The Swiss watchmaker Breitling is planning to open a store in Paris, on the Champs-Élysées, in 2025, but with millions of visitors expected to descend on the City of Light over the next six weeks for the Olympic and Paralympic Games, the brand decided it couldn’t wait.
“We are hosting a pop-up next door to where our permanent store will be,” Georges Kern, Breitling’s chief executive, wrote in an email. “Paris is the place to be this summer.”
While there is no doubt that the French capital is the belle of the international ball this season, many luxury watchmakers in the city have tempered expectations about watch sales during the Games.
“We have a network in Paris with 25 points of sale, including three boutiques,” Carlos Rosillo, co-founder of the French watch brand Bell & Ross, said on a recent video call from its headquarters in Paris. “But frankly speaking, we are a challenger. We cannot compete.”
Raynald Aeschlimann, the president and chief executive of Omega, the Games’ official timekeeper since 1932, struck a similarly pragmatic note. “Those millions of people are coming to Paris for the sport,” he wrote in an email. “Omega’s primary focus will always be on the timekeeping, not on marketing.”
Beyond the Games, the outlook for travel retail in general, however, is a different story.
Many watch brands — particularly large ones with global distribution such as Bulgari and Hublot, both owned by the luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton — are expanding their retail footprints at airports, on cruise ships and in other tourist-magnet destinations to match the growth in travel, especially among rich consumers.
“We are just now relocating our boutique in Zurich Airport, Switzerland, tripling the size so that it’s consistent with the downtown Bahnhofstrasse boutique,” Jean-Christophe Babin, chief executive of Bulgari, said during a video call last month. “Some airports like Zurich have a high-profile clientele. If you have the right staff, the right assortment, the right experience and the right size, you can create a strong business.”
Marco Passoni, senior executive vice president at 2.0 & Partners, an agency in London that helps brands develop travel retail strategies, said travel retail was on an upward trajectory.
“Immediately following the pandemic, we saw incredible amounts of revenge shopping, and since then the market has continued to rebound, keeping pace with, and in places outstripping, the speed of travel recovery,” Mr. Passoni wrote in an email.
Indeed, the market research firm Euromonitor recently projected that global duty-free sales would total $146 billion by 2027, with sales for 2024 expected to reach $113.5 billion, well ahead of 2019 levels of $98.6 billion.
But then traveler numbers are also expected to exceed 2019 figures. In September 2023, Airports Council International, an airport advocacy group in Montreal, said that the passenger volume worldwide was expected to hit 9.4 billion in 2024, surpassing the 9.2 billion passengers who traveled in 2019.
One inescapable fact about travel retail is that it is highly dependent on flight availability. “We can drive traffic to our stores in Los Angeles, in Beijing, anywhere,” Mr. Babin of Bulgari said. “But we cannot drive traffic in an airport where you have no aircraft.”
Yet that metric, too, is showing promise. Global air traffic was expected to reach a new peak of 40.1 million flights in 2024, up from 16.9 million in 2020, according to Statista.
Seeing ‘Downtown’
While having a network of airport boutiques is key to capturing airline passengers, Mr. Babin said Bulgari lately has focused on what he called “downtown travel retail” opportunities, such as La Samaritaine, the 19th-century department store owned by LVMH in Paris’s First Arrondissement. After a lengthy closure and renovation, it reopened in 2021 with a number of restaurants, a five-star hotel, and a spa.
“Samaritaine is designed to be a travel retail destination,” he said. “It doesn’t prevent French residents of Paris from buying there. But obviously, being French residents, they will pay the French VAT.” (He referred to the 20 percent tax added to most goods and services; tourists may have VAT payments refunded.)
“In general,” Mr. Babin continued, “the downtown has been on the rise, because it’s easier to create a true luxury experience downtown than in an airport, where often people are in a hurry.”
Omega, too, has concentrated new store openings in areas where travelers like to shop. “In the heart of Hong Kong, where shopping is considered very prestigious, we opened two new boutiques, in the K11 Musea and Queen’s Road Central,” Mr. Aeschlimann wrote. “Furthermore, we are focusing on having a great presence near tourist attraction areas like Champs-Élysées or Faubourg St.-Honoré in Paris and SoHo New York,” the Manhattan neighborhood where Omega opened a new boutique last month.
