Global beauty’s once-reliable travel retail channel is getting a makeover to recoup slumping sales.
In the first half of 2025, the slump dragged on the results of beauty giants. Estée Lauder Companies (ELC) attributed much of its 8 per cent decline in organic net sales for the 2025 fiscal year (ended 30 June) to global travel retail, while L’Oréal Group blamed a 1.1 per cent decline in North Asia on challenges in the sector.
For beauty, travel retail has historically been a channel for brand visibility, high margins and access to Chinese travellers — and one driven by discounts. A key factor in the slowdown is the collapse of downtown duty-free in North Asia. Downtown duty-free shops offer tax-free goods to travellers in a non-airport setting, as long as they have proof of travel. This part of the travel retail sector was once fuelled by Chinese tour groups and daigou resellers (traders who take advantage of cross-border price differences to resell luxury goods); but now, the Chinese are spending less, and the government is cracking down on the grey market.
As a result, beauty sales in Asia-Pacific travel retail declined 10 per cent year-on-year in 2024, while sales rallied in the Americas (+5 per cent), the Middle East and Africa (+15 per cent), and Europe (+12 per cent), data provided to Vogue Business by travel retail and duty-free market research agency Generation Research shows.
With beauty representing one of the largest categories in global travel retail, worth $25.2 billion in 2024, per Generation Research, the stakes are high. If brands can’t reignite growth here, they risk losing a vital revenue stream and brand-building platform.
Estée Lauder president and CEO Stéphane de La Faverie is already restructuring to turn the channel around by 2026. For L’Oréal’s travel retail, there are “two realities”, says managing director Emmanuel Goulin: with the downtown duty-free model in North Asia fading, airports are booming and are now the core focus.
Going glocal
The impact of the slowdown on financial results has highlighted beauty’s historical overreliance on downtown duty-free mega-malls and Chinese travellers. This is pushing brands to take a more localised approach, adapting their global strategies to amplify the categories that resonate most with travellers in each region.
Dolce Gabbana Beauty describes its approach as “glocal”: consolidating luxury in EMEA (Europe, the Middle East and Africa), expanding fast in Latin America, focusing on exclusives in North America and scaling in Asia-Pacific growth markets like India and Southeast Asia. For L’Oréal, premium skincare anchors Chinese travel retail, gifting defines the Middle East and Europeans remain price-sensitive, favouring accessible novelties from brands like L’Oréal Paris.
Although beauty sales in China’s travel retail space are recovering from heavy discounting in the domestic market — and despite a slower start to 2025 — consulting firm Oliver Wyman notes average selling prices rose 9 per cent this year, signalling a “price recovery” in the prestige category. “For Chinese travellers, travel retail is no longer simply a place for bargain hunting,” says Oliver Wyman partner Dave Xie. Fellow partner Imke Wouters adds that spending is becoming more rationalised: “At the high end, efficacy is essential, while other travellers are happy with good local alternatives at lower prices.”
The shift underscores a structural change: travel retail is evolving from a discount-driven channel, to one where brand equity, personalisation and premium experiences drive spend.
Airports as experience hubs
Reshaping retail in airports from a purely transactional ‘grab-and-go’ experience will help frame the industry’s next phase. “The major challenge for us is to transform these simple transit points into true experience hubs, where shopping becomes an integral and exciting part of the journey,” L’Oréal’s Goulin says.
Appetite for beauty in airports remains strong, he continues, pointing to two polarised trends: premiumisation, with surging demand for high-end skincare such as Helena Rubinstein and couture brands like YSL and Prada; and rapid democratisation, where accessible labels like L’Oréal Paris and Cerave are gaining traction.
According to data from travel retail research agency M1nd-set, experiential elements such as sampling, brand storytelling and physical interaction play a bigger role in driving impulse purchases, with 46 per cent citing the in-store experience as a reason to purchase — evidence that transforming these moments into meaningful encounters is central to growth.
That vision is already being put into practice, especially in the Middle East’s booming airports. This autumn, alongside Qatar Duty Free (QDF), L’Oréal will debut the Lancôme Café de la Rose in Doha — the first beauty-branded café to open in an airport. “Beauty today is about immersion, personalisation and service-led engagement,” says Thabet Musleh, chief retail and hospitality officer at QDF. “The café’s hybridised environment blends beauty, fragrance and gastronomy in a sensorial way, redefining what travel retail can look like. This is ‘experiencentricity’ in action.”
Designed in Lancôme’s signature pink palette and developed in collaboration with French pâtisserie house Lenôtre, the café also offers Absolue skincare consultations, olfactory touchpoints and exclusive merchandise. The format is not just about novelty; QDF’s track record shows experience-driven activations deliver results. Recent campaigns in Doha such as Chanel’s A Winter Tale and YSL Summer Mirage generated sales uplifts of 32 per cent and 43 per cent, respectively, while overall beauty activations at QDF in 2024 drove category growth of 25 per cent.
“Activations that make people part of the experience consistently drive higher conversion and bigger basket sizes,” Musleh adds.
Newness and personalisation
If experience is the next front line of travel retail, then newness and personalisation are its most powerful levers. As Deirdre Devaney, global head of beauty at international airport travel retailer ARI, explains, the domestic beauty market has become more competitive than ever, with department stores and direct-to-consumer (DTC) brands dedicating greater space and storytelling to beauty. “This presents increasing challenges for travel retail to deliver cut-through,” she says. “Newness is incredibly important for us and helps to enhance the travel retail point of difference.”
ARI is broadening its offer across price points, adding value through gifts with purchase at key moments, while leaning into digital tools to create more personalised journeys. “As luxury shoppers become more discerning, we see strong demand for value-added services, especially those that enhance education and personalisation,” says Devaney, citing free in-store skin analysis at Charlotte Tilbury and L’Occitane, as well as virtual try-ons with Tom Ford and Lancôme to ease purchase hesitation.
These ‘phygital’ activations have also proved effective for Dolce Gabbana Beauty. According to the brand, the relaunch of its Light Blue fragrance in May positioned it among the top three beauty brands in several airports during the campaign month.
The activation featured an AI-powered experience that virtually transported shoppers to Capri, inviting them to step onto the white boat from the iconic campaign, now updated to star British actor Theo James and Italian model Vittoria Ceretti, and capture a photo against the backdrop of the Faraglioni rocks.
Travel retail currently accounts for 13 per cent of D&G brand revenue, with ambitions to reach 18 per cent within three years. Future growth will depend on building visibility among millennials and Gen Z, beyond Light Blue’s core, more mature audience.
As L’Oréal CEO Nicolas Hieronimus acknowledged during the beauty giant’s H1 2025 earnings call, travel retail is reconfiguring “back to what it was and should have remained; which is [individual] travellers, business opportunity and a brand exposure opportunity”.
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