travel retail enters the digital age - the moodie davitt ... · travel retail enters the digital...

Travel retail enters the digital ageIntegrating the digital and the physical

By Michiel MunnekeMarch, 2016

M2mobiMarch 2016, Amsterdam

‘‘Combining digital and traditional in-person shopping has potential to revolutionize the passenger’s travel retail experience.’’

Even though passenger numbers have been increasing, the average revenue per passenger is decreasing. Now that passengers have the ability to compare products online, the idea that duty-free products are cheaper is long gone. Still, we don’t see an urge to digitally innovate within travel retail.

If we look at high street, we’ve seen many brands struggling because they didn’t adapt to the new digital reality. Consumers who order online, expecting more variety, better prices, and faster service. The brands that are surviving on high street, are the ones that have embraced the digital revolution and are continuously improving their omni-channel strategy. These brands are combining the strength of a digital and a physical shopping presence. So why aren’t we seeing this trend in airports around the world? Is it because digital just doesn’t work in travel retail? Or is it because airport retailers just don’t know how to apply digital yet?

Because passengers have to be at the airport on time they are more or less forced to use the shopping mall that is built around it. That’s one reason why travel retail hasn’t been hit as hard by digital as high street has. However, passenger expectations have changed. These days, they expect a personal approach and online shopping mixed with the offline experience. They are scanning products to see if they can buy them cheaper online and have them shipped to their homes. This behaviour is only slowly starting to affect airport retail sales and the revenue per passenger. And, most airports are still resting on their comfortable non-aviation revenue streams, all the while not realizing they need to take urgent action in order to keep their customers satisfied.

Introduction

‘‘Now that passengers have the ability to

compare products online, the idea that duty-free products

are cheaper is long gone.’’

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At M2mobi we work for airports (Schiphol, DFW, Paris CDG, and DXB) and brands (G-star, Heineken). We want to use our passenger knowledge to help brands reach their customers in a meaningful way.

In airport retail, we always start with the passenger but when looking at digital shopping possibilities within travel retail, we need to start with the customer. They are already highly accustomed to online shopping and direct services via mobile ordering. Their established online habits have given a whole new range of possibilities to the retailers who have the right ingredients in place.

The beautiful thing about mobile and wearable connected devices is that they create the opportunity to combine the digital shopping with the physical shopping experience. And being primarily physical, this is where it gets exciting for travel retailers. Being able to recognize your customer in a shop gives you the chance to become personal in terms of knowing what this person likes, what he has bought before and whether he deserves a special treatment or not.

Bluetooth beacons can be a powerful tool to enable a personalized approach in airport retail shops. Since GPS does not work well inside buildings, it becomes hard to know where passengers are within an airport. But, by strategically placing Bluetooth beacons, an app can recognize the beacon’s proximity and thus determine that this person is in your shop.

Integrating physical and digital shopping

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iBeacon

Digital Physical

CRM Advertisements Loyalty eCommerce

If done well, you can set up your digital systems in such a way that customers can connect to their profile and receive personalized suggestions. On the other hand, the physical shopping experience is also rife with personalized opportunities. You can help the staff along in this direction by giving them background information about the customers who are in your shop: . Saying something as simple as “Hello, Mr. Munneke. How did your wife like the perfume you bought for her last month?” can go a long way in building a memorable, personalized shopping experience.

The problem is that most travel retailers don’t have their systems set up right for this personal attention. Most of them are still stuck in retail’s middle ages and lack things like a product information management (PIM) system with all their SKU’s nicely documented; an ecommerce platform in which their customers can actually buy things; or even a customer relationship management (CRM) system, loyalty program, or targeted advertisement systems.

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Digital shopping

At M2mobi, we think the opportunities are vast within a passenger’s journey of the airport, especially if key flight information, wayfinding and leisure elements like shopping and food are integrated into a single flow.

Every mobile travel service that has been introduced, has seen a quick uptake by passengers. Eighty percent of passengers carry a smartphone now. When mobile check-in is available, it is used by more than half of the passengers, and 9 out of 10 users want flight status on their mobile. This indicates that there is a strong demand for a passenger journey where mobile is the primary touch-point. We believe that this mobile-first approach is the way to go for airports, retailers and airlines the coming years. Setting up this mobile first

strategy will lay the foundations for many

innovations.

