CANNES, France — A latest normal.

That’s what travel retail beauty executives are grappling with and focused on through the recent TFWA World Exhibition and Conference.

The Cannes, France-based event, held from Oct. 1 to five, was fittingly dubbed “Open World” by trade show organizers. Every little thing is now open to discussion and evaluation, as travel retail resembles nothing prefer it did in 2019, pre-coronavirus pandemic.

“The patron doesn’t want the identical thing as before,” said Gwendoline Bommier, director merchant perfumes and cosmetics, duty free global at Lagardère Travel Retail.

There’s that, coupled with today’s volatile geopolitical and economic contexts making for an uneven channel recovery, amongst other aspects.

“The world has shifted dramatically since 2019,” said Alexandre Callens, president global travel retail at Groupe Clarins.

“Every little thing has modified,” agreed Giovanni Sgariboldi, Euroitalia president.

Beauty is a bellwether for travel retail. With a couple of 40 percent share, perfume and cosmetics was by far the number-one category sales-wise within the channel’s almost $65 billion business in 2022, with greater than 60 percent year-over-year growth, in response to Generation Research. Behind beauty comes wine and spirits, and fashion and accessories, with about 15 percent each.

Amongst beauty categories overall, skincare generated greater than half of total sales, followed by fragrance and makeup.

Beauty executives at TFWA percolated with excitement, ideas and optimism, with many saying their business had already surpassed 2019 levels, despite the proven fact that Chinese consumers — traditionally top luxury cosmetics spenders, especially for skincare — are still not traveling beyond their country’s borders.

“There’s loads of positivity around duty-free and travel retail in the meanwhile,” said Erik Juul-Mortensen, president of TFWA, through the opening conference. “Persons are hungry to travel again…but we should not quite back to where we were in 2019.”

Overall passenger numbers by the top of 2023 are expected to achieve 90 percent of 2019 levels, in response to travel analytics company ForwardKeys, a travel analytics company. It estimates the Americas and Middle East and Africa regions needs to be up 101 and 105 percent, respectively, while Europe and the Asia-Pacific regions to be at 94 and 70 percent, respectively, of the 2019 levels.

ForwardKeys forecasts the worldwide 2019 level of international Chinese passengers might be reached in 2026, but that some regions similar to the Middle East and the Americas should get better earlier, in 2025.

“The surge in air traffic, although welcome, has created some staffing problems, since 43 percent of airport staff worldwide left the sector through the pandemic,” said Mortensen, citing Air Transport Motion Group statistics. “It stays true travelers are returning, but buying habits have evolved.”

“The channel must adapt to the evolution of the worldwide population and the traffic,” said Antonin Carreau, global director for beauty at Dufry Group, which is able to soon be called Avolta.

Helping shape the brand new face of travel retail is the rise of the Gen Z demographic, born between 1997 and 2012, which is extremely proactive of their well-being and that of the planet. Gen Z represent 25 percent of the world’s population and $7 trillion-plus in purchasing power, in response to management consultancy Oliver Wyman.

“Our world is essentially dominated by the younger generation valuing experience, digitalization and social responsibility,” said Carreau, who noted a greater demand for luxury experiences, similar to personalization, cocreations and exclusive events.

Some challenges have a brilliant side.

“From a macro level, the challenge — and the chance — is traffic recovery,” said Israel Assa, global president, travel retail on the Estée Lauder Cos. “As traffic grows, the industry has the chance to grow with it.”

Yet it’s not at all times an ideal equation.

“Regardless that traffic is recovering strongly, average spend per passenger is below pre-pandemic levels,” said Mortensen.

To assist ramp up in-store penetration, L’Oréal is accelerating digital activations for preflight marketing, in response to Vincent Boinay, the group’s outgoing general manager for travel retail worldwide, who early next 12 months will grow to be president of the the corporate’s North Asia zone and chief executive officer of L’Oréal China.

Gebr. Heinemann is taking an identical approach.

“That’s where we see big opportunities for us to make sure that that more customers buy in our stores,” said Britta Hoffmann, director of buying for perfumes and cosmetics on the German operator.

A TFWA-commissioned study suggests the travel retail industry must transition from a one-size-fits-all approach to a segmented value proposition tailored to every customer category.

“That is where we now have collectively, as a trinity, a challenge,” said Boinay, referring to the triumvirate of suppliers, retailers and airports.

Other aspects are shaping travel retail’s latest normal, too. Yaël Blassin, regional director at Interparfums SA, highlighted an increase in special offers in European travel retail doors.

