m1nd-set sheds light on downtown duty free trends and opportunities
Research published by leading travel retail research agency m1nd-set explores the unique shopper behavior trends specific to downtown duty free. The research provides a global overview of the various opportunities and challenges, comparing the downtown duty free trends with the shopper behavior in international duty free shops at airports, inflight and on cruise ships.
Among the key findings of the research is the difference in the importance of price and value to shoppers at downtown versus international duty free shops. Value is the primary factor influencing purchases in downtown duty free stores, having a notably greater impact on downtown duty free shoppers compared to international duty free shoppers (61% vs. 49%). According to the research, this is largely because downtown duty free shoppers place more emphasis on value for money (28% vs. 24%) and greater importance on the perceived stronger price advantage when buying in downtown duty free stores (27% vs. 16%).
Lower prices and promotions are also more significant purchase drivers in downtown duty free stores. According to m1nd-set, 31% of downtown shoppers cited lower prices as an attractive feature, compared to 26% in international duty free stores. Similarly, 31% of downtown shoppers highlighted available promotions, compared to just 17% of international duty free shoppers. Consequently, downtown shoppers are more likely to compare prices across different retail channels, with 69% comparing prices with other duty free stores, downtown shops, or online, compared to 65% of international duty free shoppers.
The research also reveals notable differences in the appeal of the shopping environment for purchasing souvenirs. Thirty-two percent of shoppers found the downtown duty free environment attractive for buying souvenirs, twice the percentage reported for international duty free stores. This preference is further reflected in the purchase motivations, with 20% of downtown duty free shoppers considering the channel suitable for trip memorabilia, compared to just 13% of international duty free shoppers. According to m1nd-set, the downtown duty free environment also provides more attractive packaging (16% vs, 10%), and a more appropriate product range for gifting in general (15% vs. 10%).
Data shows that convenience, product variety, service quality, and atmosphere are additional areas where the downtown duty free shopping environment outperforms international duty free shops in terms of overall appeal. However, paradoxically, when it comes to what drove the decision to purchase, the convenience of the international shopping environment scores better than downtown (20% vs. 15%).
One area where downtown and international duty free shopping behavior aligns is regarding the importance of in-store communication touchpoints in engaging shoppers and influencing purchase decisions. Over 70% of downtown duty free shoppers are either undecided or make impulse purchases, with most finalizing their decisions in-store, making in-store elements crucial. However, downtown shoppers place even greater importance on the in-store experience than international duty free shoppers. The in-store experience ranks as the second most significant purchase driver, with a notable difference in impact: 53% for downtown shoppers compared to 48% for international duty free shoppers. m1nd-set says this underscores the need for an engaging and compelling in-store atmosphere to capture undecided shoppers and boost sales across all duty free environments.
Peter Mohn, CEO & Owner at m1nd-set underlined the importance of providing engaging in-store experiences across all touch-points, the sales staff in particular, “Downtown duty free shops have a huge opportunity to convert browsers into shoppers, as a far higher percentage - 84% - of customers in downtown duty free stores engage with the sales personnel, which is significantly more than in international duty free environments, where less than six out of ten shoppers engage with the staff.
"However, the overall influence of sales staff on purchase decisions is lower in downtown stores compared to international duty free shops (70% vs. 76%). So, while interaction with staff is frequent, their impact on final purchase decisions is somewhat less effective in downtown duty free stores. This highlights clear missed opportunities for sales in downtown stores. We strongly recommend that industry stakeholders assess sales staff performance and address these differences through enhanced staff training,” he said.
Mohn concluded, “Downtown duty free shops prioritize a more upscale, personalized shopping experience with amenities like VIP lounges and concierge services, which are less common in airport duty free stores. While international duty free environments are investing more and improving their experiential retail activations, space and time limitations in the international duty free environment make the downtown experience more engaging, diverse, and appealing to both international travelers and local consumers."