Travel

Estée Lauder, Head of Travel Retail, WWD

PARIS – Estee Lauder Cos. has high hopes for travel retail.

The group has just opened a new state-of-the-art distribution center dedicated to the worldwide channel located in the hilly area of ​​Galgenen, Switzerland, near Zurich. The multi-story, sustainably managed facility spans 300,000 square feet and doubles the company’s travel retail operations.

Here, automated robots work alongside humans in huge rooms where boxes snake on conveyor belts. The futuristic, 65-foot-tall, 11-aisle metal mesh warehouse can store more than 340,000 trays of boxes.

“This is being done to ensure the future growth of Estée Lauder’s travel retail business,” said Fabrizio Freda, President and CEO of Estée Lauder Cos., during an exclusive interview with WWD in Galgenen.

He explained that the site is also designed to better serve retailers by increasing not only volumes but also the quality of shipments.

“[It makes] we are confident that we will be able to more effectively adapt to different retailers and the needs of different markets,” said Freda. “This is the key idea. It is also a way to prepare to serve this growth in a well organized and sophisticated way.”

Travel retail, which includes duty-free shops at airports, city centres, airlines, cruise shops and border shops, has been the hardest hit retail channel during the coronavirus pandemic. When the health crisis hit in early 2020, travel came to a complete halt in most parts of the world, causing sales in travel stores to plummet.

Estee Lauder Cos. Distribution center Galgenen.
Cortes Estee Lauder Cos.

Prior to the COVID-19 pandemic, travel retail sales were $86.3 billion in 2019, up 9.8 percent year-over-year, according to Generation Research. Of these, perfumes and cosmetics made up the largest product category, valued at about $37.6 billion, up 20.1% year-over-year.

A survey by Generation shows that between 2024 and 2025, duty-free vendors should generally reach pre-COVID-19 sales levels. However, at Estée Lauder, the recovery was faster.

“Despite the pandemic and numerous airport closures around the world and travel restrictions, the retail channel has grown for us,” said Freda. “Our retail travel business is significantly larger today than it was in 2019.”

Travel retail, which typically reaches over 3 billion consumers a year, is one of the group’s fastest growing retail segments.

In fiscal year 2021, Estée Lauder Cos. the tourism retail business generated 28 percent of its total sales.

The growth was primarily driven by business in China and in particular Hainan Island, which has become a tax-free haven for domestic Chinese travelers who are not allowed to leave the country as part of the government’s “COVID-19 zero”.

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