COMMENT


Now and Then... Confronting the data vacuum


T


he August 2000 edition offered a useful snapshot of


category sales within the duty free and travel retail industry. Based on 1999 data


from the then-known Generation Publications,


women’s fragrances were found to be the leading product category, generating sales of US$2.1 billion and accounting for 10.8% of all products sold through travel retail stores. Meanwhile, cigarette sales were beginning


to suffer from the abolition of intra-EU duty free that year. Revenue dropped by 15.6% to $2,091m, as the category’s market share of total sales declined from 12.1% in 1998 to 10.5% in 1999. At this point, there remained plenty of


headroom between cigarettes and women’s fragrances and other categories that had passed the $1 billion mark at the time The Duty Free Business went to press. Women’s cosmetics ranked in third place


($1,388m), followed by jewellery ($1,358m), Scotch whisky ($1,243m), confectionery ($1,161m), accessories ($1,040m) and men’s products ($1,022m). Twenty years on, the picture has changed


irrevocably. The beauty category has exploded in growth and sales terms, setting the pace as a bellwether for innovation and an early adopter of new technologies, which has widened the category’s appeal to new consumer demographics. According to 2018 Generation Research


data, the latest global snapshot available, fragrances and cosmetics accounted for more than $31.5bn of the industry’s $78bn- plus total. In Asia Pacific alone, the category


contributed more than US$18bn to the region’s $35bn total sales. While categories such as P&C have


astounded, others have returned sluggish single-digit, flat and even declines in growth. In some instances, the reasons are


relatively clear cut; the damage caused to tobacco following the abolition of intra- EU duty free in 1999 mixed with a steadily increasing cocktail of onerous regulations has put it under strain.


50 TRBUSINESS


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Fragrance sales took pole position in August 2000.


Other category purviews are more opaque. As mentioned, jewellery racked up sales of US$1,358m in 1999. Nineteen years later, the watches, jewellery and fine writing segment posted sales of $6bn, according to Generation. Fluctuating commodity prices, increased


competition and heavy concession terms resulting in squeezed margins are probable causes. Meanwhile, confectionery’s $1,161m


showing in 1999 graduated to confectionery and fine food sales of $5.3bn in 2018. Rising raw material costs, slimmer travel retail margins and legislative pressure from national governments and the worldwide health lobby factor highly. The coronavirus (Covid-19) horror show


this year has decimated the industry and no doubt tougher challenges lie ahead. As stakeholders begin to assess the full


scale of the damage to businesses at year- end and the arduous road to recovery continues, travel retail will be yearning for timely and relevant data reflecting the scale of the damage to help inform future business decisions. The current unknown has already


triggered a data vacuum for category sales. As we all emerge from arguably the worst


health and economic crisis in the past two decades, who will fill the vacuum? «


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AUGUST 2020


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