Youngme Moon,Mihir Desai, and Felix Oberholzer-Gee discuss whether the “retailpocalypse” is real, try to figure out how companies are spending their Trump tax cuts, debate whether share buybacks are a good thing or a bad thing, and offer their picks for the week.
HBR Presents is a network of podcasts curated by HBR editors, bringing you the best business ideas from the leading minds in management. The views and opinions expressed are solely those of the authors and do not necessarily reflect the official policy or position of Harvard Business Review or its affiliates.
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On November 6, Euromonitor International’s travel research team will introduce a report on Megatrends Shaping the Future of Travel at the World Travel Market event in London.
The report identifies the most influential megatrends transforming the way we travel and do business. Concerns about travel impacting the environment, digital detox and travel simplicity are some of the world-changing patterns presented in the report.
Register today to ensure you receive this year's report as soon as it is released.
Insights into consumers’ spending patterns are essential to business success, helping companies understand their target markets and devise long-term strategies based on their consumers’ potential purchasing power. Income and expenditure data not only allows businesses to determine market size and forecast its growth but also provides a uniquely detailed picture of consumer spending patterns. This type of information can help segment the market, assess consumer demand and pinpoint opportunities.
Silver consumers in the beauty and personal care industry
People aged 65+ represent a large and growing consumer group, due to lower birth rates and longer life expectancy. As well as growing in number, older people are generally in better financial health than some younger segments of the population, with a rising number of older people continuing to work and earn an income beyond the age of 65. Additionally, older people have a propensity to save less and spend more in their later life.
Global Average Gross Income by Age: 2012-2030
The beauty and personal care industry has always been focused on the youth, but businesses are now waking up to the fact that older consumers are the ones with high discretionary spending power. This has been seen in a growing cluster of brands that cast older models in their advertising campaigns. L’Oréal Groupe, for example, has gathered together actress Andie MacDowell (aged 58) and models Helena Christensen (47), Tatjana Patitz and Karen Alexander (both 50) and Amber Valletta (42) to front a campaign for its new, most potent anti-ageing product, Revitalift Laser Renew The Double Care.
Rising opportunities for African internet retailing
Africa’s young, fast-urbanising population, with a burgeoning middle class and strong consumer expenditure growth have led to the narrative of “Africa Rising” and captured the attention of businesses as a key future market. During the 2018-2030 period, real consumer spending in the Middle East and Africa region is expected to grow by 51.5%, equivalent to 3.5% per year on average (compared to the global average of 2.7% per year).
Online retailers such as Jumia, Kunga and Spree have been growing exponentially in Africa to cater for the continent’s young, growing and connected middle class, with rising demand for a wide range of products that store-based retailing cannot meet, due to a lack of shopping malls and gridlocked cities.
Auto-makers bring women on board
Women will still earn 35.7% less than men on average in 2030 and women’s annual disposable income will rise by 29.4% in real terms between 2016 and 2030. Even though the gender income gap is hardly narrowing, the global female consumer market – with 3.6 billion consumers and rising incomes – is too large for businesses to ignore.
Female consumers are becoming increasingly prominent in the automotive industry where cars are not traditionally designed by women with the female consumer in mind nor marketed to them. A growing number of automobile manufacturers including Citroen, Honda, Jaguar Land Rover, Nissan and Volvo now have women working at the top levels of their design teams. By bringing female designers on board, the automotive industry recognises the influence women have on important household buying decisions that include car purchases.
Income and Expenditure Insights
Income and expenditure insights, such as who the consumers are, where they live, how much money they earn and what they spend their money on are truly critical to business success. These insights help companies understand market potential, target consumers within appropriate income bands and devise long-term strategies such as whether to enter a prospective market or which products and services to offer and at which price points.
Euromonitor’s Passport database helps identify key changes in consumer income and spending patterns. For additional insights on Income and Expenditure, request a demonstration of Passport.
For anyone who’s ever shopped online for a vacation package where the flight and hotel are bundled together, you’ll know it can be a tedious exercise.
First you might find a holiday package on Expedia, for example, and then you’ll have to figure out at least two things: Is it cheaper to book the package versus buying the flight and hotel separately, and then you’ll want to search to see whether another vendor, such as Virgin Vacations, has a better deal.
The process can be frustrating because there are a lot of variables, and the rates change frequently, too.
Enter Google, which has been testing vacation rental metasearch, where users are transferred to third parties for bookings in the UK and Germany within its Destinations category since the spring of 2017.
Speaking at Skift Global Forum last month, Richard Holden, Google’s vice president of product for travel, said that effort will be expanding in a number of ways.
“We do offer it now in the UK, Germany and the U.S.,” Holden said. “I would still say that it’s not prominent in its display at the moment; it’s fairly buried in the destinations experience. The next version of this we’re working on at the moment to make it more prominent and Germany is actually probably the first market that we’re most focused on simply because Germany is a very large package travel market as a whole.”
Skift has seen the product on Google in a number of forms: on desktop in the Destinations section and in the Travel Guide category, and at the very top of the page under Destinations in Google Germany or further down underneath paid ads in Google U.S. desktop.
But, the vacation package search product, which is likewise on mobile, is indeed becoming more prominent, although it is far from perfected, as can be expected with such a complex feature. But Google is already addressing some of the pain points in vacation package search, albeit in a rudimentary way so far.
Holden explained Google’s thinking.
