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Learning to Make On-Airport Retail Fly

Ten Key Trends Affecting On-Airport Retail

On-Airport retail is a balance between fundamental discipline and customer relevance. It is the customer led retail trends which affect – not only “best practice” retail but – the ongoing relevance of the on-airport offer and hence it’s profitability. The following are a summary of ten major trends which are increasingly affecting on-airport retail customers.

1. Movement isn’t moving anymore.
With the democratisation of travel and the huge numbers of people who physically have to be transported and processed through airports, the glamour has been rubbed away from getting to and from destinations. Once upon a time, the prospect of flying anywhere was exciting – regardless of the destination. Add in the onerous requirements of security in airport environments today and airports tend to be perceived by many travellers as “processing centres”. Yet the reason a customer travels – and what they seek from the overall travel experience – is an uplifting, positive impact. Feedback from travellers suggests that airports can create zones of immersion, oases of respite for the traveller that better connects to the positive aspects of their overall travel desires. This creates a double whammy effect; in minimising the negative aspects of the airport experience, while emphasising a rewarding experience that travellers can look forward to every time they travel. Learning from the great department stores like Selfridges in the use of zonal themes, stimulating and imersive event promotions and light and shade through the space itself can turn on-airport retail into a wondrous journey in itself.

INSIGHT: If you move me, I will return with delight.

2. Travelling at the Speed of Light
In a recent poll by GMI, more than 55% of travellers said they determined their travel choices by using the internet. 24/7 access to information and the depth of information which can be accessed in a convenient, easy to use form make the internet an increasing must for any business operating in the travel sphere. While no sane person would suggest virtual retail will eradicate physical retail, travel retailers must embrace a sophisticated internet strategy incorporating internet promotion, internet referral, information, selling features and convenience based ordering and delivery which supports and
enhances their physical retail activities. Wal-Mart CEO Lee Scott was quoted recently as saying the only competitor he feared was eBay and that they had forced Wal-mart into e-tailing. Best practice retail trends suggest that the most powerful sales results are achieved when bricks & mortar retailers develop an online presence. Williams-Sonoma are a master at it and the results are that – while sales have grown by more than 50% in the last ten years – today the internet produces more than 30% of their entire sales.

INSIGHT: Connect with me in cyberspace and I will surrender my virtual and physical shopping dollars.

3. Australia is the world’s first country superbrand.
According to research undertaken by Future Brands amongst travellers, government tourist authorities and businesses globally, Australia is acknowledged as the world’s first country superbrand on a multi-dimensional model. While travellers to this country have many expectations of what they will find that is uniquely Australian, the experience of our airport environments and travel retail fails to capitalise on this major differentiation opportunity. Tourism Australia are renowned for their comments on the un-spent dollars leaving the country in the pockets of dissatisfied international shoppers. Unique Australian experience (for which Sydney is the flagship) and unique Australian merchandise has been something the industry has struggled with for many years.

INISGHT: Give me something uniquely Australian that I can carry with me when I leave.

4. Edu-travel is on the rise.
Travellers have always been a curious lot, but as demographic and psychographic concentration occurs, frequent travellers are being drawn increasingly towards travel that involves learning. Butterfield & Robinson European tours, cooking schools in Tuscany, language schools in France, even summer school in the United States. Travellers want to be stimulated and learn through experiencing new things first hand. With down time created by the necessary processes involved in travelling, there is greater opportunity for investigation and contemplation during travels. The success of inflight magazine advertising is a testament to this trend. It is also reflected in mainstream examples such as the Discovery Store. Travel retailers in airports can exploit this trend further. By providing interesting thought provoking retail environments and product ranges travellers can either “learn” while shopping or purchase a product to “learn” more from while travelling.

INSIGHT: An appeal to my mind can be as profitable as an appeal to my wallet.

