The ACI Airport Commercial & Retail Conference in Tel Aviv is a major event in the aviation industry, bringing together airports, travel retail operators and brands. The ACI created a high-profile panel that focused on whether airport retail outlets are shops or showrooms for the brands: “Are you being used? Are airport stores shops? Or just showrooms for brands?”
Participants were some of the industry’s airport retail experts:
Erik Juul-Mortensen, Global Commercial Director at DUFRY, opened the discussion, speaking about the importance of airport retail and innovative activations to encourage trial and purchase. Juul-Mortensen said he could imagine further financial pressure might cause some brands to exit the GTR channel and refocus the funds on the domestic market, where margins are more favorable. He also outlined many attractions of travel retail for brands.
Another bold statement by Juul-Mortensen: “Brands are among the best at adapting to using digital as a way to recruit new shoppers!”
Featured next on stage was Nigel Keal, Global Commercial Director at DUFRY, outlining that “Brands are tough, they have their own agenda. There is a need of collaboration between all three parties”, airports, travel retail and airports.
Travel retail is too expensive to draw in new brands, Keal argues. Talking to the ACI delegates, he said: “I believe that we are currently stopping the niche brands and the new trendy brands coming into this environment.”
Third expert on stage was Chris Annetts, Retail & Service Proposition Director at Heathrow Airport. Annetts started by discussing his history working for a retailer before his job at Heathrow, arguing: “They were absolutely shops and, fundamentally, I don’t think things have changed.” Annetts pointed out the digitalization process that is already disrupting airports and travel retail: “Digital disruption is everywhere, coming at every angle of airport retail.”
Annetts talked about the challenges of digitalization for airports and travel retail: “We recognise the world is changing. Digital disruption is everywhere. Amazon in particular is changing the game. That’s a difficult model to overcome.”
As Nigel Keal pointed out earlier, Annetts agreed on the importance of collaboration of brands, retailers and airports: “We talk a lot about the experiential airport and how we can deliver the seamless, frictionless airport. Airports exist to get passengers onto a big lump of metal and to somewhere else.”
Annetts also mentioned that airport product ranges are quite good, but that there is a lack of communicating that to the passengers: “You can buy pretty much anything in an airport these days. What we’ve been pretty rubbish at is telling people about it.”
Last on stage was Kian Gould, CEO and founder of Tech Company AOE. His introductory statement: “It is not so crisp, clear where branding starts today.”
Kian Gould spoke about disruption and unobtrusive E-Commerce boosting brands, retail and airport revenue: “The era when airports could rely on passengers’ impulse-buying at the airport is over.”
Gould named “webrooming” as the best answer. “Young shoppers in particular say that the ideal setup is an online shop with a physical store where they can pick up or return an item.”
“Omnichannel E-Commerce is the ideal hybrid, taking the best of both worlds, online and offline. An online shop combined with a physical store is the ideal combination, as ‘webrooming’ has become more frequent than showrooming. 73% of lower tier millenials agree with that,” said Gould.
In the discussion of the travel retailer’s challenge, Nigel Keal mentioned: “Retailers need to balance the demands of brands and airports. Once we had a business based on price, a captive audience and limited competition. Things no longer apply the way they once did.”
The panel discussion provided a lot of insights, illustrating a major point: The digital disruption has already begun, and airports, brands and travel retail have to react to that to survive – the best way is to collaborate and create win-win digital business models.
Aviation & Travel
One of the biggest emerging trends I have seen in the airline sector over the last couple of years is the concept of passenger self-serve onboard or order to seat. Despite the almost constant discussion at every industry event, the funny thing is, this isn’t really new at all – almost 10 years ago, a former CEO of an onboard retail technology provider proclaimed: “Over time the duty free model will shift to 100% passenger self-service transactions. One of the biggest reasons being the fact that the trolley only comes down the aisle once a journey, for half an hour – in essence the duty free store is only open for half an hour. If I can make transactions myself, through self-service technology, the store is open for the entire flight.” And yet, a decade later, this isn’t even close to the reality on-board most aircraft. During the pandemic, with the need for social distancing, coupled with a desire for innovation, self-service again bubbled to the fore – it gained a new level of relevance. With passengers across all demographics accustomed to ordering everything from groceries to new cars via their phones, digital transactions onboard an aircraft look to be a natural extension of what has become an everyday digital experience. The aviation sector is obsessed (but occasionally intimidated) by digital answers, and there is much that can already be done. Making a digital store available for browsing and even purchasing is achievable, both on IFE and passengers own devices. The process raises a number of operational implications, such as how crew learn of and deliver orders, how payments are handled (particularly if there is no air-to-ground connection) and how this sits alongside the existing cabin service. All of these issues require significant thought and, in some cases investment; and there lies the heart of the problem.
WIESBADEN, GERMANY, 19 JANUARY 2023 - Omnevo opens 2023 on a high with the announcement of two new airline projects following the launch of digital platforms with Fly Arna, Armenia’s national airline, and Fly Jinnah, a low-cost domestic carrier connecting main cities across Pakistan.
Aviation & Travel
In his two previous blogs in this three-part series looking at digital revenue adoption by airports, Daniel firstly outlined the compelling commercial rationale of ‘Why?’ airports should develop a digital revenue platform. He then explained the ‘How?’ - detailing the phased program in the creation of a digital revenue platform. Now he explains ‘Who?’ – highlighting the key roles required across the joint airport-Omnevo team to make the project a success.