June 24 2024  |  Industry News

Gen Z fuel growth in Latin America & Caribbean travel retail

By Hibah Noor

m1nd-set highlights the evolution of international departures 

Swiss-based research agency m1nd-set has released detailed shopper and air traffic research centered on the Latin America & Caribbean regions. Details were revealed at the annual regional conference organized by ASUTIL, where m1nd-set CEO & Owner Dr. Peter Mohn was among the speakers and moderators.

The m1nd-set research reveals that the younger generations from the Latin America and Caribbean region are the highest spenders in travel retail. Gen Zs spend the most with an average of US$135, despite below average footfall and conversion among this young shopper segment. Millennials follow in second place with US$129 spend across all categories in travel retail. Footfall among Millennials is in line with the global average but they have a tendency to purchase more than the global average in Latin America and the Caribbean.

According to the research, business travelers are also among the higher spending shopper segments, also at US$129. While they tend to have above average footfall, conversion among business travelers is below average. The research also highlights spend by nationality, revealing minor differences across the nationalities. The highest spenders are the Columbians at US$126, with Brazil in second place at US$119. Travelers from the US spend US$120 when shopping in Latin America and the Caribbean, Mexicans US$110 and shoppers from Canada, US$101. In terms of footfall and conversion by nationality, the research reveals that Mexicans and Columbians tend to visit the shops less but purchase more frequently than average, while travelers from Brazil, the US and Canada, visit the shops more than the average but show a below-average conversion.

The top three categories purchased by shoppers from the region according to the research are Chocolate & Confectionery, Alcohol and Perfumes, and in quite different proportions to the global average. More than one third (35%) of shoppers from the region purchased Confectionery, six points higher than the global average, while 27% purchased Alcohol compared to 24% globally.

The third most popular category, Perfumes is purchased by 22% of Latin American and Caribbean shoppers, which is 6% below the global average, according to m1nd-set.

m1nd-set also considers demographic differences in the LATAM region

Understanding what motivates travelers to purchase in duty free is one of the most sought-after criteria by clients, the agency said. The Latin America & Caribbean traveler research reveals that killing time, convenience, lower prices, variety of choice and product authenticity are the main reasons why the duty free shopping experience appeals to Latin American and Caribbean shoppers. When grouping together the key purchase drivers, the in-store experience scores higher than ‘value’ with 50% of shoppers from the region citing ‘experience’, seven points higher than ‘value’, at 43%. Suitability is the third main net purchase driver cited by 38% of Latin American and Caribbean shoppers.

Taking each purchase driver individually, good value for money is the top purchase driver (25%), followed by convenience (23%), brand loyalty (19%), sufficient dwell time (17%) and the suitability of the shopping experience for self-indulgence (15%).

Another important shopping criteria, which subscribers to m1nd-set’s Business 1ntellligence Service (B1S) shopper behavior database tend to look for, is the influencing factors that impact the purchase decision. Among Latin American and Caribbean shoppers these range from the unique nature of the products and promotions, to touch points including the staff. Promotions and exclusives as well as new and unique products are also important influencers. Just over half (52%) of shoppers from the region say they purchased a product on promotion, 56% of shoppers said they purchased a duty free exclusive, and 61% of shoppers said they purchased a product they had never purchased before.

One of the main touchpoints and influencers for shoppers in travel retail is the in-store sales staff, who are invariably highly influential, irrespective of the passenger’s region or nationality, according to m1nd-set. The research agency reports that the tendency to interact with sales staff is higher than the global average for shoppers from Latin America and the Caribbean (54% vs 48%). However, the impact of the interaction is less effective among regional shoppers. Just less than two thirds of Latin American and Caribbean shoppers reported a positive impact from the interaction, which is somewhat lower than the global average of 71%. This shows a concrete potential area of improvement to increase the shopping basket.

The research also focuses on how air traffic performance across the region and highlights the fact that in 2024 international departures will surpass the pre-pandemic level of 2019 for the second consecutive year, reaching 128 million passenger trips. That is 8% higher than the 2019 level, five points higher than the global average of 103% vs 2019 and ahead of all other world regions except for the Middle East & Africa, according to m1nd-set. The research also provides detailed performance and forecasts by country, city, airport and nationality of travelers.

Commenting on how stakeholders can improve performance with shoppers from the Latin America and Caribbean region, Peter Mohn, m1nd-set owner and CEO, said, “We see that shoppers from the region consider the travel retail offer as poor value. Higher prices and, to a certain extent, uninspiring products and sales are the top barriers to purchase, which are leading shoppers to purchase in other retail channels.”

“This is also evident from the fact that price comparison is higher among non-buyers than buyers,” he added. “We see a below average purchase rate and limited exposure to touchpoints by travelers from the region before arriving at the airport; the intention to shop is therefore limited.

“We recommend that stakeholders invest in more targeted and more effective digital campaigns to ensure higher exposure to pre-trip influencing factors. This will not only positively impact footfall but also lead to greater purchase intention and ultimately higher conversion rates” Mohn concluded.

REGION Americas
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