“But we still think this is a great opportunity from a transparency standpoint,” Holden said. “Users just don’t know where to find this data. There is no great place to go to understand all the packages that are offered out there and from a transparency standpoint, we’re also trying to show people what that package travel would look like and what the component pricing looks like so they can compare right there.”
On mobile in the U.S., we entered Germany vacation packages on Google and found 102 options for trips to Berlin, for example, along with a widget to refine dates and destinations, as well as maps, amenity descriptions, photos, ratings, and reviews.
An Expedia vacation package for a Wow Air flight and a 3-night stay at the Sofitel Berlin Kurfürstendamm shown on Google.
For Berlin, we found several Expedia flight and hotel packages, including those for a Sofitel Berlin Kurfürstendamm-Wow Air three-night package from New York City in early November for $1,175 per person; a Park Inn by Radisson Berlin-Wow Air package for $1,061; and Steigenberger Hotel Berlin-Wow Air package for $1,157.
Along with each Expedia package price, Google listed the price for booking the flight and hotel separately from Wow Air and Agodo or Priceline, for example.
The main value proposition in packages is the traveler is supposed to get a considerable discount because the airlines and hotels can fill seats or beds without disclosing the pricing on the individual components because the traveler only sees the package price. The hotel or airline therefore can offer discounts without diluting their published rates.
Ironically, though, the differences in the package prices and those when someone books the individual components separately that we saw on Google were not very large, sometimes nonexistent. For example, the Expedia package for the Sofitel Berlin Kurfürstendamm-Wow Air package was $1,175 versus $1,173 when the flight would be booked on Wow Air and the hotel on Priceline.com.
As noted, Google’s vacation package search is very much a work in process. We’d expect in the future to find considerable discounts for vacation package prices versus booking the flights and hotels separately.
But Google will work out the kinks, and the ability to compare holiday packages from vendor to vendor, and also to determine the discount versus individual components one one place will be a compelling premise since there aren’t many easy ways to do that today.
In other news, Holden said Google is now offering a way for consumers to search for vacation rentals outside the United States in major metropolitan areas.
“We struggled for a little while as to what’s the right way to integrate those offerings,” with hotels, Holden said. “We are actually offering it now outside the U.S. as a filter in hotel search in major metropolitan areas. There’s content that you can filter in to see alternative lodging or vacation rental content. Typically today, the content that we have there is apartment-like, it’s most hotel-like properties, though we will be in the near future moving into a broader set of properties as well. We think it’s hugely relevant.”
Photo Credit: Beach-goers enjoyed the sands at the Jersey shore in New Jersey after Hurricane Sandy. Wayne Parry / Wayne Parry
How much business travel is too much for the seasoned road warrior? Well, the evidence shows it’s less the frequency of travel than the travel experience itself that leads to botched meetings and self-destructive behavior.
This week I explored a report polling road warriors on what is ruining their lives. Balancing work and life remains a major hurdle, although the elements that improve a business trip aren’t too hard to predict: More sleep and more comfortable flights lead the pack.
There is also evidence that pushing business travelers too hard is leading them to leave their jobs for something requiring less soul-crushing travel that distances them from their families and leads to gluttonous In-N-Out Burger binges (just speaking from recent experience here).
We’ve also got the latest on how U.S. airlines are jacking up fares to outrun rising fuel prices, courtesy of Senior Aviation Business Editor Brian Sumers. Could the recent era of low fares driven by competition be coming to a close? Looks like it, although the airlines have complex arbitrage methods to deal with fluctuations in fuel prices.
If you have any feedback about the newsletter or news tips, feel free to reach out via email at as@skift.com or tweet me @sheivach.
— Andrew Sheivachman, Senior Editor
Airlines, Hotels, and Innovation
Frequent Business Travelers Need More Sleep to Survive: I’m tired, you’re tired, we’re all tired when we travel for work. It’s leading employees to burn out and quit, causing problems for travel managers and companies that push their workers too hard. Some sleep and nicer flights can help.
Group Booking Pace Slows in Tight Market for Meetings:New research from Cvent shows that group business is declining for U.S. hotels, and planners are booking room blocks closer to the date of their event than before. This is bad news for hotels, which rely on group bookings to boost business.
Delta Air Lines Sees Premium Profit: Travelers hoping for more free first-class upgrades should probably root for a recession. The economy is too strong for airlines to give away their best seats for free.
Cvent Buys Social Tables as Event Tech Consolidation Escalates: Cvent is working methodically to expand its offerings in the small meeting space by acquiring Kapow and now Social Tables. Social Tables found success streamlining obvious pain points for planners, which is something Cvent can learn from.
Measuring the Value of Wellness to a Hotel Brand: Every time you turn around these days, a major hotel company is announcing that it has hired a chief wellness officer. But will this wave of devotion to wellness be a phase or a long-lasting phenomenon? Look to the return on investment for that answer.
The TSA Plans to Use More Biometrics at Airport Security Checkpoints: We hear good things about the reliability of facial scans at airports with one exception. JetBlue Airways reports that the system in place at its terminals is not as effective with the oldest travelers as it is with everyone else.
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Skift Senior Editor Andrew Sheivachman [as@skift.com] curates the Skift Corporate Travel Innovation Report. Skift emails the newsletter every Thursday.
Photo Credit: In this March 17, 2016, file photo, travelers wait in line for security screening at Seattle-Tacoma International Airport in Seattle. Ted S. Warren / Associated Press
