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Travel Retail - UK - June 2019

Covered in this report

This report is designed to give an overview of the travel retail market within the UK. It includes research on MSA (Motorway Service Area), railway station and airport terminal retailing, as well as limited analysis for comparison of the foodservice offering within each hub. It combines market data, including drivers in the market and detailed information on the key players, along with Mintel’s consumer research to build a picture of the travel retail market.

Our consumer research supplied within this Report covers the following areas:

  • Which travel hubs have been visited in the last 12 months and how frequently do people visit
  • The reasons for buying products from a retailer within a travel hub
  • The reasons for not buying products from a retailer within a travel hub
  • Aspects those who shopped at travel retail hubs are most satisfied with
  • Behaviour towards shopping in travel hubs

“There has been a conscious effort to increase the retail offering at travel hubs, in an attempt to turn more of them into shopping destinations. Currently most are still using travel hubs as a place to purchase food items and many have begun to innovate and introduce more convenient and enticing food concepts. However, people’s travel habits are changing due to the economic uncertainty and the challenge now remains to bring people into travel hubs for the shopping experience alone.”

– Chana Baram, Retail Analyst

This report examines the following issues:

  • Railway stations should be pushing to become key retail hubs
  • Airports are introducing new strategies to get people to shop more
  • There is room for innovation in MSAs

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Table of contents

  1. Overview

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

          • The market
            • Sterling has not fully recovered from its post-Brexit decline
              • Figure 1: Pound versus euro and US Dollar, January 2015-April 2019
            • Domestic tourism is on the up
              • Figure 2: Domestic holiday taking, July 2016-July 2018
            • Delays and rising fares have reduced rail travel
              • Figure 3: Number of passengers travelling by train and distance travelled*, 2000/01-2017/18
            • Extreme weather in 2018 halted all travel
              • The consumer
                • Railway stations are the most visited destination
                  • Figure 4: Reasons for visiting travel hubs crossed by travel hub visited, April 2019
                • Most purchases from travel hubs involve food
                  • Figure 5: Reasons for buying from travel hubs, April 2019
                • Pricing is a concern for travel hub visitors
                  • Figure 6: Satisfaction with travel retail hubs, April 2019
                • Convenience is key in travel retail
                  • Figure 7: Behaviours towards convenience when shopping at travel hubs, April 2019
                • Experiences, and not just shopping, are important to travellers
                  • Figure 8: Behaviours towards shopping at travel hubs, April 2019
                • What we think
                • Issues and Insights

                  • Railway stations should be pushing to become key retail hubs
                    • The facts
                      • The implications
                        • Airports are introducing new strategies to get people to shop more
                          • The facts
                            • The implications
                              • There is room for innovation in MSAs
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Many fear that Brexit will have a negative impact on the cost of living
                                      • Sterling is still to recover from a post-Brexit decline
                                        • There has been an increase in domestic tourism
                                          • Delays and rising fares have stunted rail travel
                                            • Extreme weather in 2018 halted all travel
                                              • Airport passenger numbers on the rise
                                              • Market Drivers: Economy

                                                • People have become more cautious…
                                                  • Figure 9: Percentage point difference in items people have purchased over the last three months, February 2018 vs February 2019
                                                • …as many fear that Brexit will negatively impact their cost of living
                                                  • Figure 10: Economic outlook consumer tracker, March 2019
                                                • Sterling yet to recover from its post-Brexit vote decline
                                                  • Figure 11: Pound versus euro and US Dollar, January 2015-April 2019
                                              • Market Drivers: Tourism

                                                • Increase in domestic tourism...
                                                  • Figure 12: Domestic holiday taking, July 2016-July 2018
                                                • …which has impacted domestic flights
                                                  • Figure 13: Domestic terminal passenger traffic, 2014-18
                                                • The rise of Chinese tourism
                                                  • Figure 14: Number of Chinese tourists to the UK, 2008-17
                                              • Market Drivers: Travel Methods

