As the aviation industry continues to strongly celebrate the significant growth in passenger numbers, it is not surprising that airport retailers are seeing similar rises in revenue. The $66.3 billion travel retail market is projected to reach $1456 billion by 2032 by 2023.
The luxury retail sector in particular has been a major success in the airport industry, with high-end brands taking advantage of their long-standing relationships with air travelers and gaining wider interest in luxury goods.
This growth appears to last for the next decade as Global Data forecasts growth at a CAGR of over 6% between 2023 and 2028, and many airports that explicitly focus on expanding luxury retail products.
“Major growth potential”
One such airport, Amsterdam’s Schiphol Airport, announced last year that the Lounge 2 terminal upgrade would include the arrival of new luxury brands at the airport to bring retail space alongside other global hubs and meet passenger demand.
“When you look at the airports around us, the availability of luxury retail is much greater than Schiphol,” an airport spokesperson told an airport industry review.
“In conversations with store staff at the sales floor, they repeatedly shared that they were frequently asked about where other luxury brand stores are. Combined with an extensive analysis of retail space efficiency, this allowed us to confirm that luxury retail has great growth potential.”
Luxury retail has great growth potential.
With investments in luxury brands, two industry giants opened new outlets in Lounge 2 in 2023, with Bvlgari and Louis Vuitton joining existing stores for major brands such as Gucci, Rolex and Hermes.
The opening of the Bvlgari store, along with Bvlgari’s Northern Europe managing director Bad de Boeber, also gave a glimpse into the perceived benefits for travelers buying luxury goods at the airport, saying the new outlet would seduce buyers by creating “memorable experiences for travelers.”
Would you like to exchange High Street?
This sentiment is reflected by aviation historian Professor Dan Bab. Dan Bab says airport stores will provide people with increasingly rare opportunities to get closer to products before spending a lot on purchases.
“The opportunity to shop at a high-end airport store (in a safe environment) brings a familiar experience of shopping in a brick and mortar store,” he says.
The airport sector’s ability to provide experiences that are not seen in high altitudes can also be seen when it comes to luxury retail growth compared to the decline of certain high-end department stores around the world.
In the UK, centuries ago, Devenham closed all 118 remaining physics stores in 2021, with similar brands like Swiss Germori facing the same fate as consumers are driving spending primarily online.
Many remaining department stores are also seeing sales decline, making airports likely to be the most accessible location for many passengers to explore multiple luxury brands at once.
The uniqueness of airport-based luxury outlets has often been extended to the offerings, with many brands seeing the benefits of offering “airport exclusive” products.
“Some items may be available in brick and mortar stores, or in airports where travelers cannot purchase online,” Bubb said.
The street is already recognized by the airport itself, and Heathrow Airport tells airport technology that it uses exclusiveness to attract luxury buyers amidst the challenges of the travel retail sector.
“By removing tax-free shopping, it’s harder for UK retailers to compete on price alone, but we can offer an exclusive Heathrow retail experience,” the spokesman said.
“From our dedicated team of personal shoppers, to our ‘Heathrow-only’ items and our first ever Louis Vuitton Café, we’re working with our retail partners to maintain the magic of luxury airport shopping. ”
Premium Retail Experience
Heathrow’s Louis Vuitton Café highlights the benefits of using exclusiveness to drive the growth of luxury retail. Fashion House describes the Hybrid Store Cafe as a “immersive” blend of fashion and a “Art de Vivre” designed to enhance the travel experience for visitors.
Other European airports “enhancing the transport atmosphere of the space” featuring Bvlgari outlets, which offers services such as bottle sculpture and custom gift wrapping, taking advantage of the opportunity to provide a unique experience at Rome’s Fiumcino airport.
Schiphol also says it supports efforts to embrace high-end outlets, as this growing desire from luxury brands reaches international passengers.
“When we shared our strategy and plans with the luxury industry and showed the units we were creating, they all responded very positively,” an airport spokesperson said.
“The luxury brand understands the importance of Schiphol as a major airport in its global network and recognizes the relevance of passenger profiles driving through Schiphol.”
The move to create a unique experience is to place the airport as the luxury destination itself, with the Asia Pacific region dominating the travel retail market with less than 50% of the global rating, as major European airports follow the lead of Asian counterparts, such as Zayed International in Abu Dhabi and Changi Airport in Singapore.
Recently, UAE Capital’s Airport used the opening of the Terminal A building in 2023, placing a luxurious outlet from Omega, Coach and Hermes next to midrange shops such as WH Smith and Bath and Body Works as an opportunity to attract high-end brands of various names.
That effort exemplifies the regional attitude towards the luxury travel sector, which makes up half of Middle Eastern and Asian airports, on the list of 20 airports that offer the best luxury experiences released by AllClear Travel Insurance in 2024.
As global airports continue to be amazed to attract attention from travelers focused on luxury that want to “want to be fully immersed in the experience,” Bubb suggests that the winner is someone they want to adapt.
“Some people are very loyal to a particular brand, so they take advantage of being able to spend time shopping in lounges designed by luxury retailers,” he says.
“To achieve all this, airports need to keep up with the tastes of travelers, including wealthy tourists who expect to see luxury retailers at the airport.”
This article was originally published in the Airport Industry Review in Digital Magazine. You can subscribe for free here.
