Gucci's Hottest Sales Location: The Airport
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whalen at The Wall Street Journal in New York.
How big is airport retail sales and why is it surprising?
It's not news that retailers have been closing their brick-and-mortar and mall stores as of late, but what is news is the source of strength they're seeing in airports, to the tune of $76 billion. We'll go inside the numbers in a moment.
What short news highlights set up the airport shopping story (Bitcoin, Facebook coin, student debt)?
First, these money and market stories you should know. Back in January, many were lamenting Bitcoin's fall from grace, a single Bitcoin sitting at about $3,200, off 80% from its all-time high. Well, now Bitcoin is going for about $9,200. That's its highest level since March of 2018. So what's behind the big gain? The journal Stephen Rusolillo reports the ongoing trade fight between the U.S. and China has a lot to do with it, because Bitcoin is an autonomous network which isn't controlled by any individual company or government. Another factor is Facebook's plan for a digital coin.
How much time do travelers typically have in terminals and how does that drive shopping?
The social media company has signed up more than a dozen companies, including Visa, MasterCard, and PayPal, to back its new cryptocurrency. And the Financial Literacy and Education Commission, that's a group that includes the Treasury Department and the Department of Education, says that with Americans treading through $1.5 trillion in student loan debt, now would be a good time for colleges to provide mandatory financial literacy courses. The commission also suggests that financial aid offers include letters that clearly tell student borrowers the debts they've incurred annually and what their expected future repayment amount will look like. The commission says the letters should also detail repayment options, estimate how much interest will amass if payments are deferred, and provide average entry-level salaries for graduates with a similar academic major.
Airport terminals are an obvious venue for what looks like a series of track meets of passengers racing to catch their flights. But for luxury retailers, there are enough passengers with time to kill who buy goods that terminals are major revenue sources for those retailers. Wall Street Journal reporter Sharon Turlep is here with some details. So, Sharon, the average person has a little more than an hour of time to kill in terminals when they fly.
Why are international and Asian travelers boosting luxury airport sales?
There really isn't a lot more to do than eat and shop.
Exactly. And when we talk about really high-end shopping, we're talking mostly about international terminals. So while the average is an hour when you are talking about international travelers, even more time.
And so for the luxury brands, the amount of waiting time that passengers have to linger in stores, the amount of time they have, that seems to be the key to sales here.
Yeah.
Yeah. And I would say that's what started this. And that's what kind of started the trend of really looking at this as an important area. And now, particularly with travelers from Asia and other developing countries where there's just a lot of money to burn, now passengers increasingly are extending their layovers, planning their trips. So they're making these almost destination points.
And it's the disposable income from the so-called BRICS countries, Brazil, India, Russia, and China. They've been a major boost to these sales.
A major boost. There's this disposable income.
Which brands and product categories are winning in airports and why (Estée Lauder, cosmetics, exclusives)?
And then there's also the fact that people with this income may not have access, may not have the access that people in developed countries have to these stores and to these items.
Right.
And the so-called travel revenue, it hit $76 billion in 2018, and it's up from 2017. Interesting thing here is that, you know, people having shopped online, they force the closing of some malls and brick-and-mortar stores. I guess they don't feel the need to hold things and see how they feel in their hands. But in an airport, you have a captive audience where all they really have time to do is to take stuff off the shelf and see how it feels and see how it looks.
Yeah.
Absolutely. And particularly when you're looking at cosmetics and fragrances, not only have department stores lost business to online buyers, but there's so many specialty stores, Sephora, they're actually losing traffic to other retailers as well.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
How big is airport retail sales and why is it surprising?
0:09–0:23
3
What short news highlights set up the airport shopping story (Bitcoin, Facebook coin, student debt)?
0:23–1:00
4
How much time do travelers typically have in terminals and how does that drive shopping?
1:00–2:24
5
Why are international and Asian travelers boosting luxury airport sales?
2:24–3:21
6
Which brands and product categories are winning in airports and why (Estée Lauder, cosmetics, exclusives)?
3:21–4:29
7
How are airports changing retail strategy with exclusive products and duty-free offerings?
4:29–5:39
Speakers
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