Part 1 of this series on the Future of Inflight Retail set the scene for an in-depth view into this very unique retail channel called ” Travel Retail & Duty Free”, and ended off with a question as to whether inflight duty free shopping will go the way of books, big-box retailers and even cinemas.
There’s a couple of key elements in that question that need deeper investigation and understanding.
First – the terms “retail” and “shopping”, and “travel retail” and “duty free” respectively, have been fairly interchangeably used. Of course, they each refer to slightly different aspects of the same overall thing, but rather than split hairs, I wanted to reflect exactly how the average traveller might refer to all of this.
Those of us on the inside can spend all day defining the nuances between duty free and duty paid, between travel retail (merchandise and products) and travel retail (airline and related ancillaries like baggage, insurance, upgrades, hotels, car hire etc. during the air ticket booking process). We might even be business, process and technology experts within these domains and wax lyrical about each one of these in depth at industry conferences. My personal favourite is the difference between “shopping” and “buying”, which I confess to have used on more than one occasion. Heck, airlines can barely get their definitions of “ancillary revenues” standardised – so who are we kidding?
The point is – do we really imagine any of this makes any difference whatsoever to what travellers want and need, and how they choose to behave, or why?
Second – people have not stopped reading, shopping or watching movies. Bookshops, physical retail outlets and cinema halls have not disappeared (and in fact in some places they are flourishing!).
What has changed is the way these products are sourced, ordered and consumed by those who want them. This has been the single biggest disruption in the history of retail as we know it. It is the direct consequence of an explosion on the internet – of information, advertising, promotions etc. – which in turn, has enabled unprecedented scaling of product and service distribution and fulfilment on the front-end, supported by increasing efficiency of operations on the back-end, and the cacophony of marketing (aka “advertising”) and sales in the middle.
Why would travel retail be immune to any of these things?
Whilst we know why and how many customers have changed their search, discovery, comparison and procurement behaviours, is it sufficient for us to jump on the digital bandwagon and well, place a digital storefront on the WWW and hope for the best?
To put it another way: if less than 20% of passengers in ONE airport walk into ANY store to buy something today, why do you think putting your store on the WWW along with a bazillion (super technical term for which, if you need an explanation, please DM me separately) other brands and retailers is going to improve visit and conversion rates?
The omni-channel marketplace is most certainly not a silver bullet to your travel retail problems. Don’t get me wrong, I’m not saying it’s not needed – clearly it is – but it’s not a once-and-done plug-in. Sure, it might successfully funnel some stray digital surfers who happen to catch your wave while out at sea, but that’s really the digital equivalent of building it in the hope that they will come, like the bricks-and-mortar retailers of yesteryear. Look at it another way – dozens of online marketplaces have failed to flourish; why would yours buck that general trend just because it is there?
When was the last time YOU either (a) visited the airport app or website before you travelled, or (b) visited a brand website (or app) before your travel? Sure, there may be many Chinese doing it today through the Jessica’s Secret app (1 million downloads and 15,000 users daily) but remember that is less than 4% of the total outbound travelling population of China. Take a minute and read that again – that’s only users, not transactions and we don’t know if all of them are unique. Now what do you think monthly average user numbers are for average airport apps, or other B2C travel tech and concierge apps? Not all that fantastic either you might surmise.
The point that needs to be made clearly is this: shopping is not usually top of mind when travellers undertake their trips (to the airport or even inflight); retail is neither the reason they go to the airport, nor when they take a flight. There’s primary research available to support the view that pre-planning is undertaken before reaching the airport, but in a recent admission, it was also stated that “However, the majority arrive at the duty free shop without having made up their mind about which products to buy specifically… they only have a general idea about the category, the mission or the budget” .
I don’t know about you, but to me, that sounds like someone basically saying, “I might shop if I have some time left at the airport…”! Contrast this to anyone who logs into an online marketplace or opens a shopping app on their phone to search for a specific product, or with a specific mission to accomplish. You get my point.
It becomes clear therefore that Travel Retail is not specially immune or insulated from the global shift in consumer retail behaviour. In one of my earlier blogs, I defined retail eras as “B.A.” and “A.A.” – nothing to do with the IATA codes for British Airways and American Airlines mind you. They refer to the Before Amazon and After Amazon era. (The real confusing bit though, is that Amazon is opening physical stores…you should read what I had to say about this in my blog!). Travel Retail seems to be somewhat stuck in the B.A. era, with relatively few attempts by anyone to modernise strategically.
So what’s the future of Inflight Retail?
I’ve delayed releasing Part 2 of this write-up until today because I wanted to see what was being said through the recent Tax Free World Association APAC exhibition held in Singapore from 12-16th May. It was underwhelming; the phrases most often used were “omni-channel marketplace” and “digital”, “e-commerce” and “online”.
Of course the future of retail – even inflight – is “digital”! I personally wouldn’t go so far as to proclaim it “game-changing” (a notoriously over-used term, seemingly synonymous with “innovation” and “digital transformation”) but there are obvious opportunities in what is clearly a fast-changing consumer retail paradigm in every ecosystem. There will be some sort of marketplace online – of course. And there will be pre-order and home delivery. These things are obvious; the game obviously needs to be changed; some might argue even the rules!
I am nevertheless underwhelmed because the focus seems to be overwhelmingly on the platform and process as the saviour of retail. There’s a whole lot more to it than thatand I hope we are not blinded by the Technology and Terminology enough to forget that we are dealing with a fundamental issue of Transformation.
It is a transformation of the way travel retailers understand their customers, their business and the tools of their trade. It is a cultural transformation at its core, long before any technology comes into play. It is a transformation that does not require even the use of the word “digital”.
Intrigued to read about how this transformation in inflight travel retail needs to take place? Keep a lookout for my next article – Part 3 and the final one – in this series.
An ex-airline and travel retail specialist, I am driven by Customer Excellence. I enable startups and established organisations within the travel domain to connect, grow and scale their business internally and externally, thereby delivering Customer Excellence. This is achieved through the strategic mix of social marketing,modern selling, operations and HR advisory consulting, mentorship and occasionally angel investing.
You can find my content on Linkedin & Twitter by following the hashtag #flyvrai.
Here’s a training/project video from back in 2011. It makes for interesting viewing because it simulates an “ideal” inflight retail situation…and one that rarely ever occurs. Watch it and see.
One of my favourite restaurants in Hong Kong is Aziza.
It’s small (12 covers), family-run, serving delicious Egyptian food. They do more than 1 thing on their menu, and off their menu, really, really well. Consistently. Their service is 5-star – not by top Michelin standards, but by my own, and by those of the dozen others who patronise it nightly, almost religiously. And there’s always a line waiting to get in, but who actually get turned away. Yup, turns out the owner doesn’t think it’s cool to pressure existing diners or to make people stand in line waiting hungrily.
It is also tricky because it requires a fundamental shift in perspectives about business, selling and your customers. To quote that famous song from Aladdin:
A whole new world
A new fantastic point of view
No one to tell us no
Or where to go
Or say we’re only dreaming
(I know you’ve now got the song bouncing around in your head repeatedly – I’m sorry.)