Travel retail’s advantage in an online world
The duty free and travel retail world is rushing to create new and seamless omni-channel experiences. Just like some domestic retailers who don’t want to be ‘left behind’, there is a tangible panic among airport landlords and their concession partners about how best to develop a relevant digital offer for the passenger.
The first airport-wide digital platforms have started to appear. At Frankfurt Airport, the global web portal and content service provider, AOE, has developed a single digital platform for retail that makes things more convenient for passengers. AOE has also landed a contract at New Zealand’s Auckland Airport to create a ‘multi-retailer mall’ experience and has just announced another big deal with London Heathrow.
This is great news for the DF&TR market because single, unified digital retail experiences that help – rather than hinder the consumer – are overdue.
At this year’s TFWA World Exhibition & Conference, which attracted a record number of attendees, a new feature at the show was a Digital Village with 33 exhibitors taking part. A breakfast workshop at the show to discuss digital opportunity was also packed solid, showing the interest in the topic.
Bricks and mortar remain fundamental
However, in the scramble to digital we should not forget some important facts. Research by consultancy Bain & Company, together with Farfetch, predicts that when it comes to luxury purchases – and remember that DF&TR remains a strong luxury channel – physical locations will hang onto 75% of the market by 2025.
So while there is no denying the growth in online sales – double-digit for many big downtown retail groups – the truth is that bricks and mortar stores will remain fundamental to retail.
This makes sense if we look at data from the French Federation of Selective Perfumeries. It shows that six years ago only 5% of customers went to the web and they accounted for 1-1.5% of sales. These days 70% of customers go online first to do their research, yet they account for only 7% of sales.
In an article by Kevin Rozario in BWConfidential, William Koeberlé, president of the French Federation of Selective Perfumeries and European Federation of Retail Perfumers, says the figures show that the customer journey has changed. “They go online to check opening times, prices and promotions, but they prefer to buy in the shops. So 93% of sales are still taking place in-store,” he explains.
Online can help in-store
Online, in fact, is providing retailers with data – and lots of it. Consumers’ shopping habits are being uncovered and exploited to target them better once they are in the shops. In-store allows for what online can’t provide – a sensory experience of feel, touch and smell. This is especially important for categories in DF&TR like beauty or wine & spirits where sampling – with all its sensory appeal – can make the difference to a sale. It can also be true for fashion and accessories where touch and feel are part of the appeal.
It also opens the door to empowering the sales staff in the shop. In the age of digital – when a traveller can order any commoditised or repeat purchase online – they will still come to a store to find something new, or for a special, unique or personalised experience.
Training store staff – not just to do a direct sell but to tell a brand story, to coach a customer, to engage them in something aside from the price – is going to matter more in future. This relationship is set to deepen in the bricks and mortar world as digital takes hold in the ethereal world. And there lies the opportunity in the domestic market and in travel retail.