The prime business model leads back to the main passenger problem: stress. When passengers have to run to their gates only to experience the frustration of having to sit and wait for their flights, stress results. M2mobi is convinced that finding ways to reduce passengers’ stress levels will create trust, and therefore confidence, that there is enough time to relax in the lounges, go shopping, and do things that improve the total travel experience. Decreases in passengers’ stress levels will result in revenue increases.

Apart from the relaxed passenger who has more time to spend in the lounges, there is also a more direct business model, mCommerce. The duty-free zone is a perfect place to shop, but what if you could already figure out which shops to go to, and which items are on sale before you got there? Also, why should you drag all those bags with you during your trip if you don’t really need them?

Opportunities

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Not only should passengers enjoy the majority of their time in an airport, but this enjoyment can be extended if they can access the airport services digitally. There are a lot of possibilities pre- and post- travel to create an integrated online and offline travel experience. The aim here should be to create a kind of “Uber for airports” where all the available services of an airport will come to you with a single tap.

This means you can have a coffee delivered at the gate, or a rental car waiting for you right outside the main exit. Passengers can browse the collection on their way to the airport and use the showroom to select and get a better feel for the products. Ultimately passengers want to have single-click services experience.

Digital Services and mCommerce

Parking

TollTaxi

Public Hotels’

Food & Beverage Fastlane

Car rentals Shops

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Create Digital Shopping Possibilities

Increase Shopping Time

HomeTravel time Check-in

& securityRetail

lounges Pier / Gate

At Schiphol Airport, 21% of the passengers have indicated they didn’t shop because they didn’t get any relevant offers. If the airport knows their flight, their gate, their shopping history and their preferences, why can’t it be more personal in its offerings?

Personalization and context are key to creating an experience that is relevant to the user. With such a wide range of services and products to offer, we need to be able to get this right. There is no use in offering a parking spot to someone who travels by train or to send offers to passengers who are in a hurry to board their plane.

There are a lot of factors and existing data that we can use to predict whether a certain passenger might be interested in a certain offering. In the below image, eight factors that can affect the level of personalization a passenger experiences are shown, ranging form the passenger’s location to his final destination. Obviously, time is an important factor in these offerings. For example, the time of day defines whether to offer someone a breakfast or lunch.

Personalized Offers & Recommendations

Current time

Available time

Location Profile Loyalty Big Data Destination Flightduration

Personalized OffersBased on context & profile

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Getting there Getting there

ArrivalsDepartures

Arriving at terminaland departures

Leaving the terminaland airport

Home Home

There is a long way to go for airport retailers to catch up with high street. The situation is different, so a different approach should be taken. Travel retailers have taken the first baby steps, but now it is time for a serious change. Simple solutions like hiring a digital manager won’t do the job. Rather, it is time for a company-wide sea change in which every retail employee understands and embraces the new digital opportunities. If they get this right, there is a lot to gain for the airport, the passenger and the retailer.

Conclusion

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‘‘Travel retailers have taken the

first baby steps, but now it

is time for a serious change.’’

M2mobi is a mobile agency. We develop mobile solutions from strategy and concept up to development and maintenance. Full-service. From our offices on the Herengracht in Amsterdam, we work with around 30 people on mobile solutions such as apps, mobile websites, applications for smart watches, car apps, etc. We do this for well known brands such as Schiphol, Heineken, Transavia and G-Star.

MoodiesBest Airport App (2014)Best Airport App (2013)Best Airport App (2012)

SportNextBest Sport App (2011)

TravelutionBest Travel App (2010)

Navteq Global LBS AwardRunner up for location based app Nulaz (2010)

Teleatlas Out of the Box AwardWinner for location based app Nulaz (2009)

Vodafone Mobile Clicks AwardBest Mobile Startup (2008)

About M2mobi

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Awards

Michiel MunnekeGeneral Director

[email protected]+31 6 20 00 33 30www.m2mobi.com

travel retail enters the digital age - the moodie davitt ... · travel retail enters the digital...

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