Walk through any airport these days and you can see that Food & Beverage is busy. Normally there is a big queue for Starbucks or Pret or even sit down locations such as Giraffe. If you have time to kill in an airport, grabbing a coffee or a bite to eat is often top of mind. It is a “low involvement” decision meaning that little thought is required over the decision making. The move by airlines to go for a “Buy on board” strategy rather than free food means that people are becoming more mindful of their needs before boarding (Red Kite Study).

When I flew recently, I found myself queuing to go for lunch in a restaurant. Anyone with airport experience will tell you that a queue (unless it is to board the plane) is never a good idea. It begs the question as to whether capacity should be increased.

Like stores, airports do not have rubber walls and so something will need to give way. But what?

 

Opportunity Cost

Airports need to generate a revenue and one way they do this is to rent retail space. The thing is, retailers do not rent space in the same way as downtown. It takes a percentage of sales. When you consider the impact of this, you are entering the realms of opportunity cost. This is the commercial trade-off – the potential negative impact of taking back space compared with the revenue that can be generated from another concept.

 

Digital

If what we are told (note that I say told) about digital and that the way forward is pre-order, collection in store and or home delivery, it calls into question the space that the Duty Free store has. Will a Duty Free retailer need such a large footprint in the future? 

 

The Argos Model

In the UK, there is a retailer called Argos. If I don’t use Amazon, Argos is my next ‘go-to’ store. I can look on their app, check that they have what I want, check that stock is available and then reserve. I collect at my convenience.   On arrival, the stores are relatively small, there are very limited displays and the products are in the warehouse out the back. This means that costs are kept low – no merchandising, no expensive fit outs etc. Just Till Staff and Runners (who may be the same thing as you can use self-service tills).

If digital is the way of the future, why have such large stores? Shop online, collect in store.

 

Customer Service

Ah, but what about Customer Service? Well, we have highly trained mystery shoppers that we deploy (many are ex retail managers with a sharp eye for what ‘should’ happen). The information we gather helps brands understand what is happening on the shop floor and what they need to do to improve the customer experience, improve conversion and get shoppers to trade up. Our approach is unique. This is not a tick-box exercise, it is much more valuable. If you have taken time and money to recruit, train and invest in your people, you need to know that you are getting a return on investment!

The best people on the front line can triple the average spend of a shopper. An average person on the front line can often miss opportunities and even encourage shoppers to spend less. In one study we completed last year, our very conservative calculations found the impact of bad service was costing the average store between £0.5m and £1m a year. Roll that across an estate of stores and it is very easy to see that this is a significant opportunity.

Did I say conservative estimates? Well, when you consider at least 4 out of 5 of our interactions (with store staff, brand consultants, agency staff etc) in stores would not have resulted in a sale, I believe the ‘size of the prize’ is much higher. Much much higher.

So, is service still a compelling reason to have larger stores? Maybe, maybe not. If active selling is not part of the retailer or brand strategy, self-selection from shelves could easily move to an Argos format – small shop floor, self-service screens, stock in a room at the back.

 

There is a but….

Airport shopping is not like any other retail environment. To travel, people are obliged to enter the departures lounge. You do not have the luxury of avoiding it and just shopping online. In some locations, a walk through store ensures that everyone gets exposure to the products on offer. For want of a better phrase, it is like “shooting fish in a barrel”.

Where else do you get a retail environment where people must go and they are in a positive mood, their inhibitions are lowered and they are more willing to part with their hard earned cash?

Having space in duty free shop is like having a shop window to the world. The exposure to a consistent flow of passengers should not be underestimated and it is something that brands do value.

 

And of course there is the shopper….

The other element to consider is shopper behaviour. Ever notice how people shop? When I worked at World Duty Free I spent a lot of time out in terminals and on the shop floor. The way shoppers interact with the retail environment is interesting. It can be easy to overlook what actually happens. Let’s take an example right now. I want you to do the following – Take a moment to think about the last time you shopped in store for a shirt or a blouse or a top… what did you do?

  • Did your eyes scan across the department taking in the range?
  • Did you spot something that was suitable?
  • Did you take a closer look?
  • Did you touch the garments?
  • Did you pick anything up?
  • Did you compare?

It struck me last night as I went to find a pair of swimming shorts for my son online. What an arduous, time consuming and boring process?! My ability to make a judgement is far quicker with products on shelf than it is on screen. We do it (online) to avoid being stuck in traffic, paying for parking, fighting the crowds and dealing with grumpy staff in store who are more interested in chatting to their colleagues than selling.  

In an airport though? I have to be there and when I am there, I can search the category quickly and easily taking in hundreds of products and make a decision.

 

So, is the Argos Model right for Duty Free?

If you believe that everyone will move to pre-order and collecting in store, stores may end up becoming a shadow of their former selves. With overcrowded F&B outlets that are likely to create passenger dissatisfaction, extra space has to come from somewhere.

Personally, I think that there is a big opportunity out there to maximise every shopper that crosses the threshold and that begins with the right people representing your brand in the right way.

If you want to know how your team are performing in store, drop me a line at kevin.brocklebank@oneredkite.com and I will share with you our unique approach to Mystery Shopping that will deliver powerful insights and get results.

Thanks for reading.

Kevin