“For the retailers, it now represents 15 percent to twenty percent of their fragrance business,” she said.

“One among the challenges is the large discounts we see in the wonder category in every single place,” said Hoffmann.

This has a big knock-on effect.

“The retail price convergence between travel retail and native markets or pure players means there isn’t any more price advantage,” said Callens, who explained it’s subsequently essential brands start constructing consumer loyalty through CRM data. “That’s where the industry must reinvent itself.”

One other concern voiced by executives is the vast variety of products in store.

“The largest challenge is the reduction in space [for existing brands], because retailers are listing increasingly,” said Blassin.

Experiential Retail

A key phrase of this thirty eighth edition of TFWA — which clocked 7,385 attendees, up 23 percent versus 2022 and down just 2 percent against 2019 levels — was “experiential retail.”

“Now we have to offer experiences, retail-tainment,” said Bommier. “It’s not a transactional relationship anymore. In our shops, we’d like to adapt our concept, our journey, which have to be seamless.”

In Cannes, DFS revealed it would open a “seven star” luxury retail and entertainment destination in Hainan, China, by 2026. That’s to spread greater than 1.38 million square feet and carry greater than 1,000 luxury brands. Called DFS Yalong Bay, it’s the biggest project ever conceived by the LVMH Moët Hennessy Louis Vuitton-owned travel retail operator, and will even boast immersive concepts.

Category-specific, DFS reopened a renovated and expanded store, called Beauty Store of the Future, in Galaxy Macau in late October 2022.

“That is the sort of experiential retail, catering to 1 category only, which is beauty, that encapsulates what we’re aspiring to do,” said Benjamin Vuchot, CEO of DFS Group.

The situation offers a big range of services. There are Valmont luxury treatment rooms with a full-service menu, for example, and artisanal fragrances from the likes of Maison Francis Kurkdjian, Le Labo and Diptyque.

“[They are] very beautiful brands that require a bit bit extra space to narrate what they’re all about,” said Vuchot.

Digital touch points are vital, as well.

“We desired to make sure that that those touch points that individuals see online are replicated in the shop,” he said.

The Beauty Store of the Future has a studio for livestreaming.

“We are able to invite KOLs, journalists and even our staff, which we call our key opinion staff, to make use of a camera, stream and send it to their customers,” said Vuchot. “It’s really a next-generation store, which matches beyond ensuring that we now have products and costs that can satisfy the client. We even have a story to inform them and a standpoint.”

DFS sets out to create “destinations inside destinations,” said Vuchot.

Heinemann is working to further expand and diversify its assortments, while specializing in innovation, latest concepts and experiences. Within the Düsseldorf, airport, for example, the operator opened its Test and Learn concept.

“Now we have dedicated spaces for the wonder category specifically, for online brands which might be targeting Gen Z — assortments that perhaps we don’t typically have in duty-free,” said Hoffmann. “The primary learnings is that it really works super well.”

Every three to 6 months, the concept and types here will change, and Test and Learn is anticipated to roll out to other airports.

Perfume Mania

In travel retail, as within the domestic market, fragrance — especially high-end perfume — is driving the wonder category’s growth. In 2022, fragrance was the second-largest category overall, after skincare, which makes greater than half of beauty’s overall sales, in response to Generation.

“Fragrance was traditionally a really large segment of the European and Latin American businesses, however the unbelievable thing is that we’re seeing very strong growth for artisanal and luxury fragrance from the Asia-Pacific region,” said Assa. “So, it’s truly a worldwide phenomenon.”

“It’s a lever of growth within the months and years to come back,” said Bommier. “We’ll construct this category with the brands.”

Other travel retail operators were quick to leap on the trend, too.

Dufry has developed an Haute Parfumerie concept, involving fragrance brands similar to Penhaligon’s, Maison Francis Kurkdjian, Acqua di Parma, Parfums de Marly and Amouage. The primary location was launched in Zurich airport in March. The 1,940-square-foot, freestanding store has plenty of digital assets, including fragrance finders.

“We’re looking into expanding the concept worldwide and evolving it from a store design and consumer standpoint,” said Carreau.

Puig has a wealthy portfolio of area of interest brands in very tight distribution. L’Artisan Parfumeur, for example, is present in just 300 doors globally.

“We actually consider the airports as windows of the world,” said Kaatje Noens, executive vice chairman of world travel retail at Puig.

The corporate sets out to have a singular, dynamic offer within the channel. Starting in July, it prelaunched Rabanne’s latest image in Heathrow Airport T2.

“What we’ve seen is the amazing engagement of passengers with that latest image and look, and that elevation of name equity,” said Noens.

