Global travel retail turns green to keep pace with consumer values – Market Intel

Operators in global travel retail face inherent challenges to become more sustainable. They operate stores in highly regulated, third-party owned settings such as airports, airlines, cruise ships, ferries and downtown stores, so have limited power to reduce their consumption of energy and tackle waste. Added to that, retailers do not operate the manufacturing facilities of the vendor companies that make the products they sell in their shops – a major source of emissions.

Yet, within these confines, travel retailers are making great efforts to reduce their carbon footprints as consumer concern over climate change grows. From the incorporation of more digital technology in-store and sourcing more sustainable brands to decarbonising supply chains and, in the case of one operator (Lotte Duty Free), even opening a solar power plant, retailers are raising their game.

The biggest players now produce annual sustainability reports and many have signed up to respected international sustainability frameworks such as the United Nations Global Compact and the Paris Climate Deal. Tangible results are being achieved – Swiss travel retailer Dufry, for instance, has developed a ‘Mind, Body & Soul’ store concept focused on sustainable, health-related and wellbeing products, and 20% of its electricity is now provided by renewable sources.

Travel retailers increasingly encourage staff at all levels of responsibility to pull together to achieve green targets. In 2022, Lagardère Travel Retail France launched its first internal CSR challenge where several teams were tasked with developing ideas to make the company more sustainable.

The winning concept was ‘Huggy’, an internal platform creating a collaborative community around recycling. Stores could register their unused equipment and furnishings on the digital platform, while others could conveniently search for the items they need.

Decarbonising the supply chain

The supply chain is a major source of emissions for GTR operators and has become an area that many are now focusing their sustainability efforts. “We’re constantly trying to optimise our supply chain,” says Bastian-Philipp Müller, head of buying at the liquor purchasing department of German travel retailer Gebr Heinemann.

“Our logistics centres have run completely on green electricity since 2021. Together with our logistics service providers, we’re developing concrete measures to significantly improve our carbon footprint. For instance, sustainable fuels and e-trucks will play a more important role in the future.”

Müller points to Gebr Heinemann’s recently-opened Norway Hub – or ‘N-Hub’ – its first regional warehouse near Oslo, as another example. “With this regional warehouse and the associated development of new networks, we are faster and closer to the market and can save around 300,000 transport kilometres per year between Germany and Norway,” he explains.

Buying policy is arguably the area where travel retailers have the greatest power to affect positive change, however. For instance, Gebr Heinemann now follows a ‘Future Friendly’ strategy that aims to see sustainable products account for 50% of its total turnover by 2030.

“With Future Friendly, we’re setting new standards for responsible shopping in the industry,” says Müller. “Every product offered in this range must meet at least two of our five sustainability criteria – plastic-free, recycled material, 100% vegan, fair production and organic origin. In addition, the prospective supplier must pass our sustainability assessment.

“This is, of course, also a guiding principle when we list new drinks brands.” He adds. “We recently listed Nc’nean Single Malt Whisky, because it meets our sustainability criteria so well. As a matter of fact, it meets all five of the above-mentioned criteria.” 

A green approach to purchasing

Similarly, 12 months ago, Tourvest Retail Services, the inflight retail concessionaire for British Airways, joined forces with eco-friendly GTR drinks distributor Sustainaholics to offer travellers five sustainably-made British spirits brands on the airline’s ‘High Life’ shopping programme.

The quintet comprises Two Drifters Rum, a carbon-negative Devon rum produced by a B Corp-certified family business; Oxford Rye Whisky, made with grains from biodiverse organic farms; zero-waste Cooper King Dry Gin from a renewably powered distillery; Hyke Gin, made from surplus grapes; and Black Cow Vodka, produced with whey, a by-product from the cheese-making process.

Digitisation leading the way

While working to appeal to tech-savvy Millennial and Gen Z consumers, more digitisation within the GTR channel also has sustainability benefits, according to Gebr Heinemann’s Müller. “In our everyday business, we see that digital promotion is more efficient and helps to reduce waste when compared to ‘classic’ non-digital promotion activities,” he explains.

“Also, on our floors, you’ll find digital gadgets like the ‘Wine Lifter’, through which travellers can discover their favourite wine and compare it with others using interactive RFID technology. While this is convenient and efficient for the user, it also helps us to make the supply chain more efficient.”

On a more basic level, digitisation can help cut down waste. In late 2022, for instance, Lagardère Travel Retail UK & Ireland prepared its move to digital receipts at its UK airport and ferry store locations. In partnership with Finland-based ReceiptHero, the division is now able to issue customers with digital receipts that can be used for refunds or product exchanges. Customers can also send feedback from their experience in-store and receive promotional offers for future purchases.

GTR operators will never be able to escape the fact that their customer base is predicated on international travel – after all, by 2050, emissions from the aviation industry are forecast to triple. Yet, despite the restrictions of their business model, operators are making genuine attempts to become greener, a pivot that increasingly chimes with the values of many of their customers.