The world of airport retail is booming. As airports continue to implement tasks such as check-in and bag-drop remotely, there is more physical space which can be used to increase non-aviation revenue streams.
Alongside increasing brick and mortar stores, airports are improving services through personalisation and technology. From Heathrow’s personal shopper service to JFK leveraging VR and AR to help passengers find the retail shops they desire at the airport, airport hubs are ensuring that passengers make the most of their limited time before boarding.
Here is what the experts had to say about the trends likely to take over the airport retail sector in 2020.
Varsha Saraogi (VS): What will be the biggest retail trends in airports in 2020?
Chief value adviser for retail at SAP UK, Shane Finlay (SF):
Airport retail will become the way customers shop in the future. One of the reasons is that it’s tax free. A number of airport retailers are increasingly looking to customer experience surveys to get a better understanding of travellers’ spending habits. The retailers that have asked their customers have identified that boredom while waiting and convenience top the tax-free shopping incentive. Travellers with a couple of hours to kill before a journey are a big target for the retailers in their immediate vicinity.
For instance, WHSmith’s travel arm is making profit while its high street sales are slumping.
The intersection of convenience and customer need are played out better in travel hubs and any retailer that plays to those will perform better. Some retailers cite the shift in property values causes more people to move further away from busy high streets and spend more time in transit.
While consumers are moving through travel hubs, time is of the essence and there is a fuller range of emotions. Delivering good experiences will depend on connecting customer experience data with operational data.
Chief executive officer and founder of AOE, Kian Gould (KG):
There will be four major retail trends in airports in the near future.
The first regards the approach to technology as well as the business model, where we can observe an ongoing transition to omnichannel use cases. Passengers expect to have access to e-commerce platforms and websites anytime, anywhere – regardless of the device they use. Airport retail shops must think beyond the physical boundaries of on-site stores and create omnichannel business models for sustainable success.
Secondly, there is a definite trend toward luxury items in travel retail. At, Heathrow Boutique, for example, passengers buy expensive Jaeger-LeCoultre watches and high-end camera equipment. None of these items would be considered as traditional travel-retail products. The reason is that passenger buying behaviour has changed dramatically. Where in the past, passengers shopped spontaneously, making most of their purchasing decisions in the store, this behaviour no longer applies. Passengers research, check availability and compare prices online – and then purchase the products at the airport.
The third trend regards the entire travel retail ecosystem. The major players – airports, brands, retailers and airlines – will not be successful in the long-run if they continue to operate as individual silos and all players must collaborate. Airports provide the physical space and infrastructure; brands and retailers the retail environment and airlines provide the necessary customer data to communicate with and sell to passengers in a targeted manner. We call this ecosystem ‘The New Quaternity of Travel Retail’.
Finally, passengers’ e-commerce buying behaviour is trending more and more toward third-party platforms such as WeChat, Jessica’s Secret and Alibaba’s pre-travel duty-free platform, Fliggy Buy. Integrating such third-party vendors into travel retail ecosystems is relatively new and will change the industry in the long term.
The best way to summarise is to realise that travel retailers and airports must really know their passengers. Only then can they customise their offerings to meet the needs of their customers. The only way they can access this information and tailor their offerings toward their customers is by using an omnichannel approach to travel retail.
Director at Pioneer Group, Mark Childerhouse (MC):
The biggest trends in airports for 2020 are personalisation and making high-end shopping an attainable luxury for the modern traveller.
Retail shops need to focus on delivering experiences which offer one of two things: ultimate convenience, or a luxury experience. Business travellers are searching for both of these items simultaneously and with the time-poor traveller spending more hours in airports than with free time at the destination, then offering service, quality and a memorable moment is all important.
Retail owners need to work out how to leverage their brand equity and play to their consumer’s requirements, while also reducing any barriers to purchase. There is nothing more stressful than waiting in queues to pay while your flight is on its final call. For example, cosmetics stores now offer simple beauty treatments while passengers wait, and high-end stores hold customer preference details and have items wrapped and ready to take when they arrive in the store.
Executive chairman of Hellenic Duty Free Shops S.A, George Velentzas (GV):
It’s important to fully accommodate today’s and tomorrow’s travellers’ needs. Even though, traditionally, duty free business attracted customers with lower budgets, this is no longer what today’s customers are after.
To create better value proposition and offer a unique experience, the duty-free sector must add a strong local flavor. Local foods holds 37% of the total sales in Greece. We educate our personnel on Mediterranean diet and local liquor. In 2018 we launched a new concept ‘All Greek to Me’ that offers unique souvenirs, Hellenic gourmet, Greek designers’ fashion masterpieces.
A well-developed loyalty scheme is important. The Dufry loyalty program offers incremental discount based on customer status, and provides benefits such as VIP access to lounges, city experiences and car rental discounts in more than 200 airports and cities.
This is an integral part to create a unique and seamless shopping experience for the passengers in the future.
VS: How can retailers in airports use technology to their advantage?
SF: Certain retailers are likely to perform better in terms of sales at travel terminals rather than the high street. If they leverage data and handle experience management very well. Top performers will combine data points to adjust their storefronts and merchandising to maximise sales in real-time in some cases. Furthermore, leveraging outside data sets like event and weather data will make a huge difference here, like umbrellas when it’s raining or event packs for festivals or sporting events.
KG: It is important in a holistic, omnichannel model that a standalone approach by individual retailers and duty-free shops will not work. What is needed is a multi-merchant platform built on omnichannel retails solutions.
These solutions would not be possible without a high degree of digitalisation. Airports will not be economically successful if they continue to invest millions of dollars into physical retail infrastructure, but ignore the realities of today’s travel retail landscape and neglect their online offerings and omnichannel platforms.
MC: Many international destinations are putting teams and technology in place with the purpose to help travellers to source, try and purchase items on their wish lists in the short time frame they have in the airport. This is where integrated online purchase through airport apps, as well as displays and networks in airline lounges are being brought together to create opportunities to connect with the brands on the concourses.
One example is OPI which positioned AR pods within their nail displays, meaning that when people were already interested in the brand they were incentivised to experience the colour and make a purchase. This visualised the hands of the traveller and put the nail colour onto the hand in a virtual environment, offering both the convenience of trying the colour, but also an experience which can only be tried instore. This is the perfect example of giving the consumer what they are looking for by using technology.
Digital signage was also installed in many of the stores to amplify and attract the shopper and to demonstrate the experience as you passed through the duty-free areas.
GV: Airports must create new channels of travel retail purchases with click and collect services. New payment options such as Apple Pay, Amazon’s ‘shopping like stealing’ concept are novice alternatives that simplify purchase for the customer. Explore the option of gate shopping and delivery as a response to the restricted available time for shopping and the time spent in gates along with home delivery, after examining legal restrictions. Right customer service is working 24/7 all days of week to meet customer enquires in store, by email, chatbots.
Airport shopping must be a memorable and instagramable experience. We are always organising contests and events to create a buzz and motivate customers to share these moments on social media.
Stores must be designed according to the ‘walk through’ concept, have highly engaging interior design. It should fully reap technology’s benefits to offer the most simplified and interactive shopping experience. Since the last few years, we invested more towards instore technology and large screens, digital touchpoints and sale tablets were added to lure customers’ attention, and draw them in.
Despite how challenging ‘Aerotropolis’ may seem today, this phy-gital concept allows us to enhance communication and approach potential customers in a more personalised way than ever before.
Nevertheless, we should never forget that the real tech story in the retail is about unseen digital infrastructure: Big Data, CRM, internal systems integration are the real actors that will allow us to understand better each of our customer and help us provide qualitative tailored services.