                                                • Delays and rising fares deter people from rail travel
                                                  • Figure 15: Number of passengers travelling by train and distance travelled*, 2001/02-2017/18
                                                  • Figure 16: Percentage change in rail fares at the start of each year, 2010-19
                                                • Railway footfall
                                                  • Figure 17: Footfall and demographic breakdown for selected Network Rail stations, 2017/18
                                                • Decline in car usage
                                                  • Figure 18: Number of trips and distance travelled by car drivers and passengers, 2002-17
                                                • Extreme weather in 2018 halted travel
                                                  • Motorway traffic sees small increase in 2017
                                                    • Figure 19: Year-on-year percentage change in the annual daily vehicle flow for major sections of the motorway network in Great Britain, 2007-17
                                                    • Figure 20: CAGR of average daily motor vehicle flow for major sections of the motorway network in Great Britain, 2007-17
                                                  • Airport passenger numbers on the rise
                                                    • Figure 21: Total passenger numbers at reporting UK airports, 2008-18
                                                • Companies and Brands – What You Need to Know

                                                  • MSAs
                                                    • The MSA market is highly concentrated
                                                      • Applegreen completes takeover of Welcome Break
                                                        • Railway stations
                                                          • Network Rail’s share of income from retail grows
                                                            • London Bridge station gets a makeover
                                                              • Airport terminals
                                                                • The top five airports account for two thirds of all passengers
                                                                  • Airports introduce more convenient food options
                                                                  • Launch Activity and Innovation

                                                                    • Convenient food options in airports
                                                                      • Toronto Pearson airport collaborates with Uber Eats
                                                                        • Coop Sweden tests food delivery service to airport
                                                                          • First M&S airside ‘Food to Go’ concept launches in Birmingham Airport
                                                                            • Deliveroo at Schipol airport
                                                                              • Figure 22: Deliveroo delivery within Schipol airport, 2018
                                                                            • London Gatwick expands retail offering
                                                                              • High street retailers added to roster
                                                                                • Harry Potter shop opens
                                                                                  • Mobile payments
                                                                                    • Lagardère introduces WeChat and Alipay in Poland and Italy
                                                                                      • WeChat launched at Heathrow
                                                                                        • Airports increasing retail space
                                                                                          • Belfast Airport increases retail by 30%
                                                                                            • Figure 23: Born & Bred in Belfast City Airport, 2018
                                                                                          • Leeds Bradford extends terminal
                                                                                            • London City Airport to add new terminal
                                                                                              • Figure 24: Mock-up design of London City Airport’s new terminal with retailers, 2019
                                                                                            • Revamped London Bridge introduces new retailers
                                                                                              • Figure 25: Ted Baker and MAC at London Bridge station, 2018
                                                                                            • Foyles partners with travel retail company SSP Group
                                                                                              • Welcome Break installs self-service kiosks
                                                                                                • Figure 26: Centralised self-service kiosks at Welcome Break, 2018
                                                                                              • Restaurant featuring local produce opens in Newcastle Airport
                                                                                                • Figure 27: Quayside Bar and Kitchen in Newcastle Airport, 2019
                                                                                            • Travel Point Operators – MSAs

                                                                                              • Consolidated network
                                                                                                • Figure 28: Summary of the leading UK MSA operators, 2019
                                                                                              • Applegreen completes takeover of Welcome Break
                                                                                                • Westmorland completes revamp of Cairn Lodge
                                                                                                  • Figure 29: Westmorland’s Cairns Lodge service station farmshop, 2019
                                                                                                • Financial performance of leading MSA operators
                                                                                                  • Figure 30: Revenues of the leading MSA operators, 2014-18
                                                                                                  • Figure 31: Operating profit/loss of the leading MSA operators, 2014-18
                                                                                                • Moto sales helped by fuel prices
                                                                                                  • Roadchef’s deal with Euro Garages effects profits and sales
                                                                                                    • Welcome Break profits and sales up in 2017
                                                                                                      • Roadchef introduces new food outlets
                                                                                                        • Welcome Break concentrates on innovations and new food retailers
                                                                                                          • Moto ups focus on catering
                                                                                                            • Figure 32: Breakdown of Moto's non-fuel turnover, 2016-18
                                                                                                            • Figure 33: Breakdown of share of Moto’s non-fuel revenues, 2016-18
                                                                                                        • Travel Point Operators – Railway Stations

