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World in flux: Travel retail amid today’s geopolitical realities In yesterday morning’s workshop – ‘World in flux: Travel retail amid today’s geopolitical realities’ – Kearney Partner and Chairman Emeritus Alex Liu and Senior Partner Victor Dijon shared exclusive findings from a bespoke report commissioned by TFWA. They were then joined in a panel discussion by Leon Falic, founding member, Falic Group, and moderator Michele Miranda, Conference Director, TFWA. Deep shifts in consumer behaviour, geopolitical disruption, and the economics of travel retail A s geopolitical tension and economic fragmentation reshape the global order, duty free and travel retail find itself at a crossroads. The industry is contending with rising uncertainty across markets, shifting regulatory environments, and mounting operational pressures that challenge long-standing business models. In yesterday’s workshop – ‘World in flux: Travel retail amid today’s geopolitical realities’ – Kearney Partner and Chairman Emeritus Alex Liu and Senior Partner Victor Dijon shared exclusive findings from a bespoke report commissioned by TFWA. “One of the central messages of this new Kearney study is that volatility is no longer an occasional shock but the new operating reality for travel retail,” said Liu. “Passenger traffic has surpassed pre-pandemic levels, yet spend per traveller remains structurally lower – about 17% below 2019. This is something. And this disconnect is not temporary; it reflects deep shifts in consumer behaviour, geopolitical disruption, and the economics of travel retail.” As a consequence, ‘waiting out’ volatility is no longer an option. Instead, success will belong to those who operate through uncertainty by building agility, leveraging live traveller data, and reshaping the value proposition around clarity, trust, and relevance.” Volatility is now structural, indeed. In 2024, global passenger numbers hit a record 9.5 billion – 3% above 2019 – but travel retail sales reached only $74.1 billion, still 13% below pre-pandemic levels. “This reflects two profound shifts: first, shopping frequency has fallen by four percentage points year-on-year; second, the long- held ‘cheaper than downtown’ proposition no longer closes the sale – almost 40% of passengers doubt the savings are real,” Dijon explained. “Companies cannot continue to rely on traffic volume alone if they want to return to sustainable growth. All operators must adapt to a world where relevance and trust determine conversion.” In a nutshell, this new report identifies three critical themes. “First, the traffic versus spend disconnect,” Liu shared. “Even if the situation differs depending on the region, many shoppers are flying but spending less, with frequency declining year-on-year. Second, polarised demand. Growth is concentrated at the low and high ends – entry-level value products and premium/luxury – while the mid-tier thins. Gen Z buys with intent and identity; older travellers trade down. And last but not least, the structural forces at play. Geopolitics, geo-economics, social polarisation, technology disruption, and climate stress are reshaping the entire ecosystem. Nearly a quarter of global travel retail sales sit on high-conflict corridors. That is the new chessboard.” Dijon similarly identified three headline insights. “First, regional divergence: Asia Pacific, still the largest market at $31 billion, shrank by 2% in 2024 despite record traffic, largely due to less Chinese spending and policy headwinds,” he said. “In contrast, India grew 21% year-on-year, Europe rose 9.2%, and the Middle East about 8%. The Americas returned to pre-Covid levels, but growth remains capped by fragmented retail and low conversion. Second, category polarisation. Tobacco (+13%) and confectionery (+8%) outperformed, while fragrance and cosmetics fell 2%, dragged down by cosmetics difficulties. Fragrance itself and premium spirits remain bright spots, but the mid-tier is hollowing out across categories. And finally, the consumer confidence gap. Indian and Saudi travellers express the highest confidence in duty free value (95% and 78% respectively), while fewer than half of UK or German travellers believe duty free is cheaper than domestic retail. Once again: this trust differential plays a huge role in diverging conversion rates.” The report provides a forward-looking perspective on the forces currently reshaping the travel retail ecosystem. It introduces a ‘new playbook’ built on four capabilities: traveller-flow sensing, value Victor Dijon, Senior Partner, Kearney; Alex Liu, Chairman Emeritus and Partner, Kearney; Leon Falic, founding member, Falic Group; and Michele Miranda, Conference Director, TFWA. Wednesday 1 October 2025 4 T F W A D A I L Y