If you have read Part 1 and Part 2, you will be starting to realise that Travel Retail is a tricky business. Landlord pressure over prices, increased competition from online and currency fluctuations bringing its own set of challenges are just a few things retailers contend with.
What is becoming increasingly clear is that Travel Retail is at a crossroads. One option is to aggressively chase value by dropping prices. The likes of Amazon are able to push towards “Cost Leadership” because they do not have or need the expensive infrastructure (and the ongoing investment required) to operate at an airport. Would Amazon ever open a store at the airport? (I will cover this later in the series).
Another option is to place emphasis on convenience. The increased suggestibility and impulsiveness of those travelling can make price less of an issue.
Either way, how we frame our message is the next element to be considered. In Part 3, I want to look at branding.
What do I mean when I say I want to look at branding? Well, I want to take a more strategic view rather than focus on retailer level branding. Once again, no expensive research required to find that passengers often do not know the brand of the store they are in. They will often say it is the “Duty Free” shop but not know what “Duty Free” really means. This becomes very obvious when people ask “So what do you do?”. If you mention “Duty Free” you often get a blank look. You often have to explain further.
This simple act of having to explain myself is a gem of strategic insight in itself. What is it that passengers DO understand and how can we become more aligned to THEIR way of thinking?
Re-Framing Travel Retail
As an industry, do you know what we are really great at? Marketing to each other. We are great at telling each other about the exclusives we have, the great executions we run and how well they ‘worked’. But… what about marketing directly to the traveller? Do we do well? Could we do better? Probably.
If your brand has an airport exclusive product, please contact me email@example.com for information on how you can attract more shoppers.
At present, we could view the situation as follows:
- Travel Retail is different to Domestic Retail
- Airport Retail is different to On-Board Shopping (In-flight, Ferry, Cruise)
- Airport Retail is different to Border Shopping
- On-Board and Border are both very different
Each segment has its own unique opportunities and challenges. In the same way that domestic retail is very different to Travel Retail, these 3 segments are also distinctly different to each other. In the chart below, I look at what each of the constituent parts are of the 3 proposed segments.
- Re-think how we market to passengers rather than ourselves
- Become more targeted to their needs of the passenger in their respective channels
- Collaborate on a whole new level
Whilst collaboration is something that people are often wary of, it can be something that can deliver real gains without revealing sensitive data. There is a whole world of opportunity that can deliver massive insights that can be turned into commercial gains.
So What Is The Solution?
There are a whole raft of ideas that spring to mind that could transform Travel Retail. I would love to share them all but please forgive me for not doing so. We are a family run business after all and the team have mortgages to pay and children to feed 🙂 . I will however, share some initial thoughts.
I have already touched on this with the segmentation but the creation of 3 customer facing “brands” could be a first step to driving customer awareness. Those 3 “brands” would be as follows:
- Airport Shopping
- On-Board Shopping
- Border Shopping
Airport Shopping Marketing Board
I believe that the industry could hugely benefit through the creation of The Airport Shopping Marketing Board. This would be a non-profit marketing function that operates with a global remit to promote the channel to travellers. (We have outlined a campaign plan if anyone is interested in finding out more). Funding would be from key stakeholders (i.e. retailers, brands etc). The sole purpose of promoting airport shopping in its entirety to PASSENGERS. Of course, similar could be done for On-Board and Border Stores.
The Airport Shopping Marketing Board should not be limited to Duty Free retailers either. It should incorporate any retailer that features within airports but also Food & Beverage companies too.
One could argue whether such an organisation should be regional but I think this could be a relatively restrictive, particularly if you see Airport retail the way we do at One Red Kite.
With such an organisation, there should not be a “management by consensus” approach or large committees. This would restrict the dynamic and entrepreneurial environment needed to deliver proactive and responsive marketing to key target audiences quickly and effectively.
One final point is to move the focus away from price. Placing emphasis on convenience, exclusivity and affordable luxury would be key.
Here in Part 3, I have taken a look at how we can align ourselves in a way that passengers understand. By taking a strategic view and moving to segment Travel Retail to create “Brands”, benefit can be derived for both the passenger and the supplier (Retailers including inflight, borders etc, brands and F&B).
Some may consider this segmentation to be a little obvious and simplistic (and rightly so – it should be). It is the first step towards aligning ourselves to the distinct requirements passengers have within each channel.
You may even say that we do this already. You might say that the focus is already split by type. That may be true but a marketeers work is never done. There is certainly more that can be done to ensure we attract shoppers at an earlier part of the journey. By re-aligning to passengers in a more focused and targeted way, we can drive greater sales.
In Part 4, I want to take a peak at a radical new model.