                                                                                                          • Leading train operating companies
                                                                                                            • Figure 34: Stations operated by train operating companies in the UK, 2017/18
                                                                                                          • Network Rail income experiences strong growth in 2018
                                                                                                            • Figure 35: Network Rail financial performance, 2014-18
                                                                                                        • Travel Point Operators – Airport Terminals

                                                                                                          • Top five airports account for 67% of all passengers
                                                                                                            • Figure 36: Proportion of passengers at UK airports, 2016-18
                                                                                                            • Figure 37: Air passengers at the busiest UK airports, 2014-18
                                                                                                          • Financial performance of leading airport operators
                                                                                                            • Figure 38: Leading airport operators’ revenues, 2014-18
                                                                                                            • Figure 39: Leading airport groups’ operating profits, 2014-18
                                                                                                          • Breakdown of revenues
                                                                                                            • Heathrow: reserve and collect boosts revenue growth
                                                                                                              • Figure 40: Breakdown of total revenue at Heathrow, 2016-18
                                                                                                              • Figure 41: Breakdown of retail revenue at Heathrow, 2016-18
                                                                                                            • Gatwick: pop-up strategy brings in retail revenue
                                                                                                              • Figure 42: Breakdown of total revenue at Gatwick, 2015-17
                                                                                                              • Figure 43: Breakdown of retail revenue at Gatwick, 2015-17
                                                                                                            • Manchester Airports Group
                                                                                                              • Figure 44: Breakdown of total revenue at MAG, 2016 and 2017
                                                                                                            • Heathrow case study: ‘world’s best airport shopping’
                                                                                                              • Heathrow has a wide range of stores
                                                                                                                • Figure 45: New Louis Vuitton store in Heathrow Terminal 4, 2018
                                                                                                                • Figure 46: Maison Christian Dior opens in Heathrow Terminal 5, 2018
                                                                                                              • More convenient solutions are offered
                                                                                                                • Heathrow ups its innovations
                                                                                                                  • Figure 47: Lancôme interactive makeup mirror at Dufry’s New Generation Store in Heathrow Terminal 3, 2018
                                                                                                              • The Consumer – What You Need to Know

                                                                                                                • Three quarters of people have visited a travel hub
                                                                                                                  • MSA visitors show the highest level of purchasing
                                                                                                                    • The overall satisfaction with travel hubs is high
                                                                                                                      • People are most dissatisfied with pricing
                                                                                                                        • Convenience is key
                                                                                                                          • More people want experiences to be offered at travel hubs
                                                                                                                          • Travel Hub Usage and Reason for Use

                                                                                                                            • Three quarters of people have visited a travel hub
                                                                                                                              • Figure 48: Travel hub visitation, April 2019
                                                                                                                            • Men over-index in visits to travel hubs
                                                                                                                              • Figure 49: Travel hub visitation, by gender, April 2019
                                                                                                                            • Most visited travel hubs as part of a leisure trip
                                                                                                                              • Figure 50: Reasons for visiting travel hubs crossed by travel hub visited, April 2019
                                                                                                                            • Younger people most likely to go to travel hubs for the shopping
                                                                                                                              • Figure 51: Reasons for visiting travel hubs, by age, April 2019
                                                                                                                            • London residents most likely to use travel hubs for several types of trip
                                                                                                                              • Figure 52: Repertoire of reasons for visiting a travel hub, by region, April 2019
                                                                                                                              • Figure 53: MAC pop-up at Old Street Station, 2019
                                                                                                                          • Reasons for Spending or Not Spending in Travel Hubs