L’Artisan Parfumeur staged a pop-up in Charles de Gaulle airport in Paris, which has grow to be a road map for further rollouts.

“Partnering with retailers to bring unique and different experiences is the one way we’re going to walk away from a price battle that could be a short-term element,” said Noens. “It’s not going so as to add value to the brand, the retailer or the owner.”

Caroline Andreotti, CEO of Coty Prestige, said a fragrance brand like Chloé Atelier des Fleurs has hopped on a rising trend of perfume layering.

“We explain to the shoppers how they’ll layer different flowers together to get to a certain final result,” she said, adding consumers are also layering ancillaries with scent to strengthen a perfumes’ long-lastingness.

Coty and others within the industry have noted the increasing importance of travel retail exclusives today.

“You’ve gotten discovery sets,” said Markus Stauss, vice chairman of world marketing travel retail at Coty, citing for instance a coffret with five bestselling perfumes in 10-ml. spray bottles.

Molton Brown keeps rolling out its “fragrance first” strategy in travel retail.

“There’s such a requirement from our consumer for services, individualization and personalization. Traditionally, those have been saved for our high-street locations,” said Mark Johnson, president of Molton Brown global, who earlier this 12 months was also appointed president of cosmetics business AEMEA at parent company Kao Corp. “But now what we see is inside the travel retail industry, the patron now not has that divide.”

Inspired by its global flagship on London’s Regent Street, Molton Brown reworked its T5 location in Heathrow Airport to grow to be an area focused on perfume, with a present bar and engraving. That reopened in November 2022.

Because the area of interest fragrance trend grows, Euroitalia has been revamping its Atkinson brand.

“We’ve really worked on Atkinson to rebuild the image, fragrances, exposure and distribution,” said Sgariboldi. “We’re ready to lift the visibility and presence of Atkinson in duty free.”

Retail-tainment and exclusives are also names of the sport for perfume. The Estée Lauder Cos., amongst other groups, has been launching some products in travel retail before the domestic market. Tom Ford introduced a two-month exclusive preview of its Gray Vetiver fragrance within the Europe, Middle East and Africa region starting in April.

“It was an incredible success,” said Assa.

For the exclusive launch of Coty’s Boss Bottled Summer Edition 2023, there was a cross-category animation with Heinemann, including eyewear, watches and fashion, in addition to immersive experiences in Frankfurt Airport, also in April. That included a surfboard with virtual-reality simulation and a photograph booth with a surfboard and ocean backdrop.

“It was really to bring them into the universe of Boss as a brand,” said Stauss.

“Increasingly more consumers are travel retail to find innovation that they don’t see within the domestic market,” said Andreotti.

In July, Coty introduced Burberry Goddess in travel retail worldwide for a one-month exclusive. The group said the launch is setting latest market records.

Events — with glitter and a large logo — for Jimmy Choo’s I Want Choo were staged within the channel within the U.K. a couple of times this 12 months.

“For travel retail, [the concept] needs to be understood immediately, because persons are stressed, they shouldn’t have much time,” said Blassin.

Skin Care and Makeup

While perfume is booming, skincare and makeup sales are taking longer to get better in travel retail.

Partly, that’s attributable to the actual fact fewer Chinese are traveling abroad, which has allowed beauty brands and retailers outside China to grow to be less reliant on skincare.

“It’s more diversified, the expansion footprint,” said Peter Jueptner, group president, international on the Estée Lauder Cos.

Still, the category’s business is picking up.

“Now we have noticed during the last 4 to 6 months a gradual recovery on skincare, where brands have adopted their offer to be less Chinese-dependent,” said Carreau.

Inside China, in Shanhaiguan, the Estée Lauder Cos. opened some treatment rooms for a few of its brands, marking a primary for the group in travel retail.

Assa said that has been well received from an experiential perspective.

“The patron now has the power not simply to shop, but additionally be pampered while they shop, and that definitely resonates with the luxurious, higher-end consumer,” he said.

Carreau expects by mid-2024 skincare sales in travel retail will reach 2019 levels, even without the complete recovery of Chinese footfall.

At DFS, people have been searching for out clean beauty.

“I’m particularly interested also now in bringing products which might be good for hair and sun care,” said Vuchot.

DFS launched in Galaxy and The Londoner, in Macau, an area called Beauty Collective, which supplies a chance to herald more indie brands. Its 2.0 version is attributable to be revealed late this 12 months, and the rollout will include Hysan in Hong Kong in December.

Dufry has been developing and launching a well-being concept dubbed Mind. Body. Soul., which works cross-category.

