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Travel Retail - UK - June 2017

“The ongoing investment into some of the UK’s largest travel hubs is changing the face of travel retail and presenting retailers with new opportunities to enter the market. Whilst food remains the primary reason to shop in a travel hub, the ongoing development of the sector will only help to convince consumers that travel hubs can be retail destinations in their own right which could in turn encourage more purchases in other categories. However, a significant challenge remains in pricing as this continues to be a major factor in why people avoid shopping in travel hubs.”
– Samantha Dover, Retail Analyst

This report examines the following:

  • Airport terminals – Restoring trust in duty-free
  • MSAs – Consumers want value for money
  • Railway stations – A need to better capture travellers

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • UK consumers facing difficult times ahead
              • Figure 1: Real wages growth – Wages growth vs inflation, April 2014-March 2017
            • Number of people travelling continues to rise
              • Figure 2: Holiday review: estimated and forecast overseas and domestic holiday market volumes, 2011-21
            • Rise in vehicles boosts the number of trips taken by car
              • Figure 3: Average number of trips taken per person per year, by car/van and surface rail, England, 1995-2015
            • Ongoing growth in airport passenger numbers
              • Figure 4: Total passenger numbers at reporting UK airports, 2012-16
            • The consumer
              • More people visiting travel hubs
                • Figure 5: Travel hub visitation, 2016 and 2017
              • Train stations most frequently visited
                • Figure 6: Frequency of travel hub visitation, April 2017
              • Retail purchasing highest in airports
                • Figure 7: Percentage of consumers shopping in travel hubs, April 2017
              • Food for the journey primary reason to shop
                • Figure 8: Reasons for buying in travel hubs, April 2017
              • Consumers tend to shop out of necessity
                • Figure 9: Reasons for not buying in travel hubs, April 2017
              • Chain stores could be key to capture more shoppers
                • Figure 10: Factors that would encourage consumers to shop in a travel hub, April 2017
              • Travel hub operators must prioritise cleanliness
                • Figure 11: Attitudes towards shopping in travel hubs, April 2017
              • What we think
              • Issues and Insights

                • Airport terminals – Restoring trust in duty-free
                  • The facts
                    • The implications
                      • MSAs – Consumers want value for money
                        • The facts
                          • The implications
                            • Railway stations – A need to better capture travellers
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Rising inflation and the squeeze on real incomes
                                    • UK holiday market growing despite Brexit vote
                                      • Car journeys remain key in UK travel sector
                                        • Biggest railway stations benefit from high footfall
                                          • Growth in airport passengers sustained
                                          • Market Drivers

                                            • Real incomes fall below inflation
                                              • Figure 12: Real wages growth – Wages growth vs inflation, April 2014-March 2017
                                            • Disposable income – Travel remains a major priority
                                              • Figure 13: Top 10 activities people spend their extra money on, April 2017
                                            • Volume of travellers continues to rise
                                              • Figure 14: Holiday review: estimated and forecast overseas and domestic holiday market volumes, 2011-21
                                            • Spike in inbound tourism post-referendum
                                              • Figure 15: Annual percentage change in overseas residents' visits to the UK and UK residents' visits abroad, January 2016-February 2017
                                            • Average distance travelled
                                              • Figure 16: National Travel Survey: average distance travelled, England, 2011-15
                                              • Figure 17: Average distance travelled, by purpose and main mode, England, 2015
                                            • Rail usage dipped in 2015
                                              • Figure 18: Average number of trips taken per person per year, by car/van and surface rail, England, 1995-2015
                                            • More vehicles on the road
                                              • Figure 19: Number of licensed vehicles in the UK, 2014-16
                                              • Figure 20: Number of licensed vehicles in the UK, by vehicle type, 2014-16
                                            • Increasing motorway traffic
                                              • Figure 21: Average daily motor vehicle flow for major sections of the motorway network, 2013-15
                                              • Figure 22: Percentage change in average daily motor vehicle flow for major sections of the motorway network, 2013-15
                                            • Railway footfall
                                              • Figure 23: Footfall breakdown for selected Network Rail stations, 2016
                                            • Rise in airport passenger numbers
                                              • Figure 24: Total passenger numbers at reporting UK airports, 2012-16
                                              • Figure 25: Air passengers at selected leading UK airports, 2012-16
                                          • Companies and Brands – What You Need to Know