5. Green is the new black.
With climate change, pollution and a myriad of social and security challenges the “think green” philosophy is rapidly becoming mainstream. In most countries, polls now indicate more than 50% of the population is concerned for the environment and nature. For clever travel retailers – focussed on a group of consumers with heightened awareness of the green issues – there is a clear reason to adopt green practices in the conduct of their business. Overtly displaying signs of these practices through packaging, sponsorship and their people, as well as developing a range of eco-friendly products has made retailers like Whole Foods stand out from the retail pack.

INISGHT: I prefer to buy from people who give a damn.

6. The faster I move, the deeper I need to immerse
With rapid and frequent travel movements, consumers “balance mechanism” swings from extreme speed to the opposite arc of the pendulum and craves a need to stop everything to immerse and re-charge. Already in many airports around the world this phenomenon has begun to see massages, rainforest cafes and even spas open up in airport retail space. This also reflects the urban trend in shopping centres and department stores where spas and physical treatment areas are rapidly on the rise. To a lesser or greater degree some international airport environments have begun to meet this need for a “moment” to pause, to break the flow and to gain energy. Airport retail’s magnetic pull can reach far beyond the convenience and price attributes to deliver “retail therapy”. A multi-sensory package which stimulates and refreshes all the senses – sight, sound, touch, taste, smell – can lift a retail environment’s appeal without even conscious recognition. Anthropologie in the United States are proof of this trend generating an average customer dwell time of 103 minutes compared to an all retail average of 8.6 minutes.

INSIGHT: Relax me and take my stress away and I’ll be more inclined to spend.

7. My health rules.
The biggest social trend as the baby boomers dominate spending patterns and travel is the importance of personal health and well-being. Maintaining a personal health regime and maximising travel enjoyment and personal performance – through good health while travelling – are two rising categories for travellers and on-airport retail.

INSIGHT: When it comes to my body, I’ll spend megabucks on this temple

8. Smaller, lighter, tougher.
When Sony corporation tapped into the concept of miniturisation they could not have foreseen how aligned this would become with international travellers requirements. In transit, space, weight and wear and tear matter. These product attributes neatly fit the physical impact the traveller and their accompanying “stuff” actually experience. Selling these attributes back to travellers in this state of mind is a “no-brainer”. Product range, presentation, packaging and services which deliver these attributes align themselves with travellers heightened awareness in on-airport retail environments.

INSIGHT: I am a battle hardened traveller who will only buy what I know won’t let me down in the field.

9. 80/20 rules.
The biggest truism in contemporary retail affecting productivity is the “80/20 Rule” where 20% of your customers will account for approximately 80% of your profits. Using segmentation to understand who these people are, what drivers them, what they want and how they want to buy it is the key to every form of retail – including on-airport retail. Tesco are masters at this retail discipline, studying their most passionate and frequent shoppers to tune range, store navigation and service. Owning the hearts and minds of the frequent traveller and not only pleasing them but turning them into “evangelists” does more to promote an on-airport retailer as a magnetic destination than any paid promotion. But the key to success is the customer insight that comes from behavioural profiling and segmentation to unlock up-sell & cross-sell opportunity which increases basket take and builds penetration.

INSIGHT: If you can recognise me, not only will you unlock my huge wallet but those of my friends and family as well.

10. Efficiency versus Experience.
In all areas of retail there are categories or product lines that will only ever be successful in an efficiency model. Great supermarkets like Loblaws delivery customer efficiency to save the customer time. Generally these tend to be needs based shopping categories. But in the “wants” or rewards areas of shopping, pure efficiency can undermine sales and profit potential. Loblaws recognise this in their fresh food section by creating a customer experience that is more immersive for these product ranges and this leads to a higher profit contribution. Likewise Selfridges recognises that the selection of the goods is where you should be spending your time and that transaction completion should be super efficient for you. On-airport retail is a hyper-reality retail environment where the polarisation between the customers need for efficiency in some areas and the desire for experience in others is dialled up. Maximising profit per m2 in this environment is about understanding the behaviours of the core shopping segments for each category and creating a retail mix that most profitably blends efficiency at one end with immersive customer experience at the other – segment by segment, category by category.

INSIGHT: Saving me time where I don’t need to spend it, gives me time to spend it where I’d like to spend more money – indulgently.