I think we are only at the beginning of fundamental changes in travel retail. The market, already bearish in 2015, lost additional momentum in 2016. Margins are also under considerable pressure. Moreover, the statement that duty-free prices are cheaper than elsewhere hasn’t applied for a very long time. And more and more consumers prefer online shopping to the offline variety.
The providers, above all airports, which are important for the overall market, do not want to stand idly by. Though airports, technically speaking, aren’t retailers, they nevertheless structure their leasing models for stores in such a manner as to have a stake in revenue. If sales decline, airports lose as well.
Airport E-Commerce is a complex business, as the various order-, delivery- and – to some degree – returns options must be structured for both on- and offline channels. The learnings gleaned from the multi merchant omnichannel project with the Frankfurt Airport are groundbreaking. The E-Commerce architecture exhibits a complexity that is without parallel. The worldwide interest by airports in our OM³ solution is correspondingly high.
After all, traditional retail is in quite a similar situation. Here too, decreasing revenues and shrinking margins can be found everywhere. Retail needs to move forward.
Here, the players that control the market are mainly brick-and-mortars too – and they are systematically losing market share simply by the fact that revenue streams are flowing more and more toward online offerings. Until now, the logical strategy was to simply establish an own online version of the stationary store – a strategy, however, that hasn’t been followed through with much consistency. We are all familiar with large department store chains; huge stores in the inner cities and an amateurish online shop. Accordingly, most of these endeavors are correspondingly low in revenue.
What astonishes me repeatedly is that conventional retail doesn’t really use its strength – physical presence. For this fact, even if pure-play protagonists naturally fail to recognize it, is also a considerable advantage. An advantage, which in my opinion decision-makers in traditional retail interpret incorrectly. For, instead of thinking in comprehensive customer journeys and thus creating a seamless, greatly improved customer experience, they never tire of touting personal contact, the ambiance, brand worlds, etc. as advantages.
This might have been correct – and important – during the past millennium, in today’s world, however, those players win who can provide the best and most integrated customer experience across all channels. And those players win who make things for their customers as simple as possible. It is here that airports in cooperation with their duty free vendors are currently performing pioneering work.
So, instead of merely developing a separate E-Commerce branch the order of the day is to integrate online commerce into the existing, stationary business.
I’m constantly amazed how bogged down the idea of the E-Commerce business model has become. It really is quite simple though: All you have to do is examine all of the processes and evaluate how you can redesign them with the help of new technology to reach the goal faster, at lower costs and – most importantly – in a way that is easier for the customer.
Of course, this is easier said than done. Retailers have many monolithic systems and, quite often, organizational structures that rarely make this endeavor any easier. But is there a future-oriented alternative? I don’t think so, at least no alternative that does not result in long-term significant losses.
Now the situation with the classic shopping malls is quite similar to the one airports are facing. For the most part, shopping malls also close rental contracts that are revenue-based. Mall operators are well-positioned to enable their tenants entry into true multichannel E-Commerce. They can simply copy the model from the airports. And learn at the same time.
Aviation & Travel
In my previous blog - First Steps on the Path to Airport Digital Revenue Growth - I outlined the surging imperative for airports to urgently place revenue digitalization at the heart of their Non-Aeronautical Revenue and I shared the key building blocks needed for them to set out safely on their digital journey. Now, for those forward-thinking airport managers looking to actually seize the digital opportunity, I’d like to drill deeper to illustrate the key phases of a digitalization project. When Omnevo partners with a client, we jointly share in creating a clear project roadmap to understand the key phases of the project. These phases obviously vary in scale, complexity, and timescale according to the needs of each project and the internal resources available to the airport, but the visual (below) offers a guide to the path of a typical project.
Aviation & Travel
Michael Raasch, CEO of Omnevo, shares an introductory view on the potential for train operators to adopt digitalization to drive new levels of performance and profitability.
WIESBADEN, GERMANY, 6 SEPTEMBER 2022 - Omnevo GmbH, the leading airport digital marketplace solution, and AeroParker, the leader in innovative digital parking solutions for airports, announce a strategic partnership to take airport digital ancillary revenue to the next level.