                                            • MSAs
                                              • Moto revenues return to growth
                                                • Leading MSA operators invest in foodservice
                                                  • Railway stations
                                                    • Fragmented sector with stations managed by large network of TOCs
                                                      • Network Rail retail growth remains strong
                                                        • Airport terminals
                                                          • Retail sales rising at leading airport operators
                                                            • Ongoing investment in departure lounges
                                                            • Launch Activity and Innovation

                                                              • Train stations look to artisanal markets to boost food offer
                                                                • Figure 26: King’s Cross Real Food Market, 2017
                                                              • Marionnaud’s beauty on board promotes new travel range
                                                                • Social shopping at Heathrow Airport
                                                                  • Figure 27: Heathrow’s Connected Mirror, 2017
                                                                • Clothing rental services to move into airports
                                                                  • Old Street Station continues to experiment with pop-up stores
                                                                    • Figure 28: HelloFresh Old Street Pop-Up Store, 2017
                                                                  • Burberry pops up at Heathrow
                                                                    • Figure 29: The Burberry Balloon at Heathrow, 2017
                                                                  • Vending machines offer freebies in return for social interactions
                                                                    • St Pancras and Waterloo set to expand retail offer
                                                                      • Tasting experiences
                                                                        • Drive-thru coffee shops
                                                                          • Pret a Manger moves into motorway service stations
                                                                            • Airports capture families with new retail stores
                                                                              • Figure 30: Harry Potter Store at Heathrow, 2017
                                                                            • Gatwick using beacons to improve passenger journey through airport
                                                                            • Travel Point Operators – MSAs

                                                                              • Concentrated motorway service network
                                                                                • Figure 31: Summary of the leading UK MSA operators, 2017
                                                                              • Financial performance of leading MSA operators
                                                                                • Figure 32: Revenues of the leading MSA operators, 2012-16
                                                                                • Figure 33: Operating profits of the leading MSA operators, 2012-16
                                                                              • Moto Group – Food steals greater share of non-fuel
                                                                                • Figure 34: Moto: breakdown of non-fuel revenues, 2016
                                                                              • Welcome Break – Moving towards a fully branded operation
                                                                                • Westmorland – Strong revenue growth sustained
                                                                                • Travel Point Operators – Railway Stations

                                                                                  • Leading train operating companies
                                                                                    • Figure 35: Stations operated by train operating companies in the UK, 2015/16
                                                                                  • Network Rail income flat in 2016
                                                                                    • Figure 36: Network Rail financial performance, 2012-16
                                                                                  • Retail sales growth remains strong at Network Rail
                                                                                    • Figure 37: Like-for-like retail sales performance at Network Rail-managed stations vs British Retail Consortium high street figures, 2012/13-2015/16
                                                                                • Travel Point Operators – Airport Terminals

                                                                                  • The UK’s top five airports account for 65% of passengers
                                                                                    • Figure 38: The UK’s five largest airports, by passenger numbers, 2016
                                                                                  • Financial performance of leading airport operators
                                                                                      • Figure 39: Leading airport operators’ revenues, 2012-16
                                                                                      • Figure 40: Leading airport groups’ operating profits, 2012-16
                                                                                    • Breakdown of revenues
                                                                                      • Figure 41: Leading airport groups’ breakdown of revenues, 2015/16
                                                                                    • Heathrow – Ongoing investment in luxury
                                                                                      • Figure 42: Breakdown of Heathrow’s retail revenues, 2016
                                                                                    • Gatwick – Catering outperforming retail
                                                                                      • Figure 43: Breakdown of Gatwick’s retail revenues, 2015
                                                                                    • Manchester Airports Group – Redevelopment boosts revenues
                                                                                      • Edinburgh Airport – Completes retail expansion
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Railways most visited travel hubs…
                                                                                          • …but consumers least likely to shop in train stations
                                                                                            • Non-food purchasing highest in airport terminals
                                                                                              • MSAs suffer from perceptions of being over-priced
                                                                                                • Railway retailers could benefit from extended opening hours
                                                                                                  • Trust in duty-free pricing is low
                                                                                                  • Travel Hub Usage and Frequency

