Why Gucci, Louis Vuitton & Other Luxury Brands Are Betting Big on Airport Retail

Airport retail isn’t all snacks and paperbacks — luxury retailers like Louis Vuitton, Christian Dior and Prada are finding that on-the-go travelers are a lucrative demographic.

According to research from Bain & Company, luxury sales in airports grew by 7 percent in 2018 as global travelers upped their spending and brands opened new boutiques. Sales in department stores, meanwhile, fell 4 percent, reflecting the sector’s struggle to drum up foot traffic when shoppers are increasingly moving online. (E-commerce sales saw the highest growth, ballooning 22 percent year-over-year.)

In its 2018 annual report, Kering, which owns brands like Gucci, Saint Laurent and Balenciaga, revealed that travel retail is one of the conglomerate’s focus areas for growth, and it attributed much of its increased store count in 2018 — particularly for Gucci, which added 11 net locations — to “the group’s drive to raise its brands’ presence in travel retail and duty-free stores.” Currently, airport sales make up 6 percent of its overall revenue.

Airports are an appealing target for retailers not only because of their captive audience but also because travelers are willing to spend. A 2017 report from research firm GlobalData found that spending in airports is forecast to reach $49 billion by 2021, up from $38 billion in 2016. The Asia-Pacific region took in the biggest share of spending that year at $14.8 billion — which should be no surprise, given the rising purchasing power among consumers from Mainland China.

A separate report from Bain found that Chinese shoppers account for 1 in every 3 dollars spent on luxury goods, and by 2025 will make up 46 percent of the market. More of these sales, though, are expected to occur at home, rather than abroad, as the Chinese government cracks down on tax-dodging resellers and local markups on foreign luxury goods decrease.

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