Where to for shopping tourism?
Wandering past several Sephora stores while on vacation in Honolulu in December I was reminded of Lee Tulloch’s recent column in the SMH/Age Traveller section, Luxe Nomad, where she was ambivalent about the introduction of Sephora to Australia.
To paraphrase her article, on the one hand, she welcomed the new retailers as providing more options for Australian shoppers. On the other, she bemoaned the increasing homogeneity of shopping while travelling as the same brands are now becoming available everywhere.
At first I concurred. But then I thought there’s got to be more to it than that, based on the reasons why people shop when they travel. And it can’t only be price.
Hawaii (well, Honolulu and Waikiki, and Lahaina in Maui) present a depressingly mainstream travel experience and the sinking AUD got me thinking about shopping mindsets while travelling and musing about why people buy the same things overseas for roughly the same price they can get them at home.
Below I’ve opined on some of these, and what opportunities they might present to retailers.
Some shopping tourism mindsets
Below are some different mindsets tourists may have toward shopping. Note that the same tourist may have different mindsets on different days, and this is an opportunity for retailers.
I’ve focused on at destination shopping tourism rather than duty free on way out or on way back.
This is one of the most obvious ones, where favourable exchange rates or cheaper manufacturing costs mean goods are cheaper to buy travelling than at home.
Tourists with this mindset are more likely to not only be planning a shopping trip while away, including to an outlet mall, but to be planned to a department level and possibly even a retail or manufacturer brand level (eg “I want to get some Van Heusen shirts cheap”, “I need Merrells and I don’t want to pay $200 in Australia for them”, or “I can get Chanel cheaper here than at home”). Given the dropping Aussie dollar this may actually be a good thing for retailers in Australia.
Mementoes for which the ‘what’ is indicative of the where it came from, e.g in Hawaii it appears to be ukuleles, sarongs, Hawaiian shirts, macadamia nuts, and things with turtle motifs.
In Australia, this translates as Akubras, didgeridoos, Aboriginal dot print merchandise, and plush toy kangaroos and koalas. Gifting obviously plays a role here – taking friends and family back a piece of something that represents where you have been as well as buying mementoes for yourself for use while on vacation and subsequently.
An interesting tailored twist on this was the Flip Flop Workshop (pictured below) where you can make your own thongs (the unofficial footwear of Hawaii) using various colours and patterns for the sole and straps and decorate with various stick on sparkly bits. Make your own Akubras, anyone?!
The time out indulgence nature of a holiday can spur a ‘Why not?’ treat mentality when the price of an item is roughly the same as at home. Psychologically, tourists in this mindset are not in work mode or buying for family and can focus on indulging themselves. This then may lead to …
Items and brands which could have been bought from the same stores at home but brings memories of where it was bought.
In a world of increasingly instantaneous travel reporting of selfies on Facebook, old fashioned post holiday group ‘slide nights’, and sharing hard copy photo albums have vanished (to be replaced by Shutterfly and the like).
This makes retrospective reliving of holidays and memories more difficult. Role of bought items, particularly wearables and accessories, serves as a trigger for holiday memories every time it is used.
We suspect these shopping mindsets are likely to skew to single/double income no kids and empty nester travellers, who don’t have children to worry about and more disposable income to spend on themselves.
‘Look what I got, look where I went – aren’t I the sophisticated world traveller?’ is the motivation here.
At a more subtle level it may be more storytelling rights particularly if it’s something not easily acquired on home turf. Leading to …
Can’t get it at home:
This is the mindset that to some extent is under threat with the internationalised distribution of retail brands.
It’s about items or products that I can’t get at home – either because they are unique, or in a different season (particularly apparel) or a slightly different range is offered in the overseas store versus the store at home (in my own experience shoe retailer, NineWest, is an example of this where they carry styles and sizes in the USA that I can’t get in Australia).
By my count, Ala Moana, the largest retail mall in Hawaii and one of the larger malls in the USA, has 212 retail stores, with at least 61 of them (28 per cent) available in Australia.
Ala Moana is the second most profitable mall in America. I hypothesise its spend per head will be higher than elsewhere (it would be interesting to compare to malls in other tourist areas such as Las Vegas).
Much of that is from Australians (one of Hawaii’s two largest overseas tourist groups apparently, the other is Japanese) even though the prices aren’t much cheaper now, they can get items in Hawaii they can’t get at home. And there may well be less retail savvy tourists who may not be completely across what is or is not available at home and therefore everything is new, different, and shiny.
While there is a preponderance of global brands, there will be a role for local brands (formal souvenirs) and artisan products and brands for storytelling rights, albeit travellers seeking the truly unique artisan stuff and not just overpriced artworks may need to get a little off the beaten path.
Fewer die hard shoppers are willing to do this, although we do know there is a segment of Christmas gift shoppers who are always on the lookout for unique and tailored gifts while travelling. (These tend to be empty nesters).
What does this mean for shopping tourism in Australia?
Travelling results in more leisure/browse shopping trips than would normally do at home as well as some destination shopping trips looking for specific brands and items cheaper.
There will always be a role for formal souvenirs. It’s the informal souvenir territory that’s interesting. With the increasing amount of affluent Asian tourists to Australia, particularly Chinese and Korean, the role of both familiar and upmarket brands will increase.
And if these tourists aren’t particularly price sensitive and more about indulgence and treat, or differentiated range, perhaps the opportunity for retailers in informal souvenirs may not lie in discounting for basket penetration but potentially in AWOP based promotions to increase spend among those looking to treat themselves.
For stores located in high traffic tourist areas, there is an opportunity to talk directly with POS and marketing messaging for tourists in order to drive spend through talking to the informal souvenir and bragging rights mindsets.
It’s not so much about deals as providing a means for memories and storytelling.
Norrelle Goldring is head of shopper insight and retail strategy at GfK. Call Norrelle on 0437 335 686 or email firstname.lastname@example.org.
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