                                                                                                                            • MSA visitors most likely to buy
                                                                                                                              • Figure 54: Purchasing from travel hubs crossed by travel hubs visited. April 2019
                                                                                                                            • Most use travel hubs for food purchases
                                                                                                                              • Figure 55: Reasons for buying from travel hubs, April 2019
                                                                                                                            • Retailers in travel hubs can capitalise on delays
                                                                                                                              • Price is a big barrier for purchasing…
                                                                                                                                • Figure 56: Reasons for not buying from travel hubs, April 2019
                                                                                                                              • …particularly for those visiting motorway service stations
                                                                                                                                • Figure 57: Travel hubs visited crossed by reasons for not buying from travel hubs, April 2019
                                                                                                                            • Satisfaction with Travel Hubs

                                                                                                                              • Overall satisfaction with travel hubs is high
                                                                                                                                • Figure 58: Satisfaction with travel retail hubs, April 2019
                                                                                                                                • Figure 59: Overall satisfaction with the travel hub most recently visited, April 2019
                                                                                                                              • MSAs: satisfaction with food outlets high
                                                                                                                                • Figure 60: Satisfaction levels of those who visited an MSA most recently, April 2019
                                                                                                                              • Railway stations: low satisfaction in range of retailers
                                                                                                                                • Figure 61: Satisfaction levels of those who visited a railway station most recently, April 2019
                                                                                                                                • Figure 62: Dollar Shave Club vending machine, 2018
                                                                                                                              • Airport terminals: good range of retail options
                                                                                                                                • Figure 63: Satisfaction levels of those who visited an airport terminal most recently, April 2019
                                                                                                                            • Key Driver Analysis

                                                                                                                              • People are most dissatisfied with pricing
                                                                                                                                • Figure 64: Key drivers of overall satisfaction with travel hubs, April 2019
                                                                                                                              • People suspicious of duty-free pricing
                                                                                                                                • Figure 65: Behaviour towards duty-free pricing, by age group, April 2019
                                                                                                                              • Travel hubs should offer a wider range of healthy options
                                                                                                                                • Figure 66: Overall satisfaction with travel hubs – Key driver output, April 2019
                                                                                                                              • Methodology
                                                                                                                              • Behaviours towards Travel Hub Retailing

                                                                                                                                • Travel hubs should sell more artisanal items
                                                                                                                                  • Figure 67: Behaviours towards the quality of items on offer in travel hubs, April 2019
                                                                                                                                • Airport and MSA users would like more unique and local options
                                                                                                                                  • Figure 68: Behaviours towards the quality of items on offer in travel hubs crossed by the travel hub last visited, April 2019
                                                                                                                                • More travel retailers are offering convenient options
                                                                                                                                  • Figure 69: Behaviours towards convenience when shopping at travel hubs, April 2019
                                                                                                                                  • Figure 70: Honest Eats fridge at Marqette in Dublin Airport, 2018
                                                                                                                                • People would like more experiential options at travel hubs
                                                                                                                                  • Figure 71: Behaviours towards shopping at travel hubs, April 2019
                                                                                                                                  • Figure 72: Time Out’s Market in Waterloo will be similar to the one already running in Lisbon, 2018
                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                  • Data sources
                                                                                                                                    • Abbreviations
                                                                                                                                      • Consumer research methodology
                                                                                                                                      • Appendix – Key Driver Analysis

                                                                                                                                          • Interpretation of results
                                                                                                                                            • Figure 73: Overall satisfaction with travel hubs – Key driver output, April 2019
                                                                                                                                            • Figure 74: Satisfaction with travel hubs, April 2019

                                                                                                                                        Travel Retail - UK - June 2019

                                                                                                                                        £2,195.00 (Excl.Tax)