The Retail Day – Talking Trinity in the cruise retail business : Moodie Davitt Report

In one of the highlight sessions of The Retail Day at Seatrade Cruise Global in Miami on 10 April, The Moodie Davitt Report hosted a discussion on the future of the sector involving a cruise line, concessionaire and brand owner. We present edited highlights.

How does each member of the cruise industry ‘Trinity’ see the market today and tomorrow? How can cruise lines, concessionaires and brand owners collaborate more deeply for the benefit of the guest via stores, offers and campaigns? How can the sector overcome sometimes siloed thinking to create a more unified, coherent experience for the guest via retailing?

Those were some of the questions moderator Dermot Davitt put to Carnival Cruise Line Vice President Guest Commerce & Onboard Revenue Luis Terife, Starboard Cruise Services President and CEO Lisa Bauer and LVMH Beauty Managing Director Travel Retail Americas André Marzloff, as part of a panel discussion at Seatrade Cruise Global’s inaugural edition of The Retail Day on 10 April. Highlights of the conversation feature below.

To begin, can you assess where you are on the recovery and growth path?

Lisa Bauer: The very good news is that onboard spend for retail has surpassed where it was in 2019. We are starting to see a slowdown in what we used to call ‘revenge spending’.

In terms of trends, increasingly we see more guests coming with their phones and price shopping more than they did in the past. And that is a really good wake-up call for us all because we must offer different products that people do not see on their phones, such as cruise exclusives.

Luis Terife: We had an amazing 2023, with +30% growth [in retail] from the same number of guests that we had in 2019. We saw that growth in multiple categories: fine jewellery, logo, leather, liquor, plus we had new ships which helped of course.

Now in 2024 we are not seeing +30% growth but +10-15% sales growth is still significant. We need to continue to work hard to make sure that we have the right value proposition for our guests.

With spend moderating we have to look at our guest mix also. We see more new-to-cruise guests and we see more families today. So we have to ensure we cater not just for the traditional guests, but for those that are new. They really need to understand the value of buying onboard compared to on land and what, for example, exclusive-to-cruise really means.

For families and kids we have product but we are still seeing white space, so how we can deliver more when they come for Spring Break or summer? We can do more to create the right product and experience in all categories, driving entertainment but also driving retail.

It’s important to note that of the ten onboard revenue categories, we do retail in seven of them, from spa to shore experiences and more, so this is not only about the stores. It’s about entertainment, programmes tailored for families. They have different spending patterns so it’s about working how we get a larger share of revenue from this group based on their interests and activities.

Lisa Bauer: We consider this a lot. The family market continues to grow so rather than worrying about falling average spends because of these new demographics we have to come up with experiences that will enable us to sell to these new groups. There are opportunities and families and kids are high among them.

Targeting those groups begins with us hiring a dedicated, senior buyer that has expertise in that field – someone that is aware of everything that is happening on land, knows about the hottest-selling games, toys for kids of all ages, and then can specifically curate for the Carnival guest or the Royal Caribbean guest or guests onboard any of our great partners.

Tapping into these groups is less about selling high-margin items and more the fact that it’s money that these guests are not spending with us. It’s an incremental growth opportunity.

André Marzloff: In my region we have seen South and Central America recover well compared to 2019. North America and cruise (worldwide) is not there yet for one main reason, that the PRC traveller has not yet returned.

For us, cruise is still under 5% of the business compared to the other major travel channels, but it’s a channel we invest in and believe in. It’s not all about size; the quality of that business matters too.

With the US passenger at levels far above 2019, especially in the Caribbean, we are seeing booming sales in fragrances, even if skincare and cosmetics are a little behind.

And what is the next level in terms of engaging the cruise traveller in beauty and luxury in your view?

André Marzloff: First, what we see is the average age getting younger, as a new generation of young adults travels. The other trend we are observing is that consumers today are a lot more focused on wellbeing and treating themselves. That has emerged since the pandemic.

Sustainability is an important topic. Where is the brand coming from? How is it made? What is the story behind the product? That’s a factor across all channels for customers.

And one other thing: we are no longer in a…