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
“Are you crazy? Joining a start-up in the travel space in the middle of the worst global pandemic for over a century?!” That was just one of the concerned comments made to me when I left my previous job role after seven years and joined Omnevo in May 2021, with most of the aviation world at a standstill. in fact, it was Omnevo’s confidence and ambition in launching during the pandemic that told me this was something special. In the aviation industry’s chaos, they saw an opportunity. Exactly one year later, I know I made the right decision. While Omnevo is a relatively new brand to the market, we’re backed by AOE – one of the most experienced players in the market – and we’ve assembled a team of highly experienced people who have worked across airline operations, retail, F&B operations, logistics and technology for many years. This experience, combined with an incredibly skilled technical team, means that we can make impactful changes to an airline’s performance; and that’s exactly how Omnevo saw the opportunity, even while most of the world’s fleets were grounded.
Aviation & Travel
In this third blog in a series focused on airline adoption of a revenue digitalization strategy, I want to zoom-in from the broader focus shared in the first two blogs and their emphasis on front-end issues and, instead, focus on how the digital solution is embedded across the airline’s day-to-day operations in F&B/Retail – driving new performance levels in every area it touches, for both LCCs and FSCs.
Aviation & Travel
To be honest, I thought at first that it was an April Fool joke - but researchers at UC Berkeley have genuinely managed to convert airline food waste into aircraft fuel! Thankfully, this process doesn’t mean that flight crew must gather the leftovers to power the aircraft – or that the guy in Row 7 can’t have a dessert because the plane’s low on fuel - but it illustrates how there are always ways to find new solutions to old problems.