Travel Retail 2020: Digitally Disrupted or Digitally Evolved? - Kian T. Gould - Summit of the Americas Conference
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Travel Retail 2020: Digitally Disrupted or Digitally Evolved? Kian T. Gould (Founder & CEO at AOE)
Who is ?
The World‘s No.1
Travel Retail Digitalization Company
22 airports/airlines currently in rollout, tender or consulting phases
Travel Retail 2020: Digitally Disrupted or Digitally Evolved?
Yesterday‘s Airport Shopping | Banking 100% on Impulse Purchasing
But is this still the reality of consumer behavior?
4.8 Bn. mobile devices yet only 4.2 Bn. toothbrushes worldwide
The average American
4h
spends more than
daily on their smartphone
25% of all eCommerce sales
USA
are made on mobile
in the
In China it is
already approaching
75%So is this today‘s Airport (No-)Shopper?
The disruption has begun | A look at Travel Retail
The 64.5 billion USD (2016) global Travel Retail market is contracting
EUROPE
29.7% MS
___________
$18.8bn
↓7.9%
ASIA PACIFIC
MIDDLE EAST 43.1% MS
AMERICAS 8.9% MS
__________ __________
17.1% MS
___________
$5.6bn $27.4bn
$10.9bn ↓2.4% ↑10.4%
↓7.5% AFRICA
1.2% MS
__________
$0.8bn
2015 - 2016
↓2.7%
Asia Pacific growth driven by Down-Town Duty Free +17.7% vs. Airports +1.5%
- Global Airport Shopping +0.4%
- Airlines -6.6%
- Ferries -2.7%
- Other Shops & Sales +7.3% SOURCE: TFWABut the market is still growing!? Market yes, spend per passenger no…
Spend per Passenger in USD
19.50
19.00
18.50
18.00
17.50
17.00 TR
16.50
16.00 $16.
15.50
15.00
4
2014 2015 2016 2017
Passengers in (billion) 3.328 3.561 3.810 4.081
Travel Retail market (in billion) 63.48 62.00 63.50 67.00e
SOURCE: TFWA & IATAHere is what these same passengers roughly spent when not traveling…
$540
online $6,030
in Retail
SOURCE: eMarketerMoments of decision of Airport purchase
Ensuring full digital engagement prior to travel is essential
to capture 65% of potential purchases
At home
before Leaving
35% On the way to At the In the Duty
the airport Airport Free Shop
for the airport
6% 14%
26% After looking around
At destination
before leaving
10% 7%
After Getting Advice from Sales Staff
(only 2% in high spender category)
for the airport
2% After buying another category
SOURCE: m1nd-set ResearchShopping behavior has changed radically
Planned vs Impulse Purchase
71% 29%
Planned in advance Bought on impulse
83% 79% 75% 44% 42% 40%
SOURCE: m1nd-set ResearchThe need for extension of the Golden Hour
PRE-TRIP ONLINE
TOUCH POINTS
34%
Search for / see information
53% Make the decision to
buy in DF before 62%
83%
Find mobile check-in
to be the most
convenient
about DF shopping Online arriving at the airport Book their
flight directly
online
40% AIRPORT ONLINE
TOUCH POINTS
Would like to do online DF
shopping before the trip
70%
Go online while at the airport
(24% search info about DF)
47% 62%
Motivated to visit DF if receive
Of DF visitors visit the offers/coupons on their smartphone
DF shop on impulse
SOURCE: m1nd-set ResearchOmnichannel E-Commerce
is the ideal hybrid
73%
of lower-tier
millennials agree
that
“webrooming” Online shop
has become more combined with a
physical store
frequent than
showrooming is the ideal
combinationFrankfurt Airport | How it all started….
