The travel industry is primarily concerned with people traveling from one point of the world to the other. It is a broad industry that encompasses products and services. It is closely linked to transportation, tourism, accommodation, entertainment, and lifestyle. In these interlinked value chains is the retail demand for travel brands. From luggage, tents, and outdoor apparel, to winter clothing; people need the proper equipment or accessory to bring their things as well as adapt to the conditions in their destinations.
The travel industry is a booming value chain. It halted due to the worldwide pandemic in 2020 but is now accelerating towards 2019 pre-pandemic figures. It may have been a full stop but it is an industry too big to fail. Indeed, the marketplace cleared from the halt. This current recovery phase is a good opportunity to act early and grow a travel brand. As such, products should reach your customers efficiently. With that, what is needed is effective logistics for travel brands. This article will provide a rundown of the post-covid dynamics of the travel industry, cover the world outlook relevant to logistics for travel brands, and then outline how great logistics can make a travel brand excel.
(Covid pandemic, recovery, what comprises the tourism/travel sector)
The tourism and travel industry was the hardest hit during the 2020 Covid-19 pandemic lockdown. The industry contributes significantly to the worldwide GDP. By 2019, the combined industry contributes to a little over 10% of the global GDP1. In 2020, the first year into the pandemic, international tourist traffic declined by 73%2. In the world as a whole, tourism, and travel used to generate around $9.3 trillion; but as of the end of 2022 it was back to $8.4 to $8.5 trillion dollars3.
Despite the challenges, global tourism and travel have been recovering. The lockdown made people crave the outdoors once the restrictions eased. Indeed, there are waves of Covid-19 that came, gone, and might arrive. Nonetheless, we have seen recovery since we handled the pandemic better. In the first seven months of 2022, tourist arrivals were 57% of the pre-pandemic level; a tripled growth versus the figures in the same period of 20214. The industry is looking good in the first quarter of 2023. Travel and tourism to Europe, the Middle East, and South America performed better than expected.
The Luggage Market: What you need to know
The product that first comes to mind when talking about travel brand are bags and luggage. There are different types available according to particular lifestyle segmentations, Travel luggage is categorized according to the following:
- Carry-On Luggage — these are the smaller bags that you carry in the passenger cabin, and fit on the overhead bin and under the seat. These are either backpacks, duffel bags, small wheeled suitcases, or totes.
- Hardside Luggage — waterproof with a hard side. Usually made of polycarbonate.
- Softside Luggage — the bag for over-packers. Comes with an exterior compartment and might include an expandable feature. Usually made of nylon or polyester.
- Rolling Spinner Luggage — this type prioritizes easy-to-carry with navigable wheels. They may come as soft or hard side.
The current trend for consumers is the preference for luggage with soft material over hard-side luggage. This demand is pushed by new bag technology as well as affordable air travel. The trend for luggage manufacturing moves towards lightweight and sturdy while fashionable bags.
People have been using online retail approaches more and more these past few years; also accelerated by the pandemic. This trend is also affecting the market and the logistics for travel brands as well. Manufacturers are doubling their effort when it comes to improving their online sales operations.
This market is very competitive. The key players compete for major shares while small regional brands cater to particular regions. The major brands lead the way in terms of innovation imbued in their latest product releases. Mergers and acquisitions are also an indication of this very dynamic industry. The brands on top are Adidas, Nike, Louis Vuitton, and Samsonite.
Luggage Market Trends
In a forecast conducted by Mordor Intelligence, the luggage market is expected to reach a CAGR of 7.68% from 2023 to 20285. What will drive this projection? It’s from the more opportunities in education abroad. Another factor is the return of tourism opportunities during the new normal. Urbanization and the development of a more mobile lifestyle especially in developing countries also drive the demand up.
The Internet of Things and smart technologies have caught up with the luggage market as well. There is a need coming from customers for enhanced security and safety qualities. This demand is aligned with new technology applied to luggage. Smart luggage’s equipped with GPS for tracking luggage. They can be remotely secured with Bluetooth locks. Some are also equipped with convenience and extra functionalities such as USB ports for electronic gadget charging.
As with the retail industry as a whole, logistics for travel brands must adapt to the shift that online shopping has brought about. E-commerce platforms, whether through retailers like Amazon or the Direct-to-Consumer approach, changed the course of customer preferences. There is still the traditional offline retail distribution. People are now flocking back to physical stores as soon as the Covid restrictions eased gradually around the world. Now, once again, specialty stores, brand stores, and even supermarkets are selling travel luggage brands.
The Recovering Tourism Industry
The luggage market and travel brand logistics are directly proportional to the global influx of the travel and tourism industry. The 2020 pandemic was a hiccup, albeit a significant one, to this large global industry. As we move forward to the new normal, the industry is gradually returning to its former fast-paced and diversified character.
Developed countries are the major markets for travel bags. The United States, China, South Korea, the UK, Spain, Germany, and the Netherlands are the countries with the strongest outbound travelers. In terms of age demographics, people in the baby boomer generation now tend to spend more on leisurely travel.
