Retail and e-commerce go hand in hand in today’s market. Global retail e-commerce sales grew 24.8% to $2.304 trillion in 2017, representing 10.2% (up from 8.6% in 2016) of total retail sales worldwide, according to eMarketer. Mobile was a key influencer, m-commerce accounting for 58.9% of digital sales, with strong uptake in markets including China, Japan, South Korea, the UK and the US.
It’s a positive time for travel retail too. Generation Research figures show that global duty free and travel retail sales rose by more than 8.1% to $68.6 billion in 2017, after a disappointing performance in 2016. According to the blog theretailplanner, travel retail is expected to be the new disrupter in 2018 with brands looking to airports to explore trends in data-driven, experience-based retail.
For airports that approach the e-commerce boom with diversity and innovation, this is a trend that offers great opportunity for growth. Many airports are already successfully combining physical and digital retail. In March 2017, Fraport and Heinemann became the first retailers to participate in Frankfurt Airport’s online Shop Platform, launching a home delivery service for passengers who pre-ordered duty free products. The AtYourGate app, which runs at San Diego International Airport and Newark Liberty International Airport, allows passengers to order food from one of the airport concessions and have it delivered to them at the gate while they wait to board.
One major and significant trend for airports is the emergence of international travel as the latest luxury experience for middle-class Chinese. More Chinese people are travelling abroad than ever before, and their purchases represent a significant proportion of retail sales, even in European centres such as Milan and Paris. Chinese consumers are keen to post photos of their travels on social media to share both experience and status. These people also engage heavily with e-commerce, so retailers must understand how to connect with them using mobile apps like WeChat and Tmall before, during and after their trip. When a customer books a flight, data collected from that booking can be used to trigger a retail promotion in a physical store within the airport. The retail outlet can then take steps to engage with the customer on social media, seamlessly integrating their online and offline experience.
These trends mean that many luxury brands are experimenting with new retail experiences at airports as a means to encourage travellers to engage with their latest campaigns. Dior’s installation of the Dior-pink Jaguar (the actual car used in the ad campaign featuring Natalie Portman) at Singapore’s Changi Airport allowed travellers to pose in the car. They were then encouraged to post selfies with the hashtag #missdiorlovechain, building social media noise around the product. Dior built on the feel-good incentive of its campaign by donating $1 US per Instagram post to the WE movement charity. Pop-ups like this bring a statement of image and luxury and entice new younger customers to the brand.
E-Commerce and Diversification
The central points of diversification within e-commerce rest upon finding your niche, testing your products and building a strong brand. Today’s consumers are accepting of e-commerce to the point where traditional sales channels have been entirely disrupted, and they value convenience.
As airports engage with the e-commerce revolution, the question is, “How can we exploit the possibilities of e-commerce?”
Airports are different from other retail businesses. Passengers have time to spend at the airport and so continue to shop in physical outlets. This is a unique competitive advantage. At the same time, even with the benefit of tax regulations, duty-free has no advantage over Amazon and its almost unlimited choice of products. Customers can easily shop online while they wait, and Amazon already knows their payment methods and preferences.
5 Ways to Diversify
1. Understand your niche
The focus of the airport must centre on the passenger. What can be done to reduce stress for the passenger? What’s the best way to communicate options and offers to them? The goal is to get the passenger from their digital device into the physical shops at the airport, and taking advantage of all the services and facilities available on site. An integrated booking and CRM system like Rezcomm Shop enables you to get to know your passengers – what they need and what they want – so you can achieve higher conversion rates.
For example, Exeter Airport wanted to build a stronger product offering, adding products and services that would improve both customer experience non-aeronautical revenues. Exeter identified customer needs including parking, executive lounge, security fast track and a range of other bespoke products, giving the airport a platform to grow business using targeted, relevant marketing.
2. Build a strong brand
Many brand touchpoints these days come from social media. Investing in your social media presence and partnering with influencers will validate your airport’s brand as a market-leader.
Travel brands are increasingly incorporating digital technology such as pre-order smartphone apps as part of the airport retail experience. The key is flexibility, especially when it comes to luxury items, and the customer is interested in choice both whilst browsing and in the physical store.
Brand awareness at your airport can begin with your brand-matched integrated flight booking and car booking solutions and go right through to offers and promotions. Deliver a seamless customer experience to build trust in your brand and build customer loyalty, and use the ongoing personalised email communication features in Rezcomm Shop to maintain long-term relationships with your customers.
3. Put mobile first
Customer demand is driving digital innovation at airports and travel retail brands have yet to catch up. 97% of passengers arrive at their flights with a smartphone, according to SITA, and Statista says these people are already using their mobile to negotiate the journey, with 29% predicted to check in via mobile by 2021. Nielsen says that 63% want exclusive retail offers, 44% decide to buy a gift at the airport and around 30% want to treat themselves with a purchase in duty-free.
The main point of growth at the airport will come from increasing the number of passengers who make a purchase. The signs are good. Globally, airport retail sales rose 4% in 2016 according to Micromarket Monitor, and revenues from US and Canadian airport retail are expected to rise 20% from around $4.2 billion in 2015 to nearly $10 billion by 2020. However, according to Generation Research, only 15% of passengers currently make purchases. Digitising the passenger experience can potentially change the way people think about shopping at the airport, and is central to increasing sales.
4. Connect across channels
Omnichannel means that travel retail brands can develop more personalised strategies. Passengers no longer impulse-buy to the same extent as they have in the past, and growth depends on combining e-commerce with personalised concierge. Travel retailers must be there to help passengers who are captive and willing to spend.
Airport IT spending was predicted to reach $8.43 billion in 2017, and as airports continue to increase spending on digital innovations, brands with airport retail locations are following suit.
Airport retail is in a strong position to accelerate non-aeronautical sales growth using the combined strength of its ready-made destination retail status and its extensive retail portfolio. Brands that use smart digital strategies to harness the passenger data that is available to airport operators will successfully convert more passengers into customers.
5. Getting emotional
Passengers need a reason to visit the retail outlets on the way to boarding a plane. One strategy for conversion is to engage with customer emotion using digital platforms. Customer experience and personalisation begins in-store, but passengers will be more likely to buy at the airport when the experience is convenient, frictionless and memorable. Targeting passengers before travel has the power to change the way they interact with store staff, for example by making it possible for the passenger to order before they fly, and to collect in-store at departure or on arrival.
The test for good targeted communications is always relevance. Retailers must nourish a one-to-one conversation with the passenger. Knowing the customer, their purchasing behaviour and preferences allows your airport to send targeted offers. Consumers are already overwhelmed with marketing messages, but those that send relevant messages stand out. It is easy to collect data using an integrated system like Rezcomm Shop, and Rezcomm’s marketing and communications features take the challenge out of connecting with customers too, enabling your airport to send the right message to the right person at the right time.
Whether you want to increase your service offering with direct bookings for flights, destinations and on-site parking, or take advantage of e-commerce to grow non-aeronautical revenue, there is plenty of potential for airports in today’s market. An integrated, brand-matched CRM and e-marketing system like Rezcomm makes it possible to engage with customers and build your airport’s brand, enhancing the traveller’s experience and improving airport revenues.
Rezcomm is the partner of choice for parking, e-commerce, travel and CRM solutions for airports. If you would like to find out more about how our fully joined up digital solutions can help develop your airport’s e-commerce offering, contact the team today.
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