The new Quaternity of Travel Retail
PARTICIPATION
CUSTOMER INFORMATION
in the international
Airports/Airlines know much more e-commerce growth
about passengers than
most retailers do
INTEGRATED
ADVERTISING
Via Wifi, Smart-Panels and
DIGITAL DEVICES InfoTerminals offer unique
create new transaction abilities
and communication
channels
CUSTOMER EXCELLENCE
Attractive digital offers
DIGITALIZATION and services form a unique
customer experience
of the travel journey
creates new touchpointsFrankfurt Airport | Some promising signs of success
Additional spend
(by FRA Rewards members)
Customer Growth Rate
↑ 62 % beyond business plan
+90 €
Repurchase rate
30 %
Avg. Basket increase (online vs.
offline)
230 %
Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17
Avg. Cross-/Upsell
YTD
35 %
300,000+ Loyalty sign-ups to-date
PlanThe webrooming effect in numbers…
for every
100,000
unique visitors to the
airport
e-Commerce
platform
Physical retail sales
increase by
500-750k EURBut why E-Commerce at an airport
Why E-Commerce at an airport has a competitive edge
PRODUCT RETURNS TRAFFIC
Immediate Product Availability Low Cost of Returns Low Traffic Acquisition CostAnd here is the future of airport shopping today…
going
live next
weekWhat would you think are best-sellers in digital travel retail?
Frankfurt Airport sold 5 premium Leica cameras online in February 2018 alone
Singapore Airlines makes more profit selling wine fridges than actual wine
Heathrow might be the only airport that can sell you a 35k JAEGER-LECOULTRE online
While our TCP technology at Auckland Airport fulfills $100+ million in downtown purchases
With the highest ever single watch purchase exceeding $1.2 million!
Is it surprising many brands don‘t want to be sold like this anymore?
Digital won‘t replace physical retail, but it‘s where future growth lies…
The airport as a true digital marketplace
Everything Mobile – Everything at your fingertips
Touchpoints Mobile
Voice
API
Airport Marketplace Services
Shopping
Payment
Services Retail / Shopping Loyalty Fast Track F&B Ordering
Flight Data Hotels Parking Maps
Valet Services Lounge Rental Cars ...The OM3 Suite | Digitalizing the entire non-aviation revenue stream
Passenger Non-Aviation
Experience On-Premise Fulfillment Revenues
E-Commerce Marketplace Mobile Shopping
Personalized Offers VIP Services
Fast track Loyalty
Parking Lounge AccessOM3 Suite – What is needed to achieve such an experience
FRONTEND BUSINESS SERVICES BACKEND
E-COMMERCE ORDER MANAGEMENT MERCHANT BACKEND
Product Data
DISTRIBUTED Store
AIRPORT E-COMMERCE ORDER Content RETAILER 1
WEBSITE MANAGEMENT ERP/POS
Pricing
ENTERPRISE GLOBAL
SEARCH & INVENTORY Inventory Store
INFORMATION RECOMMENDATION MANAGEMENT RETAILER 2
& SERVICES Fulfillment & Logistics ERP/POS
ON-AIRPORT
CRM / BI
FULFILMENT
Store
RETAILER 3
PRODUCT ERP/POS
IN-STORE
INFORMATION
ONLINE SHOP FULFILMENT
MANAGEMENT
Product Data
CALL CENTER PAYMENT
& CUSTOMER FRAUD/RISK
BACKEND
Content
E-COMMERCE SUPPORT MANAGEMENT
FRONTEND BOOKING INFO
Pricing Booking Info
INTEGRATION AND MERCHANT
Inventory Travel Info
LOYALTY FLIGHT INFO
RETAILER PORTAL
APPs & PROGRAM
Partner-
INTEGRATION LAYER
integrations SSO / SECURITY
(ESB / Services / APIs)Raj Mahindra (49), Indian
Pen Liyun (38), Chinese Michael Madden (59), British - Travels Business
- Lives in Bangalore
- Travels First Class - Travels Business - Always uses Uber Black
- Lives in Beijing - Lives in London - Loves BOSE Gadgets
- Buys 1 handbag each trip - buys his wife Chanel - Buys Hugo Boss hsirts
- Ususally orders to lounge - wears mainly Ralph Lauren - No Loyalty member
- has 250,000 loyalty points - has 10,000 loyalty points - Drinks Chai Latte
- Drinks Earl Grey - Drinks Double EspressoQuestions? kian@aoe.com
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