Nestlé International Travel Retail (NITR) has announced an ambitious plan for driving sales of confectionery and the wider food category…
Nestlé International Travel Retail (NITR) has announced an ambitious plan for driving sales of confectionery and the wider food category in global travel retail through a newly developed VERSE (Value, Engagement, Regeneration, Sense of Place and Execution) model.
Through active collaboration with its retail partners, the company is set to reignite growth and delight passengers.
“There can be no doubt our industry is going through the most challenging period in its history,” says Stewart Dryburgh, general manager, NITR. “The good news is that the recovery is in progress; it may be slower than we want and geographically patchy, but the first green shoots are visible.
“We believe there are significant opportunities to accelerate that return to growth. Retail has never been more critical to airports and, according to a recent Bain/Castlepole study, is destined to become more than 50% of major airport revenues in the near future.”
Dryburgh points to changing consumer needs against which food is superbly positioned to deliver, including product assortments that are unique, sustainable or deliver a true sense of place. “Products which critically offer accessible price points to drive footfall back into stores,” he says. He also points to passengers from fast growing emerging markets who will have differing needs and purchase occasions that create revenue opportunities for the food category.
Dryburgh highlights the healthy growth of food in general in domestic markets, while it has stalled in travel retail. He also shone the spotlight on the disparity between domestic and travel retail when it comes to confectionery.
“In domestic markets confectionery represents 7% of packaged food, whilst in travel retail it represents 77%. This not to say we’re over focused on confectionery, but that we have a major opportunity to exploit the growth potential of other segments in food,” he comments.
“To be 100% clear, confectionery was, is and will continue to be the beating heart of the food category, but greater value creation can be achieved by taking other strongly growing segments within domestic markets and translating them into growth opportunities in travel retail.”
As the number one driver of cross category purchase and the second most purchased category (m1nd-set Cross Category Research December 2021), Dryburgh believes food can play a leading role in both recruiting a new generation of shoppers and converting browsers to buyers.
“Our ambition is clear,” he says, “to take food from the second place to the most purchased category in travel retail – a food item in half of all baskets by 2030.”
To achieve this ambition the VERSE model has been developed to provide a pathway to shopper recruitment and meet this category growth ambition.
Value: Price is what consumers pay, but value is more than price; it is the bundle of benefits that the consumer receives, encompassing not only great brands but also exclusive products, service, experiences and more. Value needs to be created for all stakeholders moving forwards.
Engagement is critical to recruiting shoppers. Dryburgh stresses the need to adopt an end-to-end approach – creating a truly omnichannel experience.
Regeneration is a new concept which Nestlé launched this September. “We all understand the importance of sustainability, but at its core regeneration is about going beyond sustainability and helping to protect, renew and restore,” continues Dryburgh.
Sense of Place will continue to be key to converting passengers to shoppers in travel retail.
Execution is what consumers see in-store and where initiatives become tangible. Flawless execution will be crucial to unlocking the growth opportunities that are available.
“We must build on the dynamic core which is confectionery, strategically adding sub-sectors such as coffee and infant nutrition with the leading global brands to the fore,” Dryburgh adds. “Additionally, by tactically exploiting the significant power of local food products we can add another layer of growth. There is so much opportunity out there, we just need to work together to harness the undoubted potential!”
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