                                                                                                    • Rising travel hub visitation
                                                                                                      • Figure 44: Travel hub visitation, 2016 and 2017
                                                                                                    • Usage driven by 16-24s
                                                                                                      • Figure 45: Travel hub visitation, by age, April 2017
                                                                                                    • Almost half visit a train station monthly
                                                                                                      • Figure 46: Frequency of travel hub visitation, April 2017
                                                                                                  • What Consumers Buy in Travel Hubs

                                                                                                    • Airport visitors most active buyers
                                                                                                        • Figure 47: Percentage of consumers shopping in travel hubs, April 2017
                                                                                                      • Food and drink drives purchasing
                                                                                                          • Figure 48: What consumers buy in travel hubs, April 2017
                                                                                                        • Young people most likely to shop
                                                                                                            • Figure 49: Percentage of consumers shopping in travel hubs, by age, April 2017
                                                                                                          • Consumers most likely to buy multiple products in airports
                                                                                                              • Figure 50: Repertoire analysis of what consumers buy in travel hubs, April 2017
                                                                                                          • Reasons for Buying and Not Buying in Travel Hubs

                                                                                                            • Three quarters buy food for the journey
                                                                                                              • Figure 51: Reasons for buying in travel hubs, April 2017
                                                                                                            • Impulse purchasing peaks amongst 25-34s
                                                                                                              • Figure 52: Reasons for buying in travel hubs, by age, April 2017
                                                                                                            • Special offers encourage fashion purchases
                                                                                                              • Figure 53: Reasons for buying in travel hubs, by product purchased, April 2017
                                                                                                            • Consumers still shop in airports to take advantage of duty-free
                                                                                                              • Figure 54: Reasons for buying in travel hubs, by travel hub visited, April 2017
                                                                                                            • Price a major reason for not purchasing
                                                                                                              • Figure 55: Reasons for not buying in travel hubs, April 2017
                                                                                                            • Motorway services perceived as over-priced
                                                                                                              • Figure 56: Reasons for not buying in travel hubs, April 2017
                                                                                                          • Encouraging People to Shop in Travel Hubs

                                                                                                            • Consumers want more chain stores
                                                                                                              • Figure 57: Factors that would encourage consumers to shop in a travel hub, April 2017
                                                                                                            • Better gift ranges attract young shoppers
                                                                                                              • Figure 58: Factors that would encourage consumers to shop in a travel hub, by age, April 2017
                                                                                                            • Extended opening hours appeal to railway users
                                                                                                              • Figure 59: Factors that would encourage consumers to shop in a travel hub, by travel hub visited, April 2017
                                                                                                          • Attitudes Towards Shopping in Travel Hubs

                                                                                                            • Almost half don’t trust duty-free pricing
                                                                                                              • Figure 60: Attitudes towards shopping in travel hubs, April 2017
                                                                                                            • Seasonal pop-ups appeal to young
                                                                                                              • Figure 61: Percentage of consumers in agreement with attitudes towards shopping in travel hubs, by age, April 2017
                                                                                                            • Opportunity for motorway services to improve food offer
                                                                                                              • Figure 62: Percentage of consumers in agreement with attitudes towards shopping in travel hubs, by travel hub visited, April 2017
                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                              • Data sources
                                                                                                                • Financial definitions
                                                                                                                  • Abbreviations
                                                                                                                    • Consumer research methodology

                                                                                                                    Companies Covered

                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                    Travel Retail - UK - June 2017

                                                                                                                    US $2,828.70 (Excl.Tax)