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?”
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.
A three-part series of blogs showing how LCCs of any size have a proven, low-cost entry option to seize the digital initiative in driving their ancillary revenue recovery.
After 20-months of Zoom sessions it was amazing to be out in the real world again this month, flying the globe and actually meeting industry colleagues in person! Following the World Aviation Festival (WAF) in London I moved on to Future Travel Experience (FTE) in Las Vegas and it was so encouraging to find that these two major industry events, 8,000 km apart, echoed the industry’s increasing buzz around the digitalization of ancillary revenue. Sadly, I’ve now been brought back to earth by the latest twist in the crisis as Omicron looks to inflict yet another challenging phase. However, after two years of disruption the aviation industry knows it has to adapt to each new challenge and strengthen its ability to respond just as long as governments finally realize that locking down borders is a very short-sighted approach (unless you are an island state) and haven’t stopped any of the previous 4 COVID waves in any meaningful way. If the last two years have taught us anything, it is that airlines, like governments, will need to think a lot more globally than locally.
December’s World Aviation Festival in London was a great opportunity to bring the industry together and, although attendance was inevitably lower than normal, there was a strong conference program that carried a mood of guarded optimism. Best of all, I was delighted to see just how strongly the focus was on real action to drive ancillary revenue and recovery. Much of 2021 has been spent waiting for a recovery to be established and many airlines have understandably been hesitant (or unable) to commit to new investment or major change in their customer operations. The long hoped-for recovery has been impossible to forecast accurately and many airlines opted to simply ‘hunker down’ and wait until a clearer path can be seen through the storm. That strategy carries deep risks. We now face a new phase of crisis as Omicron sadly develops its global presence but the fact is that the world will continue to turn, people will continue to travel, the crisis will eventually recede, and traffic will return. Airlines need to be preparing right now to create the customer experience that the recovery will demand. Yes, the picture of how the 2022 travel market will look in recovery is still blurred right now - but the key point is that we do already know exactly what the returning customer looks like and what they want. We have a clear understanding of the experience they want - and we have the digital tools to deliver that experience.