Reinventing duty free

Innovative minds look to reverse LatAm’s airport retail slump.

Airport retail used to be one of the most exciting parts of travelling – it has now become a staid and unimaginative industry reflected by falling profits and fewer customers. Unsurprisingly, the pandemic dented profits, and it will likely take years for the industry to recover. Luxury brands and duty-free retailers are betting on e-commerce, trendier products and a more streamlined shopping experience to make up for the shortfall. 

The CEO of a retail group operating airports in Brazil said, “The concept of airport retail needs to be reimagined, we need to go back to basics and inflect that concept with imagination. How can we transform the customer experience?”  

“The concept of airport retail needs to be reimagined, we need to go back to basics and inflect that concept with imagination.”

CEO of a retail group operating airports, Brazil

Aviation and retail should be fully adapted to the core business across Latin America – a seamless experience like those found in airports in Dubai, Qatar and Singapore is perhaps he most effective way of getting punters through the doors.  

Challenges remain, “You can’t transform an airport into a shopping mall because it isn’t. Most of the region’s airports are some distance away from major metropolitan areas, like Guarulhos Airport in São Paulo. Therefore, we must rely solely on those customers who are transiting through the airport, few will visit just for the sake of shopping,” remarked the CEO.  

“You can’t transform an airport into a shopping mall because it isn’t…we must rely solely on those customers who are transiting through the airport, few will visit just for the sake of shopping.”

The CEO explained, “Once you have USD 1.5bn dollars to invest in the biggest indoor fountain like in Singapore, then you don’t have any revenues problems. But the majority of airports across Latin America have limited resources and therefore they need to be efficient as airports and have a state of art travel retail, which is difficult to develop and implement.”  

Airports across the region need to see not only innovation and imagination but higher cost products being purchased and a steady flow of visitors. Such challenges plaguedAsunción’s Silvio Pettirossi International Airport where a vast new duty-free area opened in 2020, a trickle of visitors from the region and virtually none from outside the region reflected how retail profits depend on good air connectivity, especially to wealthier consumer markets.   

Good news could be on the way. Dufry, a global travel retailer, has recently focused on developing its business in Mexico given that last year the country’s airport retail sector was particularly resilient to the pandemic.  

Mexico has been a strong market for Dufry over most of the past 25 years. In 2021, Dufry operated shops at 12 airports in Mexico including Mexico City; the tourist hub of Cancún—popular with high-spending Americans through the pandemic and more so in 2022; Guadalajara; Monterrey; and Los Cabos. These destinations comprise five of the top six gateways in Mexico and all of them have seen 2021 year-over-year traffic rebounds of over 50%. So long as the products and experience are enticing, airport retail across Latin America can rebound, as Mexico demonstrates, they are not wanting for visitors.  

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