Author: Kian Gould, Founder and CEO of AOE
The aviation industry, travel retail as well as airport- and inflight shopping have been changed dramatically as a result of COVID-19. The acceleration towards digitalization of commercial and service models is clear across all industries outside of travel and aviation. And customers are leading this change prominently.
Tomorrow’s breed of travelers – as shown in multiple surveys – will no longer be content with disconnected, offline shopping experiences nor will they be willing to engage in traditional methods of discovering new retail brands and products. Everything has moved online at lightning speed.
This is precisely why travel retailers – be they airports, airlines, retailers or brands – must change to offer digital solutions that are relevant and sustainable – and that these solutions must be built on “Omnichannel” platforms that begin with traveler attraction and engagement, and move all the way through to conversion.
Reduction in passenger footfall does not have to equate to a reduction in travel retail revenues
The Airports Council International (ACI) predicts that passenger traffic will be reduced by 50 percent in 2020. There tends to be a direct correlation between passenger footfall and travel retail sales; global airport retail leader Dufry, for instance, reported a 90 percent-plus reduction in sales in April, compared to the previous year. This is not surprising; average conversion rates for airport retail was sub-15 percent in most markets, and largely dependent on physical footfall.
The same problem confronts many airlines, as their flights were grounded for weeks; even though many have E-Commerce platforms in place, most are not prepared to meet crises of the magnitude of the Corona pandemic, mainly because they have not yet built the necessary “digital relationships” with their passengers. People do not travel to shop at an airport or with an airline. The awareness, opportunity and offer for shopping therefore needs to be carefully curated and presented at relevant times to travelers.
In other words, both airlines and airports need to invest in their digital offerings. Airports will not recover non-aeronautical revenues by investing millions of dollars into physical retail infrastructure anymore, while ignoring the realities of today’s retail landscape that is driven largely by shoppers’ penchant for digital convenience based upon anytime, anywhere availability of product.
When investing in digital solutions, travel retailers must first focus on the traveler, and work backwards to the process and technology that needs to be put in place to attract relevant audiences. Digitally savvy travelers, for example, will be more likely than before to pre-order online rather than shop inflight, wait patiently in long lines or visit crowded shops. This is precisely where the opportunity lies for targeted digital transformation of travel retail by stakeholders.
Traveler acquisition and engagement cannot happen if travel retailers and stakeholders do not even know who their customers are to begin with. For this, the industry must have accurate and accessible data. This data, including the passenger name record (or “PNR” in industry terminology), is the starting point for any interaction with the passenger (image 1) through an integrated, holistic digital business and service model. This is definitely not rocket science; many an airline still refuses to acknowledge the potential value of “joined-up thinking” in collaborating with airports, brands and retailers. This has to change.
Image 1: Accurate and accessible data is the starting point for any interaction with the passenger (source: AOE)
Airports and airlines are interdependent and must work together to focus on recovery and new growth
With the significant decline in traveler numbers that are guaranteed post-COVID – and with it the aforementioned decline in associated non-aeronautical and ancillary revenues – we at AOE believe the competition between airlines and airports needs to change into one of interdependence. Travelers will be travelling less and spend per head will therefore continue declining, unless retail, F&B and services are positioned in a relevant manner seamlessly as part of the traveler journey.
We believe it is vital for airlines to collaborate with airports when creating new solutions to these new challenges. Sharing of traveler information in terms of First Party Data is just the first step. What that data is used for – understanding behaviors and preferences and extrapolating that all the way to curating relevant offers – is ultimately the game-changer. Integrating this intelligence with the digital capabilities offered by a single platform will enable a whole new travel retail experience that was impossible – until now.
Get in touch with us to learn more about how we enabled some of the world’s best airlines and airports to implement digital solutions that are now serving them well during the crisis. We would love to help you as well.
AOE is the world’s leading provider of technology solutions and consulting for digitalizing the entire travel retail passenger journey for airports and airlines alike. Its suite of solutions comprises pre-order, pre-select, onboard-sales, POS, E-Commerce, personalization, logistics, and fulfillment. Numerous global airports and airlines are already using AOE technologies to grow their ancillary revenues including Heathrow, Frankfurt Airport, Singapore Airlines and Avianca. With its headquarters in Frankfurt and with offices in Miami, Zürich, Dubai and Hong Kong, AOE and its global team of more than 250 people in six countries has the ability to work and act globally for the entire travel retail ecosystem.