CANNES, France — Travel retail’s outlook may be cloudy in spots, but beauty executives expect smooth sailing in certain market areas. That was the consensus of executives meeting at this week’s annual Tax Free World Association Exhibition here.

This time last year, travel retailers were bemoaning the challenges presented in Asia, following the outbreak of SARS. But now emerging markets there are showing increased promise, particularly China, said executives attending the show. India and Eastern Europe are also continuing to emerge as promising outlets for development.

Numbers for most companies proved to be up, although many noted that year-to-date figures are bolstered by comparisons with a weak 2003, which was affected by a litany of problems, including the war in Iraq, SARS and fears of additional terrorist attacks. “Nobody knows if there will be a sickness tomorrow, or another crisis,” said YSL Beauté’s Chantal Roos. “Strong brands resist and wait for better days to come back.”

While a recovery has been felt worldwide, the European travel retail market isn’t experiencing the stellar comeback seen elsewhere. Travel retail sales on the Continent have been impacted by the strength of the euro and price promotions in local markets, which put added pressure on the traditional price advantage offered in travel boutiques.

However, the U.K. has proven that it is possible to buck the trend. In fact, if the rest of the travel retail universe had followed the success of BAA, rather than ringing up sales of $21 billion globally, the industry would have generated sales of more than $35 million this year, said Brian Collie, group retail director of BAA and chairman of World Duty Free, in a keynote speech that set the tone for the conference.

Collie warned that rising competition and the lack of initiative displayed by some operators in the travel retail industry could spell trouble if not addressed.

Collie identified what he claims are the three key aspects of successful operation in travel retail — optimism, commitment and success — to a matched set of fragrances, and warned that only through a combination of the first two aspects could success follow.

“The forecasts show that there will be a huge numbers of travelers as potential customers to reach, and there’s clearly a changing mood in the industry right now,” said Collie. “I think this year could be a real watershed for the industry — we’ve all experienced just how tough things can be, and we now have an opportunity to revive the industry and push it into the 21st century.”

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