While retailers were once fearful of diluting their brand equity with airport stores, now big terminal renovations and the lure of captive, affluent shoppers has brands incorporating travel retail into their strategy

Longstanding cosmetics company Estée Lauder‘s sales skyrocketed 12% last quarter, and the boost came from a somewhat unexpected source—airport outlet retailers. The brand isn't alone: the “direct retailer” market is booming, with competitors L'Oreal and Revlon also finding success, and apparel companies Hugo Boss, Levi's and Lacoste leading the pack when it comes to revenue at airports around the globe.

The industry has been experiencing steady growth for quite some time and shows no signs of slowing down any time soon—its value was approximately $69.5 billion in 2016, and is expected to reach $125.1 billion by 2023. There are several factors that have led to the increased popularity of these on-the-go stores, including more disposable income on the part of consumers, as well as changes in lifestyle that enable and promote more frequent travel.

Retailers have long turned their noses up at opening stores in the fusty environs of airports for fear of diluting their brand equity, Joel Bines, global co-head of retail consulting for Alix Partners, told PSFK. But that’s changed over the past decade, as domestic and international airport terminals from John F. Kennedy in New York to Dallas Fort Worth have undergone major makeovers, architectural upgrades and retail renovations amid the upsurge in consumer travel.

Hence, brands from Estee Lauder to Levi’s have woken up to the captive, often affluent consumer base that tends to define airport shoppers, he said. That’s particularly true for retailers and brands looking to offset their sales volume declines from the department store channel, for one.

“Before, you didn’t want to associate your brand with the terminal at DFW,” said Bines. “But instead of sad, soggy sandwiches in moldy-carpeted airports, you now have remodeled terminals with attractive retail shopping experiences.”

Then brands like Brooks Brothers, for one, which runs a store out of DFW, started to branch out beyond airports’ duty-free shops. “So instead of opening yet another flagship on Fifth Avenue,” brands and retailers, which “have been struggling to get closer to their consumer … have finally realized how captive this airport demographic is,” Bines said.

In terms of global markets, Asia-Pacific is the largest retail travel market, with Europe following close behind. As a leader in prestige beauty, Estée Lauder in particular realizes the value of both travel retail and these burgeoning markets, folding a strong emphasis on airport, duty-free, border shops and cruise locations into its strategy.

On its website, the brand touts “The Joys of Beauty” while traveling, and states that, “We recognize that many consumers from emerging markets are introduced to our brands while traveling or abroad. Travel Retail continues to be an important cornerstone of our strategy to reach these consumers, particularly as destinations and traffic patterns shift.”

To this end, the retailer also turned its attention to both products and tutorials that address the particular needs and wants of the jet set. These include the four-step Fatigue Fighter process, which focuses on eye brightening, and La Mer's Arrive Hydrated skin care regimen, which suggests specific products from the line that are particularly suited for pre-boarding or in-flight application.

Estée Lauder

Lead image: Estée Lauder duty free shops stock photo from InnaFelker/Shutterstock