lvmh q2-2017travel retail report by fbic global retail tech dec 2015_W

1、DEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOBAL RETAIL & TECHNOLOGY1DEBORAHWEINSWIGFUNG1937.COM US: 917.655.6790 HK: 852 6119.1779 CN: 86.186.1420.3016Copyright 2015 The Fung Group. All rights reserved.December 21, 2015Travel Retail: A $60 BillionBusinessThe global travel retail market was valued

2、 at $63.5 billion in2014 and is estimated to reach $85 billion in 2020.The Asia-Pacific region is the largest travel retail market, with a38.6% market share, followed by Europe, with 32.2%. Chinese travelers spend the most when traveling.More affordable travel options and an emerging middle class in

3、developing markets are fueling growth in spending.The changing profile of the travel shopper may transform thetravel retail market from one centered on luxury to one that caters to broader set of needs.DEBOR AH WEINSWIGE xe cu tive Dir e c to r H e a d o f G lo b al R e tai l & T e c hn o lo g y F u

4、 n g B u s i n e s s I n te lli g e n c e C e n tred e b o r a h w e i n swi g fu ng 1937 .co mUS: 646 .839 .70 17HK : 85 2.6119 .1779CH N: 86.186.142 0.3016December 21, 2015OVERVIEWOver the past three decades, there has been rapid growth in international tourist arrivals, from only 277 million in 1

5、980 to over 1 billion in 2013,according to statistics from the United Nations WorldTourismOrganization. The travel retail market has grown concurrently, increasing insize by an aggregate 8.4% a year in the past 10 years.Looking ahead, the market shows great potential. Generation Research, atravel re

6、tail market research specialist, estimated the markets value at$63.5 billion in 2014, and the company forecasts that it will grow to $85 billion in 2020.THE BOOM IN THE ASIA-PACIFIC TRAVEL RETAIL MARKETThe democratization of traveling and the budget airline boom contributed to the growing number of

7、travelers, especially in thehaveAsia-Pacific region. According to statistics from Airports Council International,the region accounted for 2.3 billion travelers in 2014, a 7.1% increase over 2013, representing a growth rate that was significantly higher than the world average of 5.7%.Naturally, the A

8、sia-Pacific region holds the highest share of the travel retailmarket, with 38.6% of the markets value concentrated in the region. The market in the region grew by 9.9% in 2014, year over year, which was the fastest growth rate in the world. Europe is the second-largest travel retail market, with a

9、32.3% share. However, it had the weakest year-over-year growth of all regions in 2014only 1.8%.DEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIGFUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright 2015 The Fung Group. All rights reserved.

10、2December 21, 2015Figure 1. Share of Travel Retail by Region40%38.6%32.3%Value Share in 2014Change 2014 vs. 201330%18.5%20%9.2%10%9.9%3.5%1.3%5.5%5.0%1.8%0%Asia PacicEuropeAmericasMiddle EastAfricaSource: Generation ResearchTHE EMERGING MIDDLE CLASS IN THE NEW MARKETSThe major factor underlying the

11、expanding number of travelers in the Asia- Pacific region is the emerging middle class in many of the countries in the region. With travel becoming more accessible, Asian consumers have shown they have a great appetite for it, and are filling the seats of airlines. Most notably, China is the largest

12、 source of outbound tourists, who represented 30% of total tax-free spending globally in 2014, followed by Russia at 14%, according to statistics from Global Blue.WHERE DO TRAVELERS SHOP?In terms of shopping locations, travelers overwhelmingly make purchases at airports, which accounted for almost 5

13、8%, or $36.6 billion, of the market value in 2014.Figure 2. Share of Travel Retail Across Channels Worldwide57.7%60%20%40%10%20%0%0%-10%AirportsOther Shops (e.g., Downtown Duty- Free Shops)AirlinesFerries and CruisesSource: Generation ResearchAirports have transcended their function as transportatio

14、n hubs and nowrepresent prime commercial real estate, with seven airports boasting retail sales of over $1 billion. Five of those seven are located in the Asia-Pacific region. Despite the high passenger flow, it has become more difficult for retailers to operate within airports due to soaring rental

15、 rates. For instance, the five-year retail concession fee at Incheon International Airport in South Korea was recently increased by 15%, to US$121,809 per pyeong (roughly3.3 square meters).DEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIGFUNG1937.COM US: 917.655.

