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The Summit of the Americas Conference, held jointly for the first time by IAADFS and ASUTIL, welcomed duty free and travel retail professionals from the Western Hemisphere and around the globe to Orlando, Florida. According to the conference website, the Western Hemisphere, which encompasses the Americas and the Caribbean, “offers tremendous potential for companies operating in the duty free and travel retail marketplace.”
Total duty free and travel retail sales exceeded ten billion US Dollars in 2016 in the region. As part of the high-powered conference lineup, AOE CEO Kian Gould gave a talk with the thought-provoking title “Travel Retail 2020: Digitally Disrupted or Digitally Evolved?” Three of the industry’s most-influential media, DFNI Online, The Moodie Davitt Report and Frontier Magazine, present a broad overview of his presentation and the discussion of the digital evolution in aviation retail between Gould and Martin Moodie, Founder and Chairman of The Moodie Davitt Report.
According to the live blog of DFNI Online, AOE CEO and founder Kian Gould “questioned whether the current model for engaging consumers is duty-free is still the right model with the technology available. ‘You have all built beautiful stores to encourage impulse spending, but the question is whether this is still the reality of consumer behaviour.’”
According to Gould, the new Heathrow Boutique is to go live this week. The plan for the E-Commerce platform is to make most SKUs currently at Heathrow available online by the end of the year.
The Moodie Davitt Report provides readers with a comprehensive look at conference highlights in its live stream as well as additional coverage. Here’s Martin Moodie’s take on the morning workshop: “This morning's inaugural workshop formula, which I had the honour of moderating, was an excellent addition to the show, according to both IAADFS and ASUTIL. AOE's dynamic Kian Gould was in top form on the omni-channel opportunity and Portland Design's Lewis Allen was, as always, a vibrant and challenging speaker.”
According to Gould, “Airports are an ideal ground for retail, there will always be people at airports but the way selling happens can be strongly augmented and changed over the years. Travel retail is still a viable channel and I don’t see it being destroyed but it’s way below its potential.”
Gould’s proposal, states Moodie: “Let’s grow the pie rather than fight over the shares.” An example of this is, the report asserts, is the double-digit increase in E-Commerce sales at Singapore Airlines – which starkly contrasts a comparable decline in inflight sales.
To counter the challenges that the industry is facing, declining per passenger spend, competition by online giants such as Amazon and changing purchasing behavior by passengers – to name the most important –, travel retail needs to find innovative approaches based on digital business models.
During his presentation, Gould highlighted the importance of connecting with passengers before they travel, introducing what he calls “The Quaternity concept for travel retail.” To create the best-possible model for airport retail, all stakeholders – airlines, brands, retailers and airports – need to collaborate. In this way, they can make optimal use of the information they hold about their customers and take into account that more than 70 percent of all duty free purchases are made in advance. The result is a hybrid model of airport retailing, which combines E-Commerce with an Omnichannel approach.
Frontier Magazine also emphasizes the Quaternity approach in its coverage of Gould’s talk. He attributes the radical shift in consumer behavior, where only some 30 percent of all purchases are on impluse, to the accelerating marketing penetration of mobile devices.
According to Gould, one quarter of all retail transactions are mobile, with that figure tripling in China. This indicates a major shift to spending in the digital space. Frontier Magazine states that “Some 70% of the younger generation say that omni-channel shopping is the ideal format and Gould’s company has been instrumental in taking this one step further, extending the trinity concept to a ‘quaternity’ one by involving carriers such as Singapore Airlines for whom it is providing a TR digital platform in conjunction with inflight concessionaire DFASS.“
In his presentation, Gould outlines three reasons for the boom in travel retail E-Commerce:
Gould's conclusion regarding travel retail is an optimistic one, though industry professionals need to make an extra effort to adjust their business models and bring travel retail into the digital age: “Travel retail is still a viable channel and I don’t see it being destroyed but it’s way below its potential.”
Frankfurt, July 14th, 2021 - Omnevo, leading provider of revenue-increasing digital platform solutions for airports and airlines and part of the AOE Group, and Fraport AG, owner and operator of Germany's largest airport, announced today that Frankfurt Airport goes live with the latest advanced version of Omnevo's award-winning omnichannel e-commerce solution. Additionally, the two companies announced that they have extended their long-term partnership for another five years to further develop the digitalization of the airport's range of products and services for the almost 70 million passengers (before COVID-19) who travel through Frankfurt Airport each year. With go-live, the existing digital solution platform, which Omnevo’s parent company (AOE) had originally developed for Fraport, was migrated to the latest Omnevo product version. Through its original partnership with AOE Fraport utilized the OM³ digital platform (now known as Omnevo) to become the world’s first omnichannel airport focused entirely on omnichannel both before and, especially, during the pandemic. The newly enhanced Omnevo cloud solution enables the operation of a complete airport marketplace solution for all travel retail sales at a fraction of the costs previously required for such a leading ecosystem, creating new revenue opportunities for crisis-hit airports of any size. Thanks to the highly flexible SaaS solution, Fraport has also effectively future-proofed its digital strategy by integrating directly in the Omnevo product roadmap, enabling it to benefit from Omnevo’s strategy of continuous improvements to the solution.
The past year has been extraordinary in so many ways and, while the tragic impact on lives takes precedence, we’ve also had to deal with the huge changes in our working life too. As the crisis developed early last year, I was busy planning in my new role as CEO of Omnevo - AOE’s new specialist product division - positioned as a digital solution pioneer in the travel industry, launching in early 2021. As the crisis grew, this became the most challenging experience of my career, but I’ve been surprised to find that it’s also become one of the most instructive and rewarding experiences too. Creating and launching any new company is always a huge challenge but we suddenly faced extraordinary new barriers as the way we do business had to be transformed. Much of 2020 was spent planning the new company and today, still operates almost exclusively remotely. Many of us, including some of the founders, worked together for almost a year but have still not actually met in person! Yet we already operate successfully in a global network and are scaling and winning new business. Omnevo is a truly virtual organization; this is how we were born and that is how we thrive. In this short time, we’ve already made our mark on this industry, with a culturally diverse, agile and highly committed team working alongside customers of all sizes around the globe. We’re gaining a lot of attention because we are recognized as game changers - and that innovative spirit is integral to our team spirit. We are committed to being the digital challengers and innovators in the travel and mobility industry – an ethos drives us every day. And it’s working. But what is the glue behind this, what makes us successful? Why is it working and, in these bizarre working conditions, how did we manage to get the team so well and engage with our customers so quickly? I’m obviously proud of what we’ve achieved but I want to share my personal perspective on how we made this happen and hope that it will resonate with others in the industry - and, hopefully, help you with your management challenges too.
COVID-19 has caused a near universal consumer adoption of digital far beyond just search and discovery. Globally, across almost every demographic, international lockdowns have got us accustomed to pre-order, pre-select and home delivery for many of our retail and service transactions. These rapid and continuing shifts in digital behavior inevitably affect the post-crisis traveler journey. As flights slowly resume, airlines, airports and associated service providers will no longer enjoy the luxury of resurrecting 'high touch' retail or food & beverage. Shopping and food & beverage are, of course, two of the most essential experiential elements in any travel journey. As travel restarts, travelers will now expect convenient digital access to these types of products as well as an overriding commitment to hygiene, sustainability and safety. And there is every reason to believe that these expectations will extend across the travel life cycle - from airport, to inflight and post flight. If you were an airline now, given the devastating onslaught of the pandemic on revenues and cash flow, just how and where would you start? Where exactly are the incremental revenue generation opportunities and cost savings to be found? Let's start by understanding the three key challenges: