Even before the temporary closure of retail stories due to COVID pandemic, brick-and-mortar stores had, for the most part, already experienced a decline in profits. However, there are always exceptions to the norm; and duty-free outlets and other airport stores continued to boast what can only be called a rare success story.
Airport retail has had the luxury of an idle audience who typically have time to kill on their hands and are thus susceptible to buying a souvenir or luxury product on a whim or as a last-minute present.
But the sharp decline in air travel last year brought everything to a halt. Airports around the world have reported that annual revenues shrank by more than half in 2020. According to estimates from the Airport Restaurant & Retail Association, U.S. airport shops and restaurants stand to lose $3.4 billion from July 2020 to the end of 2021. That’s equivalent to more than three years of profits.
The league table by Best Global Brands shows that the pandemic has proved divisive not just for the community, but also for business and brands. While digital businesses are not new by any means, the COVID-19 outbreak led to a sudden surge in digital transformation trends—from cloud-based tech and streaming to online retail and communication.
Statistics from Moodie Davitt Report, a travel retail-intelligence service provider stated that Dubai International Airport retailer Dubai Duty Free, one of the world’s top duty-free operators, posted a 65% drop in 2020 revenue.
With no shopper base ‘killing time’ in airport lounges or buying souvenirs for their loved ones, the sales slump is only natural. In recent months, however, retailers and restaurants that were resilient enough to survive the sudden downturn are starting to see signs of a slow recovery.
It is a known truism in economics that a decline in disposable income hits the luxury sector the hardest. However, business is still business and the true entrepreneurs always find a way to remain competitive–especially when confronted with a crisis. Analysts believe that China’s luxury market is on course to become the world’s largest in the next few years.
The Jakarta Post reported that China’s love for luxury is spilling over into the once shunned secondhand goods sector, with online stores surfing a wave of pent-up demand from shoppers, led by millennials, who have been forced into belt-tightening by the coronavirus pandemic.
The shift in the perception of second-hand goods is driven by environmentally conscious consumers looking for affordable high-end goods. While the actual size of the Chinese secondhand luxury goods market is still small at 5%, some online platforms, namely Plum, Ponhu and Feiyu are betting on strong growth over coming years.
While the fashion industry is forecasted to take its biggest financial hit in decades due to the pandemic, the resale industry is thriving. Through resale platforms such as Vestiaire Collective and Rebelle, consumers are selling their unwanted items directly to other consumers online. Vestiaire Collective grew by more than 100% in the past year with 140,000 new items uploaded onto the platform every day. Historically, exorbitant price tags meant that buying a luxury handbag was a distant dream for most consumers. The resale sector has brought it within reach–due to a decline in disposable income since the start of the coronavirus crisis.
The fashion industry is known to feed and pander to a culture of wasteful overconsumption. But as the old adage goes, one person’s trash is another person’s treasure. You would simply never know it is a second-hand item just by looking at it.