July 22, 2024 | Industry News
Kaneko Henningsen and Walter said they were “very pleased” to visit Stockholm Arlanda Airport’s new on-site expansion, where Swedavia and its concession partners have created a best-in-class shopping environment.
According to Thomas Kaneko Henningsen and Carl Walter of Blueprint Partners, the travel retail industry is actively experimenting with approaches to effectively attract Gen Z travelers, with several industry players at the forefront of adopting innovative strategies to cater to Gen Z’s evolving demands and preferences.
This generation currently accounts for 30% of the world’s population and 9% of today’s travelers, but is expected to account for two-thirds of duty-free shoppers by 2028. By 2030, the EMEA and APAC region alone will include more than one billion Gen Zers.
Kaneko Henningsen and Walter explain: “It’s important to emphasise that Gen Z is more than just an age group. It is becoming a global lifestyle supported by a wide range of consumer profiles across all age groups.”
Partner Thomas Kaneko Henningsen said: “This is a special time as the travel retail industry recognises that the shopping landscape is changing, with operators, retailers and brands at all levels experimenting with how to interact more effectively with Gen Z travellers.”
Industry professionals at the forefront
Lotte Duty Free has taken a creative approach, collaborating with popular K-pop music bands NCT Dream, Riize and aespa on social media, while Avolta has introduced innovative technology to enhance the shopping experience for Gen Z customers. At Zurich Airport, the retailer offers a “phygital” experience at its Haute Perfumery store, combining physical scent testing with interactive technology to create an immersive and customized shopping experience.
Additionally, Avolta has introduced “Lift and Learn” technology, allowing consumers to pick up a product and access more information about that product’s unique selling points on a digital screen integrated into the POS. This interactive, information-rich approach meets Gen Z’s demand for an engaging, personalized shopping experience.
Other industry examples include Helsinki Airport’s launch of the “Relove” concept store, selling high-quality pre-owned clothing and accessories. Similarly, ARI introduced pre-owned luxury items in its “Preloved” stores at Montreal and Lisbon airports, catering to Gen Z’s growing interest in sustainable and unique fashion options. Amsterdam Airport Schiphol has implemented initiatives such as offering free water to travelers, resulting in the reduction of over 700,000 single-use plastic bottles per year.
The future is phygital
The convergence of the physical and digital worlds is quickly becoming a natural part of everyday life, especially for Gen Z consumers. Karl Walter points out, “According to m1nd-set, a global leader in travel market research, Gen Z spends significantly more time online per day. They are growing up in a world where there are no boundaries between online and offline. In fact, due to social media algorithms, their consumption habits are likely to be formed online long before they consume in offline environments.”
Gen Z spends significantly more time online than other generations
Walter emphasizes that the growing trend of consumers buying digital branded items on gaming platforms like Roblox and Pokemon Go that they own in the real world has become an integral part of life. “Or, as Cila has done for its VIP customers, why not take a phygital online beauty class in the metaverse, where you can receive Gucci samples at home before trying them online during the class,” he adds.
The impact of social media on consumer preferences is undeniable. “Today’s consumer tastes are constantly being shaped by influencers and bloggers posting about their preferences and travel experiences,” says Walter. “A post about an experience at an airport store can reach millions of consumers within days and have a noticeable impact on performance.”
More than any other age group, Gen Z relies on their peers and friends to decide which brands to trust.
Whether it’s how they leverage social media to inform and engage consumers before they travel, travel retail players are actively embracing digitalization and phygital experiences through a range of initiatives. Changi Airport, for example, built its own metaverse by recreating and gamifying the airport on Roblox to foster a sense of belonging and set traveler expectations. Other players are offering live shopping events and online consultations with in-store sales staff to build relationships with consumers before they arrive at the airport. Inside the store, retailers are implementing tools such as fragrance finders to allow consumers to discover a world of scents via their mobile devices or pre-installed tablets.
Put it into practice
According to m1nd-set, 54% of “activist generation” Gen Z believe it is very important to buy from companies that protect and conserve the environment – and this is not lost on retailers and brands in travel retail.
