops to purchase.

“Retailtainment is the whole lot,” said Markus Stauss, vp global marketing travel retail at Coty. “How will we increase footfall into the shop? It’s either through knowledge — so [travelers] learn something about products — or it’s gamification.”

Digital acceleration is vital to all this.

“Can we transform travel retail right into a more modern and beauty-tech channel?” asked Vincent Boinay, L’Oréal president of travel retail.

The reply is resoundingly “yes.” He gave for example YSL Beauté’s Scent-Station technology, which uses neuroscience for personalized fragrance advice, matching one’s emotional reactions to a scent. That shall be introduced at the top of this month in Hainan.

Data-sharing can also be paramount to growing business.

“Greater than ever, the passenger and shopper data that drives customer engagement is the brand new currency for our industry,” said Juul-Mortensen, adding that the reluctance to share such information amongst industry cohorts still stays in travel retail. “It is crucial to creating informed decisions, not least in these volatile times.”

L’Oréal is sharing data with all is partners in Hainan.

“That is, in a way, the grail we’ve been talking about for years,” Boinay said. “It’s for use to construct lifetime value and relationships with consumers.”

“The more data now we have, the more personalized the service will be,” Fagan said. “It’s win-win.”

“The travel-retail business is about getting inspiration from the buyer and understanding [their] wants and preferences,” Assa continued. “It’s about attempting to add those experiences to the buyer journey, in order that we will add value and create the correct memories.”

Travel retail is about upgrading the shopping experience, as well.

“You will notice so much more experiential retailing in travel retail,” said Jueptner, explaining which means more service and events.

DFS is opening three stores at the top of October. The T Galleria Beauty location in Macau is doubling its size, to 2,000 square feet. That may include eight brands exclusive to the shop, including Fekkai and Davines, marking the primary time the operator is launching into hair care.

“This store goes to be mobile POS only, so really about services, clienteling, one-on-one, treatments and introductions to recent categories,” Vuchot said.

With its recent annual beauty campaign, DFS entered into the metaverse for the primary time, inviting brands to create stores in that digital universe. The activation was dropped at life in brick-and-mortar, as well, with figurines.

It’s all a part of the omnichannel approach that’s now established in Asia and beginning to take off swiftly within the western world. The holistic strategy involves retailer and brand touchpoints with consumers before, during and after travel.

To assist reach consumers prior to their trips, Shiseido’s Nars launched its first 3D virtual animation, allowing people to find the brand’s travel-exclusive products and bestsellers through an avatar before their setting off on holiday. That launched in April and was created to construct brand awareness and excitement throughout the buyer journey.

“What’s going to turn out to be very exciting for us is to have different strategies in accordance with various kinds of trips,” said Siv Chao, vp, strategic marketing at Shiseido Travel Retail.

With the aim of blurring the lines between physical and digital retailing further, Molton Brown debuted at TFWA a synthetic intelligence-driven innovation.

“Travel retail — you never understand how many individuals are coming through, once they’re coming through,” said Mark Johnson, president of Molton Brown global, adding there may be a low level of in-store staffing and difficulties in beauty advisers translating certain languages. “So we’ve developed an AI individual who can interact.”

Travelers can ask their questions on screen to the virtual assistant of their local language. Molton Brown’s customer-service team within the U.K. then responds in English, and their answers shall be robotically translated into whatever tongue the query was asked in.

Just as geographic recovery is going down at different rates for travel retail, it’s true for beauty product categories’ rebounds, too.

In 2021, skincare was the one segment to have generated sales above those of 2019 within the channel — by 110 percent — in accordance with Generation. That’s largely been spurred by the Asian consumer, who keeps shopping domestically, in addition to other demographics as self-care becomes ever essential.

Bearing in mind the strength of premium skincare brands today, especially in Asia, Groupe Clarins just entered the segment with a brand called Clarins Precious. Its price points run about $300 for a 50-ml. jar of La Crème.

“It’s a recent chapter of Clarins’ journey,” said Alexandre Callens, president global travel retail at Groupe Clarins.

The three-product collection was introduced in September on the Chinese domestic market and shall be rolled out to the remainder of the world in March 2023, before hitting travel-retail counters in September 2023.

Executives even have seen strong demand for dermocosmetics brands. At Lagardère, for example, Garnier noted interest in La Roche-Posay, Vichy and Filorga.

At TFWA, Shiseido displayed amongst its skincare brands recent entrants to the trade show, including Drunk Elephant, The Ginza and Baum.

Hair care is starting to search out real footing in travel retail. Kérastase helps bring recent clients into the channel’s beauty market, in accordance with Anne-Laure Lecerf, L’Oréal Travel Retail Lively Cosmetics and Skilled Products Divisions general manager.

The Estée Lauder Cos. has been distributing Aveda in travel retail, especially in Asia. And Wella had its own stand at TFWA.

Fragrance sales are also rebounding. Bulgari’s Babin said an enormous surprise coming out of the pandemic period is that non-Chinese Asians have doubled their purchase of perfumes.

“It opens recent horizons for the brand’s fragrance development in Asia,” he said.

On the trade show, Bulgari offered attendees a multisensorial experience for its Le Gemme Tygar scent. In a chosen room, an individual wore a headset that in real time collected her brainwaves and heartbeats’ reactions to experiencing the scent olfactively and visually, through related images. Data collected from that was after used to create a novel NFT.

“We wish within the years to return to grow the high end [of fragrance] disproportionately,” Babin said.

Vuchot underlined the strength of premium area of interest fragrances at DFS.

“We’re way above our objectives for that category, and we’re going to roll it out much more,” he said.

“We see once consumers are in our airports, that they’re able to spend,” Hoffmann continued. “They need to have something special…which is long-lasting. They really need to speculate in products.”

Conversely, some consumers are searching for good price and value for money.

“We’re going to expand the worth categories inside fragrances and convey more brands in,” she continued.

Through Heinemann’s in-house vision hub, Gharage, the operator developed a private-label line of 4 scents with the aim of filling a white space within the area of interest of functional fragrances.

“The concept is to bring you into your personal balance,” Hoffmann said.

The gathering, called Nullpunkt, marks Heinemann’s first private-label products for the wonder segment.

As a part of its fragrance strategy, Coty has been launching high-end collections, similar to The Alchemist’s Garden from Gucci and Boss Collection, in travel retail.

“Fragrance is the brand new lipstick,” Souche declared.

Executives’ enthusiasm to be back at TFWA was palpable this yr.

“It feels good to be in Cannes, to see the brands and operators, to have the ability to share what’s in the long run,” Vuchot said.

“Now we have to maintain this spirit, to at all times reinvent ourselves,” Chao said. “Because that is what consumers expect from brands.”