TURNING TO TECHNOLOGY

Pragma’s Alex Avery takes us through the impact of digitalisation on airport retail and what this potentially means for the future of shopping and dining at the world’s gateways.

Technology has transformed our relationship with retail. From convenience, to single-click through to experiential retailing led by augmented reality.

At the same time, consumers are demanding more from their experience. They want to connect and engage with brands in a more meaningful way, seeking out discovery, authenticity, and sustainability.

Future-focused operators understand the role that technology plays in responding to evolving consumer demands and changes in established behaviours, providing new channels of communication, engagement, transaction and fulfilment.

What’s more, airports, airlines, retailers and brands recognise how, working digitalisation into strategies will support core non-aviation revenues. By 2020, millennials will be the dominant passenger group, accounting for 46% of business travel spending.

Digital natives and early adopters, their tech expectations are high and new trends quickly become established norms, with innovations in unrelated market sectors setting the new benchmarks that all businesses need to aspire to.

The rise of smart shopping

Digital innovation continues to drive the pace of change at a rapid rate. It impacts all aspects of the customer journey, from brand awareness, to product browsing, community engagement, purchasing and fulfilment.

As with its high street counterpart, consumer patterns have shifted acutely, super-charged by expectations of convenience and immediacy, placing increasing power in the customer’s hands. Quite literally, if we look at mobile shopping.

Always on and in everyone’s pocket, mobile provides highly personal, proactive and contextual assistance, at every stage of the experience. It’s effective at delivering unique brand experiences, building and maintaining valuable long-term relationships with customers and providing an immediate and continual line of communication.

Airports need to look at how they optimise the rich real-time data about individuals, products and spaces to create new ways to constantly improve the customer experience.

Innovative retailers are already exploring how to leverage smartphones and wearable devices to activate dynamic digital signage and location-based offers. Air New Zealand is doing this brilliantly, allowing passengers to order barista-made coffee via a smartphone app as they enter their selected airline lounge.

Mobile commerce offers airports the chance to build and extend relationships beyond the physical location, with smart shopping starting before passengers have arrived. It offers the significant benefit of increasing product awareness ahead of the journey, and therefore shifts purchasing behaviour from impulse to planned.

A fully comprehensive and real-time communication of the product offer available at the airport is crucial to attracting on-airport spend, increasing pre-order and driving earlier engagement between the airport and the customer. This, in turn, builds in the opportunity of more time for additional impulse shopping once on site.

A number of leading airports such as Heathrow, Frankfurt and Auckland have been investing in their online shopping platforms to allow customers a much more comprehensive browsing and shopping experience prior to arrival at the airport.

Innovation and convenience

Many of the key innovations within retail currently focus on maximising the speed and convenience of shopping through enhanced technology. This has been driven by consumers increasingly valuing ‘return on time’ – convenience, efficiency and simplicity.

Often empowered by digitalisation, it can create an enhanced purchase journey; airport commercial needs to get smarter at developing ways that maximise the value of customers’ time in the terminal. With this in place, the spend will follow.

Consider the fashion-forward, sustainable brand, Reformation, from the USA, selling clothing using eco-friendly materials and processes. Its stores are in showroom formats, combining sensory experience with cutting-edge technology.

Products are selected individually from the shop floor with different colour ways and sizes then delivered to tech-enabled changing rooms, where additional products can be ordered with the use of a smart mirror, and check-out undertaken on the spot.

Whilst the much-hyped Amazon Go convenience store is a further example of tech-enabled convenience, Alibaba’s Hema grocery stores are being rolled out at a far more dramatic pace, with 60 stores already in operation across the country.

Product merchandising is driven by big data analytics from consumer purchases ensuring stock is matched to the unique dynamics of the local customer base. The Hema app allows customers to scan QR codes to obtain valuable product information concerning price, origin, supply chain, and suggest recipe ideas.

The time pressured environment, longer walking distance through large format duty free stores, and lost airport sales due to queues at check-out, means such technology presents a great opportunity for global travel brands.

Those operating multiple units around the world could also benefit from more effective customer tracking technology and relationship management to facilitate customer identification across their portfolio.

It also applies to brands delivering content through digital technology. This includes maximising digital assets like billboard screens and TVs to target the passenger audiences.

Blending concepts to innovate

Technology enhanced retail – combined with an emphasis on showrooming and customer experience – provides a platform for innovation by creating new approaches to formats, store size, logistics, and inventory management.

The latest automotive stores by Tesla and Lexus Intersect, for instance, deliver a brand building exercise that focuses attention on craftsmanship, design, technology, and lifestyle, fusing the tangible product experience with seamlessly integrated digital platforms.

Decathlon Connect is an example where the typical warehouse sports store format of c.4000sqm has been condensed to a 200sqm intensified experience. It combines try-and-buy, digital catalogue browsing, and click and collect, yet still offering access to the brand’s c.35,000 products through the digital store interface, whilst showcasing bestsellers, brand highlights and product innovation.

By shrinking the format, the brand opens up the potential to operate out of smaller unit sizes typically offered at airports.

It’s how showroom-only brands such as SneakerBoy in Australia and Bonobos in the US offer physical opportunities to touch and try the product, but then fulfil the order through online and home delivery. This presents an opportunity to reduce the space requirements that are so often a constraining feature of airport retail.

Bringing F&B into the tech mix

Consumer preferences for an enhanced experience extends beyond pure retail, to F&B too.  Again, modern passengers are making decisions on values such as discovery, authenticity, as well as health. The opportunity for airports to optimise tech to attract this new generation of travellers is huge.

Technology is facilitating personalised catering, with innovative brands such as London’s Vita Mojo allowing customers to choose their ingredients, select quantities, and tailor their order to the specifics of their diet.

As with retail, the relationship to connect with hungry travellers extends beyond the airport.  This ranges from mobile apps and social media to digitised in-store displays, as well as fun social media engagement to educational elements.

Data also provides a platform for personalised and location-based marketing alongside offers tailored to their interests and loyalty programmes.

We’re also seeing brands lead on the convenience factor, removing the need for time-poor passengers to spend time looking for food or drink. Instead, they can order everything on the app to be delivered to a location of choice, as with Deliveroo’s food delivery trial in Amsterdam Schiphol, or the Grab app that operates in a number of airports in the USA and Europe.

Technology is shaping the future of airport retail. Pragma expects to see more exciting concepts emerge as travel retail catches up with the most innovative brands on the high-street.

Increasing ecosystem interconnectivity and collaboration will offer a more holistic proposition, and travel retail will be able to deliver the convenience that today’s consumers demand in their everyday lives, keeping pace with the shifting global retail landscape.

Ultimately, technology needs to put the customer at the heart of every touchpoint, to deliver a truly connected experience. This is how airport retail will stay relevant, engaged and connected to its audience.

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About The Author

Alex Avery is managing director for airports, travel and commercial spaces at travel retail specialist, Pragma Consulting. Visit www.pragmauk.com for more information.