“It proves to achieve success in recruiting consumers,” said Carreau.

Noelle Goris, vice chairman global travel retail and distributor markets at La Prairie Group, has also noted momentum ramping up again for skincare.

“We’re ready,” she said. “We’re gearing up our BA capability and capability.”

Over the past 12 months, while La Prairie has closed about 15 doors within the channel, the brand’s footprint in square meters has grown 10 percent.

“We gained when it comes to quantity of space, but additionally so much when it comes to quality of space,” said Goris, adding the brand is gaining market share most in every single place.

La Prairie is implementing more services and a channel-related offer. In February, with Heinemann, it opened an Art of Beauty suite with two facial cabins in Sydney International Airport. This month, it launched its first travel retail discovery set.

“You’ve gotten a full ritual,” said Goris.

All that is bearing fruit. La Prairie’s travel retail activity should close 2023 up within the triple digits versus 2022, apart from in China and Korea, in response to estimates.

Meanwhile, Groupe Clarins’ travel retail sales are today substantially above 2019 levels, according Callens. The corporate in September began launching its Precious prestige skincare range in travel retail in almost 90 doors, of which just about half are in Asia.

Within the channel overall, the group is homing in on a seamless omnichannel approach, with the goal of getting the Clarins consumers’ data shared between the travel retail and the domestic markets, to offer clients a seamless experience.

“How will we fully integrate and recognize the loyalty of our consumer the world over, across the distribution channel, across all forms of retailer barriers?” mused Callens.

It’s been a bit easier for Clarins to realize that in Asia, especially China, attributable to the WeChat mini programs and the Tencent ecosystem allowing the corporate to have interaction and collect data through the equivalent of WhatsApp.

L’Oréal, with its portfolio of brands spanning dermocosmetics to hair care, and luxury to mass market products, sets out to sell beauty for all travelers, in response to Boinay.

L’Oréal Paris, in an extension of a study begun last 12 months, asked travelers on the Chinese island of Hainan why they enter travel retail stores. Thirteen percent said it was attributable to the accessible-luxury brand L’Oréal Paris. Of those who purchased L’Oréal Paris within the channel, 68 percent bought one other brand, as well.

“So L’Oréal Paris is basically a traffic driver and has tremendous recruitment power,” said Karina Behar-Lecuiller, general manager of the Consumer Products Division Travel Retail Worldwide at L’Oréal, while standing near a merchandising unit showcasing the brand new mascara Panorama.

Color cosmetics is the wonder category taking essentially the most recovery time.

“Makeup will come back more strongly,” said Jueptner. “If you happen to take a look at makeup today, it’s still behind significantly. We expect it’s a matter of time. There’s an enormous opportunity to reinvent and upgrade the experience you’ve got with makeup.”

“It’s a segment within the channel that should be much more experience-driven — same as domestic, and even online — [more] than what it’s today,” said Carreau.

Sustainability Minded

A sustainability focus has amped up within the channel of travel retail and at TFWA, where L’Oréal and Heinemann revealed a latest partnership.

“We might be embarking on a collaborative green road map,” said Kim Rowney, travel retail sustainability director at L’Oréal.

Guido Tappesser, chief business officer of L’Oréal travel retail, explained that because the health crisis began, consumers have been demanding more sustainable products and types with a purpose.

Step one of the tie-in will concern product assortment inside Heinemann’s Future Friendly concept, slated to have a worldwide rollout starting in 2024. The partnership might be wide-reaching, including CO2 emission reduction, cooperating on social projects and customer engagement.

“We’re super convinced that our business could be green and profitable,” said Hoffmann.

Executives strongly imagine within the health of travel retail mid- to long-term.

“All the basic drivers are intact,” said Jueptner. “You should have more people traveling, more middle class within the emerging markets, more people getting a passport.

“We’ve been through this COVID disruption and have seen amazing recovery in EMEA and the Americas,” he continued. “We’re mainly back to where we were before — after which some. The recovery in China, particularly, is taking more time than everybody expected, but it would come eventually.”

This can be a period of transition, but additionally a terrific opportunity for industry reinvention, in response to Jueptner. 

“It opens up the space to do more from a segmentation perspective, with different traveling corridors and travel nationalities,” said Assa.

“It’s a really interesting time period, since it’s time to reset,” said Callens. “Ignore 2019 — have the identical ambition or larger ambition for performance. However the methodology behind 2019, which was for everyone the record 12 months, doesn’t work. We’d like to alter ingredients and make a distinct recipe.

“Ignore what we all know,” he said.