China and Travel
If this were 2019, such a retail opening spree would almost certainly have been designed to attract Chinese tourists, who spent a collective $255 billion on international travel that year (compared with $196.5 billion in 2023), according to the United Nations World Tourism Organization.
But after three years of Covid isolation and a downturn in the Chinese economy, travelers from the mainland have favored destinations closer to home, according to luxury experts.
“Not surprisingly, Chinese now go a lot to Asia,” Mr. Babin said. “The cost differential versus going to Europe or the U.S. is huge. And then when you land in Tokyo or Seoul, you realize that the hotel night is a fraction of what you would pay in L.A., New York, Paris or Rome.”
The shift has marked a radical departure from how Chinese travelers used to behave on trips abroad.
“Luxury brands and travel retail brands alike once relied on these high-spending shoppers to deliver incredible results,” Mr. Passoni of 2.0 & Partners wrote. “But the pandemic put a stop to that, and the truth is that it has not recovered and probably never will. The Chinese government is determined to keep more luxury spend within the country and luxury brands and those in the travel retail market must get used to this new normal.
“There is no doubt that Chinese shoppers retain great spending power,” he continued. “The sales at the duty-free shopping haven of Hainan underline this, but that is where much Chinese traveling spend will go in the future. We are seeing some recovery in markets such as Hong Kong and Japan in the luxury sector, but not at the levels that it once was.”
Caryl Capeci, senior vice president of fine jewelry and watches at Starboard Cruise Services, a cruise retailer in Miami, said in a phone interview that she has noticed a similar trend.
“The market dynamics have changed since 2019,” Ms. Capeci said. “In 2019, the cruise market in China was very strong in all categories but particularly for fine jewelry and watches. There were lines and lines of people waiting to buy things.”
Although Starboard’s Chinese business has not caught up to 2019 levels, she pointed to Royal Caribbean’s return to China in April, with a ship called the Spectrum of the Seas, as a sign that the market was rebounding. Its home port is Shanghai, and it offers four- and seven-night cruises to ports in Japan such as Nagasaki and Osaka.
“One thing that’s interesting is retail prices have held,” Ms. Capeci said. “It’s just the number of actual Chinese guests that are purchasing has been adjusted.”
Cruise Growth
Globally speaking, however, the cruise business has already bested its prepandemic performance. In 2023, 31.7 million passengers sailed on cruise ships, representing a 7 percent increase over 2019 totals, according to a “State of the Cruise Industry Report” published in May by the Cruise Lines International Association. According to that report, that figure is projected to grow to 39.7 million by 2027.
“Business at sea represents a very big potential growth for Hublot,” Ricardo Guadalupe, the brand’s chief executive (who is leaving the role Sept. 1 to become honorary president), wrote in an email. “The cruise business is especially a focus for the Americas where we see high luxury brands arriving.”
Midrange brands are coming as well. In May, Emmanuel Bütler, U.S. brand president of Norqain, a Swiss brand that recently expanded into cruise retail, spent five days aboard a new Carnival ship, the Carnival Firenze, as it sailed from the Los Angeles area to Cabo San Lucas, at the southern tip of Mexico’s Baja California peninsula. Mr. Bütler said his goal was to better understand the retail experience aboard ship, where duty-free stores open only once a vessel has reached international waters, at least 12 nautical miles from the nearest land.
“If you think about the cruise business, it’s all about the experience,” Mr. Bütler said. “It’s all about, ‘This is the most special week of the year,’ and they want to have a little memory.”
That, he said, helped explain why one of Norqain’s most popular offers at sea involves an element of personalization: Each of its watches has a removable plate on the left side of its case that can be engraved with the buyer’s choice of wording or dates.
And yet, for all its promise, the prospect of selling watches to travelers seeking to mark a special occasion or simply to satisfy a whim does not entice all brands. Some in the industry, such as Guido Terreni, chief executive of the boutique Swiss watchmaker Parmigiani, said they are reluctant to invest in the category after the Covid lockdown period underscored the precariousness of travel retail.
“It’s the wrong mentality to capitalize on tourists,” Mr. Terreni said on a video call last month from his office in the Swiss village of Fleurier. “Travel retail must be seen as a cherry on the cake. If you want to build a brand, you have to do it locally.”
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