BATTLEGROUND #1: Winning in key markets
Differentiation is a critical factor for success in a competitive industry like wine & spirits. We are leveraging our strengths – a portfolio of premium brands, worldwide distribution reach and a decentralised consumer-centric organisation focused on local needs and global trends – to accelerate growth in emerging consumer segments and key geographies. In the primary distribution channel for our Prestige brands, Global Travel Retail, deep-dive market research resulted in unprecedented insight into the buying behaviour of duty-free shoppers, driving an ambitious new traveller-centric business strategy to reach this vast and growing market.
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Global Travel Retail, a deep dive to understand our shoppers
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With an audience of 3.6 billion international travellers1 and growing, travel retail is often considered the ‘sixth continent’. It is the primary distribution channel for our prestige brands and also provides an amazing retail theatre to build brand affinity. Given the visibility and the high potential of this distribution channel, understanding our shoppers in this significant market is vital. Launched two years ago, the Global Travel Retail (GTR) organisation was created to engage specifically with the transient market of international travellers, who annually spend $12 billion on wines and spirits 2(of which Pernod Ricard’s market share is 25%3). With a central team based in London and regional business units in Asia, the Americas, Europe and the Gulf, today it is one of the Group’s top performing profit contributors – delivering a revenue growth of +6 % over FY19.
(1) Source: Airports Council International. (2) Source: Generation Research. (3) IWSR 2018.
“While we already knew which nationalities were very important to us, now we know what drives the decisions of different shopper typologies and where they make their purchase”
Connecting with a hugely diverse range of shoppers first requires knowing who they are, why they buy and what their shopping dynamics are. To explore this, over the last two years GTR has conducted a series of detailed shopper-insight studies. As more than half of duty-free shoppers purchase outside their own country, nationality is the key to gaining insight into buying behaviour in this market. Eight markets are particularly strategic for the Group: China, SAR Taiwan, South Korea, Russia, India, the UK, the US and Brazil. Extensive fieldwork, including personal interviews and home visits, was conducted to analyse these shoppers.
International travellers in the travel retail market
Pernod Ricard's share in the Global Travel Retail's market
Amount spent annually on wines and spirits by duty free shoppers
GLOBAL TRAVEL RETAIL (GTR)
One of the key insights from the research was profiling seven distinct ‘typologies’ of duty-free spirit shoppers. For the Pernod Ricard portfolio, four of these are most significant:
- Discerning value explorers: Highly knowledgeable, prestige buyers who attach importance to authenticity and quality. They love to explore new spirits and are looking for the value duty-free products can offer.
- Quality seekers: Prestige buyers who are less price sensitive. They are hungry for information and seek out staff recommendations for high-quality purchases.
- Pragmatic deciders: Rational shoppers with a particular occasion or shopping mission in mind. They shop across multiple categories and are open to sales advice.
- Bargain catchers: For these shoppers, price is key. They are looking for good deals or excellent value for money.
When, where, why, how?
Beyond types of shoppers, the research drilled down to discover their different motivations and purchase objectives, finding that approximately 50% were for gifts or souvenirs. The data also revealed how, when and where shoppers make their decisions: around one-third decide what they will purchase before they leave home, one-third at the airport, and one-third in the store.
“Our discovery that many travellers plan ahead to make duty-free purchases made us realise that we shouldn’t wait until the trip itself to get our brands onto their radar,” says Emma Donnellan. This triggered a further study on shoppers’ digital behaviour to find out what platforms they use for each stage of the trip, from the time they start planning to their return home. The findings informed a comprehensive new traveller-centric digital strategy that delivers tailored content at specific micro-moments when these travellers are most receptive to brand messages. “Offline and online, we need to be present in the right place at the right time with the right message for the right typology.”
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It’s not just about the data…
This deep dive into travellers across the globe is already shaping our business strategy. Online, we are shifting digital spend to influence decisions pre-trip, as well as finding new ways to engage millennials. In store, as sales personnel were revealed to be hugely influential (about 1 in 2 shoppers interact with store staff ), we are increasing our brand ambassador presence at priority airports and training them with knowledge based on our discoveries. In travel retail, people are more likely to trade up (e.g. choosing Ballantine’s 21 instead of Ballantine’s17) and to explore different parts of the range, which can be encouraged through conversations depending on shopper typology. In certain markets, gifting is very important, so we are offering year-round gifting solutions such as unique gift bags or wraps for high-value products, as well as launching limited-edition travel retail exclusive spirits.
Unprecedented in their level of detail and focus, these strategic insights put us a step ahead in understanding our duty-free shoppers and allow us to tailor our products and services to meet their specific needs.
DISCOVER OUR NEW BRAND VENTURES' STORY IN OUR INTEGRATED ANNUAL REPORT FY19 (P. 60)READ MORE
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