Retailers have developed concepts and areas within their stores that focus on healthy and eco-friendly alternatives – examples include Heinemann’s “Great for You, Better for the Planet,” ARI’s “Naturally Delicious, Conscious Shopping,” and Avolta’s “Body Mind Soul” areas within its duty-free stores. These initiatives have provided an opportunity for purpose-driven brands to emerge, from Tony’s Chocolaterie’s mission for 100% slave-labor-free chocolate, to plastic-free chewing gum, True Gum, and healthy snack alternative, True Dates.
Established brands are also focusing on environmental issues, with Nestlé’s biggest new product this year being the TR-exclusive “Nestlé Sustainable Source” chocolate. Nestlé Sustainable Source effectively combines Nestlé’s Swiss chocolate expertise with sustainability and is a direct result of Nestlé’s work with the Rainforest Alliance to support cocoa farmers and their communities.
Gen Z will be the largest travelling age group by 2028
“Their concerns about health, animal rights, racism and LGBTQ+ issues are influencing their shopping behaviors just as much as environmentally friendly initiatives,” Walter noted. Companies need to police themselves on all of these topics as well, or Gen Z will.”
Karl Walter emphasizes that “the activism shown by Generation Z goes far beyond the concern for the environment that is taken for granted in today’s world.”
Curated Community
When it comes to personalized service and consumer loyalty in travel retail, the key word is ‘relevance.’ Thomas Kaneko Henningsen explains, “The driving force of relevance is nothing new to the industry. Since 1947, travel retail has excelled at driving relevance in the form of duty-free prices, limited edition products, travel exclusives, novel shopping experiences, a sense of place, and more.”However, the definition of relevance is changing dramatically with the influx of Gen Z travelers, the world’s first digital natives.
By 2028, Gen Z will account for around 66% of duty-free shoppers
According to m1nd-set, Gen Z travelers globally spend 20% less on average at airport duty-free shops, with significantly lower conversion rates. This decline in spending is attributed to lower product relevance for Gen Z. Kaneko Henningsen points out, “This raises the question: how do we make existing products, services, and experiences more relevant in the future?” And a big part of the answer lies in digitization through artificial intelligence (AI).
Gen Z spends more time on their devices and therefore becomes part of a global community of like-minded people who exchange and socialize reviews, insights and opinions. Industry players must therefore leverage digital capabilities to engage with young travelers more effectively. Kaneko Henningsen comments: “AI-powered chatbots feel much more natural than they did a few months ago. With a human-like tone, vocabulary and even a friendly face, AI makes interactions with travelers much more seamless, personal and emotive.”
Strategic collaboration
In the travel retail industry, data sharing and networking between operators, retailers and brands has never been more important to create a seamless and engaging consumer experience. Kaneko Henningsen said, “Proactive and mutually beneficial collaboration between industry stakeholders has never been more important.” This collaboration is essential to develop a Gen Z-friendly community, where a sense of belonging is paramount and stakeholders are called upon to come together to uplift the customer.
An example of a successful collaboration is the partnership between Qatar Airways, Hamad International Airport and Qatar Duty Free. The three have created a seamless travel experience with excellence at its core. Their efforts have earned them prestigious awards such as “World’s Best Airport” and “World’s Best Airport Shopping” by Skytrax, as well as “World’s Best Business Class” and “World’s Best Business Class Lounge.”
Brands are embarking on this journey of excellence by introducing innovative concepts such as the first Louis Vuitton Lounge and the first Christian Dior Spa at Hamad International Airport. “Going forward, airports, airlines, retailers and brand collaborations will become ‘destinations’ where experiences reach new heights,” said Kaneko Henningsen.
“The Gen Z lifestyle is ushering in a new era in travel retail. As more consumers embrace Gen Z values, we are witnessing a fundamental shift in shopping behavior. Yesterday’s success no longer guarantees tomorrow’s success. The need to understand and embrace the Gen Z lifestyle is more important than ever.”
