INTERNATIONAL. A focus on single-use plastics, reducing packaging volumes, reducing waste, ethical sourcing and biodegradable packaging are the top five sustainability priorities for travelling consumers. That is according to a Sustainability in Travel Retail Study published by Tax Free World Association (TFWA) today. Details were revealed during a webinar on the theme this morning.

TFWA President Alain Maingreaud commented: “Many in our industry believe that addressing travellers’ concerns over sustainability will only become more important after we emerge from the current crisis. It will be vital for our industry to understand how these concerns can shape purchasing behaviour, and how we can respond to these sensibilities in a dramatically changed world.”

Pi Insight Managing Director Stephen Hillam, who created the report, presented the key findings during the webinar, moderated by TFWA Managing Director John Rimmer.

The event addressed travel retail-specific issues on environmental and ethical sustainability for both consumers and stakeholders.

The webinar focused on four key areas driving sustainable development in travel retail: importance and influence, priority areas, overcoming obstacles and optimising communications

The Sustainability in Travel Retail Study 2020 is a mixed methodology research project comprised of quantitative consumer surveys and qualitative stakeholder interviews. A total sample of 2,456 consumer surveys were collected from 11 nationalities: American, Australian, Brazilian, British, Chinese, French, German, Indian, Japanese, South Korean and Swedish.

Sustainable priorities for travel retail

The webinar analysed how sustainability impacts shopper behaviour and determined which areas of sustainable development are highest in priority for travelling consumers.

Pi Insight noted that 46% of travel retail consumers consider sustainability to be of high importance, although importance levels fluctuated between various nationality groups. The 12 major priority areas for sustainable development in travel retail are:

  • Reducing single-use plastics
  • Reducing overall packaging volumes
  • Reducing waste and increasing recycling
  • Ethical raw material and product sourcing
  • More biodegradable packs and items
  • Increase in renewable energy
  • Ensuring workers’ rights through supply chain
  • Clearly communicated sustainability goals
  • Water conservation
  • Partnerships with sustainability organisations
  • Carbon offsetting and reducing emissions
  • Community development programmes

While consumers have widely different perceptions about sustainability, Pi Insight highlighted 12 key sustainability areas for travel retail stakeholders

The top five sustainability priorities are relevant for majority of the nationalities surveyed

The same priorities are reflected across different categories in travel retail, although the order of importance changes depending on the product type. For example, the report shows that single-use plastics become less relevant in the alcohol and tobacco categories and are more important for luxury and beauty categories.

Varying stakeholder approaches to sustainable development

The study also showed that although general sustainability priorities are often similar, different travel retail stakeholders approach the issue in different ways.

Landlords often have centralised strategies, while brands’ sustainability agendas are usually determined at a corporate level. Retailers often have a mixed approach based on individual and partner-based initiatives.

Landlords, retailers and brands all approach the issue of sustainability in different ways

Hillam added: “Sustainability is being approached by the majority of organisations, but many are at different stages of strategy development.” Certain players already have a structure in place, others are increasing focus, while other companies have a reactive approach to sustainable development —  creating inconsistencies within the channel’s overall progress.

Travel retail stakeholders are also at different stages of sustainable development

Identifying the major obstacles to sustainable development

The second half of the webinar evaluated the six major barriers preventing sustainable development in travel retail. These include consumer, commercial, regulatory, internal, implementation and market dynamic obstacles.

Consumer and Commercial Obstacles

Consumer acceptance of sustainable practices poses a key challenge, particularly when the developments are not familiar in the domestic market or when it directly affects the shopping experience. For example, many customers expect high-end packaging but also demand that the packaging to be sustainable.

Different consumer groups also have different perceptions of sustainability, which makes it difficult for travel retail stakeholders to determine which areas to focus on and how to communicate their initiatives in an effective way.

One of the major commercial obstacles regarding sustainability is the additional cost to business operations. This can be a barrier in terms of packaging innovation, where alternative materials may not be as effective as traditional ones.

Hillam notes that balancing price sensitivity and the commercial equation is key – especially when communicating the price vs sustainability trade-off to consumers.

Will consumers accept something unfamiliar will they absorb the additional costs of sustainability?

Regulation & Internal Obstacles

The domestic regulations that are applied to the travel retail channel can often negatively impact sustainable development. Regulatory inconsistencies in different countries also affect the progress of sustainability initiatives.

Some companies view sustainability as a ‘nice to have’ instead of as a core factor to their operations. Others struggle to break away from corporate sustainability strategies, especially if travel retail is considered a market alongside other channels. Mergers and acquisitions also pose a challenge, as friction can be created when merging two different sustainability cultures, goals and initiatives.

Travel retail regulations and internal company policies and priorities can also cause roadblocks in sustainable development

Implementation & Market Dynamics

Implementation of sustainable practices poses a different set of challenges, while market dynamics can also play a role in hampering development.

In terms of implementation, advances in sustainability in one area can impact product delivery, requiring a trade-off between sustainability and product protection. This is particularly true in the perfumes & cosmetics and spirits & wines categories. Reducing packaging volumes may also have a negative impact on retail effectiveness as it minimises space for customer communications. For example, categories with high luxury gifting appeal will struggle to reduce packaging and maintain product desirability.

Alternatively, other companies may have the will to deliver sustainability but not the access to the technology or logistical capacities to do so.

Macro-factors that affecting the market dynamics include varying focal points for different organisations, conflicting consumer demands, different agendas, and the belief that no organisation is big enough to make a real difference.

Overcoming obstacles through effective collaboration and communication

What can we do as an industry to overcome these challenges? Hillam notes that clear communication and effective collaboration between the Trinity stakeholders is key.

He stressed that increasing awareness plays a key role in meeting customer demands. 46% of participants in the consumer survey consider sustainability to have high importance, 36% will have their shopping behaviour significantly affected by the product’s sustainability, while 50% will be less likely to buy an item if they are unsure of its sustainability credentials.

According to Hillam, analogue methods — which include on-pack and on-shelf communication — still lead as consumers’ preferred means of sustainable communication. He said, “Analogue communication methods are currently considered the leading platform, although there is a rise in digital.”

On-product and on-shelf communication is still preferred by travelling consumers, although digital communication is showing an upward trend

On-product and on-shelf communication is still preferred by customers, although digital communication is showing an upward trend

Hillam also noted the importance of clear collaboration across all travel retail stakeholders to drive true and lasting sustainable development in the channel.

He said, “From an airport perspective, partnership is very important. If an airport wishes to reduce a particular type of material, they need to rely with other stakeholders. Retailers can look at sustainable partnerships with eco-conscious organisations, while brands can explore working with retailers with specific sustainable strategies in place. Almost everyone is getting to the point wherein they are doing everything they can individually, but the need for collaboration is crucial to drive further progress.”

“Collaboration is key to overcoming market dynamics and to move forward as one,” Hillam added. “We need to overcome implementation obstacles by sharing ideas, collaborate to understand different regulations and work together to develop solutions that can overcome the commercial factors as well.”

Hillam says that collaboration between all stakeholders is key to progressing sustainable goals in travel retail

TFWA said that upcoming webinars under its #TRThoughtLeaders banner will tackle other issues that are affecting travel retail during the COVID-19 crisis. More details will be announced soon.