16、6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright 2015 The Fung Group. All rights reserved.3Value Share (%)% Change 2014 vs. 2013Value Share in 2014Change 2014 vs. 201334.2%8.1%5.7%(0.8%)(2.9%)4.6%3.5%December 21, 2015Figure 3. Ranking of Airports with Travel Retail Sales of over $1 BillionSource

17、: Generation ResearchDowntown duty-free shops account for the second-highest total travel retailsales, representing 34% of the market and the highest growth rate, at 8.1%. These shops represent an emerging trend, especially in Japan and China. For instance, at least four downtown duty-free retail st

18、ores are due to open in Japan in the next four years. Retailers benefit from the lower rents (compared to airports) that are available in many downtown areas, and customers are likely to spend more time in these shops than they would at airport shops.DEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOBA

19、L RETAIL & TECHNOLOGY DEBORAHWEINSWIGFUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright 2015 The Fung Group. All rights reserved.4December 21, 2015WHAT DO TRAVELING SHOPPERS BUY?Beauty Products Have the Largest ShareThe main product groups in travel retail are beauty, wine

20、s and spirits,fashion and accessories, tobacco, watches and jewelry, electronics and gifts, and confectionery and fine foods, according to Generation Research. The beauty group represents the largest segment, accounting for 30%, or $19 billion worth, of all sales in 2014.Figure 4. Share of Travel Re

21、tail Sales by Product Group, 2014Beauty30.0%Wines and Spirits16.4%Fashion and Accessories14.6%Tobacco12.8%Watches and Jewelry10.4%Electronics and Gils8.1%Confecmonery and Fine Foods8.0%Source: Generation ResearchA look at the individual product categories shows that cigarettes were thetop-selling pr

22、oduct in 2014, accounting for 10.7% of total travel retail sales. Skincare and womens fragrances, categorized under the beauty product group, took the second and third places, which explains their strong presence in travel retail distribution channels.DEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOB

23、AL RETAIL & TECHNOLOGY DEBORAHWEINSWIGFUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright 2015 The Fung Group. All rights reserved.5December 21, 2015Figure 5. Top Five Travel Retail Sales Product Categories, 2014Cigareqes10.7%Skincare10.6%Womens Fragrances9.1%Confecmonery6.

24、2%Scotch Whisky5.7%Source: Generation ResearchBEAUTY AND FASHION BRANDS ARE EVOLVING IN THETRAVEL RETAIL BUSINESSAccording to Exane BNP Paribas, travel retail is worth about 15% of the broader personal luxury goods market, which is why it has become a significant sales channel for beauty and fashion

25、 brands that aim to capture the luxury consumer. As illustrated in the table below, top luxury brands have established themselves in many key airports. Having a presence in this important channel not only helps luxury retailers capture existing and new customers, but increases their brands exposure.

26、Figure 6. Top 10 Luxury Brands and Their Presence at Key AirportsSeoul(ICN)Dubai(DXB)Singapore(SIN)London(LHR)Hong Kong(HKG)Brand/Airport2. Herms-4. Chanel6. Cartier-8. Burberry10. TiffanySource: Millward Brown/airport websitesLOral is a key player in the market, and enjoyed a 21.3% market share int

27、he beauty category in 2013. The French cosmetics and beauty giant created a dedicated worldwide Group Travel Retail division in late 2013 that covers a number of brands serving the needs of international travelers who have different beauty rituals and purchasing power. LOrals holistic approach to ma

28、rket growth means the company is able to target niche consumer groups that have only recently become part of the travel retail marketplace. TheDEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIGFUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Cop

29、yright 2015 The Fung Group. All rights reserved.69. Michael Kors-7. Prada5. Rolex3. Gucci1. Louis VuittonDecember 21, 2015strategy bodes well for the company, given the increasing number of middleclass travelers from developing countries.Another big player in the travel retail business is LVMH. Asid

30、e from itsspirits, fashion, beauty and jewelry businesses, it has a selective retailing division, which includes DFS (originally known as “Duty Free Shoppers”) and Starboard Cruise Services (a cruise ship onboard retail fascia). According to a company report, this division contributed 30% of revenue

31、 to LVMH in 2014, second only to the Fashion and Leather Goods division. DFS is investing in new retail projects in Italy and Cambodia, as well as at the Singapore Changi Airport, which will be the chains biggest single investment.SUMMARYRetail locations at travel hubs have become a significant dist

32、ribution channel, boosted by a rapid increase in the number of international travelers from emerging markets such as China, Russia and Brazil. Beauty, wine and spirits, and fashion brands are in the dominant positions in the marketplace. These brands continue to invest in growth by increasing their

33、retail footprints and strategically reorganizing their businesses to cater to this new wave of consumers. Most notably, they provide a more differentiated product offering that is supported by increasingly diverse brand portfolios.DEBORAH WEINSWIG, EXECUTIVE DIRECTORHEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIGFUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.14