Travellers returning to the airport for the first time since the pandemic will find a different retail landscape awaiting them past the security gate.

The duty-free shops selling expensive liquor and cosmetics are still there, but they’re refreshing their assortment to cater to Gen-Z and touting new websites and shopping apps. Concept stores pitching lifestyle and contemporary fashion brands are popping up alongside mainstays like Dior and Prada. There are also more things to do beyond shopping, from workout classes to movie screenings.

The changes reflect a big shift in who is flying and why. Air travel remains sharply below pre-pandemic levels; 19.4 million passengers passed through London’s Heathrow Airport in 2021, down 76 percent from 2019. Global travel retail sales totalled €19.7 billion ($21.9 billion) in 2019; last year, they were €5.7 billion ($6.3 billion).

Among the cohorts still missing are business travellers and Chinese tourists, historically two of the biggest spenders at airport shops. Instead, terminals are seeing more young tourists, especially those making short trips, a group that will make up a majority of passengers by 2025, according to Bain.

The trouble is, these travellers aren’t big shoppers, preferring to splurge on food, drinks and entertainment before boarding their flight. On average, a long-haul Chinese passenger spends over $100 on luxury goods, compared to a short or medium-haul European passenger, who spends just $1, according to Mauro Anastasi, a retail and aviation partner at Bain & Company.

Convincing these travellers to open their wallets is a key question facing the world’s biggest luxury fashion and beauty groups. Brands like Hermès, Cartier and Louis Vuitton are fixtures within international terminals. In the year ending in June 2021, Estée Lauder generated 29 percent of its sales through travel retail, which also includes duty-free shops in tourist hotspots like Hainan.

In December, LVMH, which operates hundreds of duty-free stores in addition to its own brands’ airport boutiques, said travel retail’s recovery from the pandemic had been slow. L’Oréal said in June its travel retail business was still “badly affected.”

With Chinese tourists still restricted from international trips, many luxury brands have redirected investment to domestic travellers. Hainan Island’s duty-free shops are targeting $15.8 billion in sales this year, up from $9.5 billion in 2021, according to Travel Retail Business.

As international passenger numbers begin to increase, so will sales, retailers say.

“Where traffic increases, travel retail responds very, very fast,” Estée Lauder chief executive Fabrizio Freda told analysts in February.

Rethinking the Experience

Before the pandemic, airports resisted many of the changes that were happening across retail — after all, they had a captive audience.

While retailers around the world were investing in experiences, refreshed inventory and e-commerce, airport stores stuck with what worked: expensive liquor, high-end cosmetics, handbags and fragrances. Bain estimates airport retailers’ online revenue is in the low single digits of total sales.

That changed during the pandemic when duty-free operators could no longer rely on a steady flow of bored travellers to pass through their stores. Travellers can reserve an Aspinal of London bag before heading to Heathrow, or an Armani fragrance while playing the slots in Las Vegas, then pick it up at the Dufry shop on their way to their gate. LVMH’s DFS Group allows customers to reserve items up to a month before they’re scheduled to fly out of New York’s JFK Airport and other destinations.

“One of the big advantages travel retail has is providing a physical experience … as well as a level of instant fulfilment,” said Fraser Brown, Heathrow’s retail director.

Airport retailers are also reconsidering what they sell, and how they sell it.

Zurich Airport, whose duty-free retailers include traditional luxury goods brands like Hermès, Bulgari and Rolex, has partnered with Highsnobiety to open a concept store inside the airport. The store includes products from brands like JW Anderson, Acne Studios and On Running, and features an exhibition space that hosts a new brand every two months.

“Airports offer such a traditional and sometimes old fashioned retail experience,” said Simon Weisskopf, Highsnobiety’s global director of business development. “Our store … caters to the ways in which younger consumers engage with new luxury.”

At Heathrow, a pop-up Chanel store invited shoppers to try a range of the brand’s beauty products using augmented reality on digital screens.

Airports are also introducing experiences beyond shopping to cater for younger consumers. After passing through security at Baltimore-Washington Airport, travellers can make time for a pre-flight workout at Roam Fitness, borrowing Lululemon gym gear and running shoes and using showers stocked with Malin+Goetz products. In 2019, San Francisco International Airport was one of the first to provide yoga studios for passengers — now a common fixture in many airports worldwide.

“Airports now must have a completely different mix of products and experiences [compared to what they had before the pandemic],” said Anastasi.