The Opportunity with New Luggage Shortage
The return of travel and tourism is faced with a major shortage of luggage products. This consumer-end retail problem is a good opportunity for any business currently planning logistics for travel brands. There isn’t any available inventory anywhere hence department stores’ display racks are empty and there’s a delay in order fulfillment for e-commerce platforms.
Of course, we can always blame the pandemic for what happened. The lockdowns came with shipping and trade restrictions. Raw materials are hard to get through as a consequence. Mass layoffs understaffed the production line. The disruption is felt across the whole value chain. All in all, it has affected the luggage manufacturing’s capacity to produce a certain amount of luggage.
In the production line baggage, the global slowdown of metal production has affected the production of bag parts. From wheels, handles, zippers, frames, and many other components. The shortage started in 2021, we are in a period of rebalancing of demand and supply chain. It will take time to fully restore to 2019 figures.
On the logistics for travel brands, there are still also hangups. Moving goods across the market has been causing a shortage of luggage. The trucking industry has only been recovering in terms of manpower due to the pandemic layoffs. In the US alone, there have been problems with recruitment, training, and keeping people on the job. On the consumer-end logistics, the strict baggage policies in airports are still a limiting factor
Business strategies fail mainly due to poor execution, 67% of the time according to Harvard Business Review6. The logistics for your travel brand should be strategic and efficient to gain significance in the market. An in-depth and holistic plan should consider well all the operational and infrastructural prerequisites.
The bottom line of logistics is to bring the goods straight to the customer, in the most cost-efficient way. The customer will receive what they need at the right time. For the brand, that’s not just a customer’s positive feedback. More importantly, sales are met, meeting optimal profit with the least cost requirements.
The global situation nowadays is volatile in terms of geopolitics and trade relations. It is currently a fast-changing and sometimes unstable due to the rebalancing after the pandemic. A successful logistics strategy creates a reinforced buffer against risks. It is ready for any change, even the more unexpected ones, and is proficient in developing plans to adopt.
Supply chains are always fluctuating and the market. Moreover, even just within the travel brand market alone, the supply chain is segmented and multifaceted across regions around the globe.
Building a Logistics Strategy
A logistics strategy for your travel brand should look far ahead. Five years minimum. It needs a long-term aspiration: is its competitive advantage, quality order fulfillment, and supply chain efficiency? It is something that should be the goal for the long haul. It should be clear as well the approach to achieving those goals. Another important consideration is the execution of the logistics strategy alongside the flexibility to adjust plans according to the overall goal and external circumstances. In the development of your logistics plan, certain elements need special consideration. Here are the things that you should prioritize:
- Logistics strategy overview. You’ll need a bird’s eye view to see how the lay of your logistics will work with other aspects of the business.
- Logistics objectives. These objectives should be grounded on the costs and services both for the product and the customer.
- Forecast your market. The forecast is based on good knowledge of your inventory and market trends. From there you can optimize your manpower, revenues, and many other business considerations.
- Well-defined strategy. What should be included? The crucial things are order processing, inventory, storage, and transportation on the side of the brand while order fulfillment and customer care for customers.
- Analyze your plan. The first thing to find out is its impact on the business. What took look at is the implementation costs and the timing in the supply chain.
- Financial statement. A clear financial statement is like a roadmap. It shows the business the direction it may take in the future. A clear financial picture is one showing your Cash flow, capital needs, and operational costs.
- Business impact analysis. With a business impact analysis, you can anticipate the effects of your logistics plan on your profits, customer care, and other aspects of your business.
The logistics for your travel brand should align with the larger objective of the business. It is something that we should always remember to have an effective business strategy. That implies that different concerns like HR or IT should also align with the logistics plans.
The importance of having inventory and market forecasts can never be stressed enough. It is the boat that will help you navigate the fluctuating market and volatile supply chain. Analysis of capital requirements, operations cost analysis, and cash flow will help you gauge what you can do now and what heights you can achieve later.
Some best logistics advice
What is possible in retail, from omnichannel distribution, order fulfillment, and customer care, is always being pushed to the boundaries, always exploring and applying innovations. Hence, to stay competitive, one should always be up to their toes. Otherwise, you won’t have a chance in the highly competitive market of travel brands.
Even if the market landscape is constantly in flux, there are tried and tested best practices that can be applied to ensure success. Here are just a few of the best ones:
- A flexible, and centralized purchase process does the job.
- Always see the supply chain holistically. Supply chains compete. You should observe the effects it has on other businesses.
- Always be aware of risks. Decisions of supply sources can have implications. Minimize risks by working with the most reliable logistics service provider you know. Always take into account all the worst-case scenarios to keep yourself grounded.
- Effective inventory management is at the foundation of an effective logistics strategy.
- Create and assess a demand forecasting model. A good forecast can predict the demand trend while taking into account the level of uncertainty with forecasts.
In this period of recovery and rebalancing, the travel industry is fast picking up from where it left off before the Covid-19 pandemic. In its wake are great opportunities. There is a market gap caused by supply chain issues during 2020. Hence, there are more open spaces to gain a share in the potential wealth generated by the industry soon. To respond to this, logistics for travel brands will equip your business with all it needs to succeed.