Duty Free & Travel Retail (DF & TR) is a fascinating business with luxury airports, smiling staff, first class shops and smooth yet intense atmosphere. However, the storm is rising from the east and dark clouds can be seen also from the Europe and even from the States. The clouds are revolutionizing the industry with digitalism.
TR & DF have traditionally been known as the shopping window for the consumers or the heaven for the luxury brands, great prices and very strong retailers and of course good profits for them. These same brands have been embracing the digital revolution in high street already long ago, so why not in DF & TR? The retailers in turn are very well aware of the possibilities and opportunities the digital revolution will bring, so why not adopting the approach to DF & TR? Is it because of the required investments? Or is because of their lack of knowledge?
I’ve been working myself in the industry and in Asia, namely Malaysia and China can tell the questions are very multifaceted, but the answers simple and the decisions industries and companies have to take clear. To give you some sort of understanding of the challenge, I have made it a bit easier to understand the whole picture by breaking it into smaller pieces of a large and very difficult puzzle. The whole picture goes around data and collaboration. At the moment almost every airport, airline, retailer and brand are collecting their own data, without collaborating or sharing it to the others. If the situation would be healthy the revenues, future possibilities and dark clouds would be faded away from the picture.
The good old saying goes consumer is the king. In DF & TR the passenger numbers especially from Asia have been increasing and the average revenue per passenger decreasing. Does this tell you something? There would be more in meat in the table, but no one is eating? The very same surviving brands on high street or China are embracing digital revolution and improving their omni-channel possibilities. They can combine the brick-and-mortar and digital shopping experience and consumers love it. So why not in Airports?
The airports are different. Consumers have to stay in the premises and they will shop in the premises. “Spend the money quickly Kamal Khan” says James Bond and the airports. However, consumers have changed; they expect personal approach, online mixed with offline window shopping. This is an opportunity for the brands and the airports alike.
One way to integrate the physical and digital shopping in the Airports are the beacons, since the airports cannot use GPS (does not work well inside buildings). Being able to recognize the consumer or traveller gives you plenty of options to offer personalized service, offers and information. Bluetooth Low Energy Beacons can do that – they offer the airport and retailers the possibility to recognize the shopper and to offer personalized service.
Beacons provide airports also huge possibilities to guide the traveler; flight information, location of the gate, restaurant & café information etc.
Smart beacons work with Bluetooth to alert retailers when customers are in the vicinity of their store or signage so they can communicate with them at a targeted time or range. In fact, smart beacons take targeted marketing to a whole new level. What better time to send a customer a coupon or discount code than when they’re standing outside your door?
They can also be used to data collection to determine the effectiveness of the marketing.
To make the change possible, airports have to adopt the mobile first attitude. Current smartphones are the key to unlock all the digital possibilities also in the airports.
In addition to the airports, the retailers would definitely appreciate open system (open API’s), where the data would be available also for them. The biggest challenge at the airports in my experience is the data sharing and collaboration.
To keep the article readable, I’ve decided to keep this one short. The passenger data or profiles are the key to target the consumers. They are also crucial from the security point of view.
Passenger data provides the key to unlock the opportunities for retailers at the airports. There are regulatory constraints considering the data, but it is possible to get the basic data regarding nationality, age, gender and destination. Already this would provide the retailers and the brands very valuable insights and opportunities to tailor the offerings at the airports and inflight shopping.
I’ve been personally managing and refining the data I’ve got from the ferries and airlines from different countries to make the picture more clearer, but again open API’s, data sharing and collaboration would make the task much easier. Several airlines have also own airport shops, but to my knowledge they are not using the traveller profiles they have to full extent.
As said the consumers have voted with their wallets. The average purchase is getting smaller. Retailers in the airports have been in very lucky situation previously with their restricted airport area and fences around the airport. Nowadays the situation has changed. The widely adopted ecommerce starts to bite DF & TR as well. Especially if the consumers cannot get the service they expect.
Several retailers and airports have taken steps to improve the situation, but widely adopted approach is missing. Good examples are the Chinese travellers, whom the airports are fiercely targeting with Alipay and other mobile payments.
However, a worldwide or in this case worldwide Travel Retail approach is missing. It can also be seen that some of the big players are frustrated. An example can be found from Shanghai, where Alibaba has partnered with Shanghai Airport Authority in business development, customer service, air logistics and basic internet service and will create a fully wired “airport of the future”
Other example is from Malaysia, which though considers also other aspects than DF & TR, namely Silk Road, which of course could be unbelievable lottery ticket for the industry.
Today’s consumers are more switched-on and convenience-driven than ever. They’re also more diverse, which means that retailers need to deliver a smart, personalized experience regardless of whether their customers interact with them in digital channels or brick-and-mortar stores.
This is something the retailers have not wanted to realize. However, now will definitely be the time. Through the data sharing and collaboration the airports can tap into a much bigger aspect, which is customer experience. Airport retailers sell products, but the leaders sell experiences.
After the “basic digitalization” has been made in the airports, it’s time to raise the bar. In the very near future Chatbots will be everywhere. Also social shopping is making the customers life easier and could be excellent tool for example of airline catalogues. Another point is retargeting; the returning travelers are definitely good target for this.
I am again a good example; if I would have been retargeted in the Arlanda Airport in Stockholm regarding a certain products, I would definitely have eaten the bite.
One possibility for retailer to consider is also Virtual reality, which combines the offline and online environments and enhances the customer engagement. Good example is e.g. testing clothes in a virtual dressing room.
To put it short, there is a long way to go for airports, airlines and retailers. After the first baby steps and the realization of the issue have taken, it is time for a serious change.
DF & TR are just like a big family – there are fights and cries, but it is still a family and everyone has to embrace it! I just love the business and the personalities!