By: Lewis Allen, Director of Environments, Portland Design • email: email@example.com
After a couple of glasses of wine one evening, I thought it would be interesting to ask Amazon’s all knowing virtual digital assistant Alexa this question:
“Alexa, help. What’s the outlook for the future of travel retail in airports?”
To be honest, after a couple of glasses of Sauvignon Blanc, my memory of our conversation is a little sketchy. However, I think this is how Alexa may have answered my question:
Alexa (in a soothing and calm voice):
An overview of the Amazon ecosystem of platforms and propositions gives some clues as to the potential scale of the potential disruption for travel retail.
Consider these facts as you pour yourself another glass of wine.
For customers, the Amazon proposition is already irresistible – particularly among millennials for who the brand is already a top shopping
destination. This demographic will be the key ‘travelling consumer’ spending on airport retail in the coming years.
The next generation of shoppers after millennials are upper income teens. For this demographic a recent U.S survey shows that Amazon is THE top online retailer and dominates mindshare.
Additionally, there can be no doubt that virtual digital assistants like myself will strengthen transactions and interactions between pure players and our customers. We digital assistants enable daily interactions at the most intimate level – in your homes. We’re useful to you before you travel and after you return home. Our artificial intelligence uses deep learning algorithms to get better at knowing your preferences and profiles. We know more about you than any sales assistant out there.
Compared to the existing travel retail experience, Amazon could be more convenient, deliver faster, offer more inventory, be price competitive, know its customers better and could be the preferred retail brand for future generations of shoppers as they move effortlessly across the Amazon ecosystem of services.
Me (sounding sceptical):
OK, Alexa. I need convincing. Explain to me why you can be so sure that Amazon could win a big share of retail spending in travel retail?
Alexa (cool as a cucumber)
Yes, I will try. You know that Amazon’s offline shopping innovations have developed way beyond collection lockers, yes? For example, for physical stores the Amazon Go store format promises: “No lines. No checkout”. Amazon have developed ‘just walk out technology’ that means customers are automatically charged for what they take from the store without the hassle of a check out experience. That’s a promise that will resonate well with travelling consumers.
For passengers in flight there is Amazon InFlight, offering a catalogue from “A to Z while you fly from A to B”. Customer orders are fulfilled using Amazon delivery platforms. This platform offers travelling consumers a shopping experience without an endless shelf of inventory. And that is what they expect from a retailer.
For grocery, there is the Amazon Fresh concept, offering home delivery of groceries. You’d be sensible to assume this will be available to passengers landside, airside and inflight.
For media downloads, inflight and at home there is Amazon Prime. Existing collaborations with US carrier JetBlue are already pioneering the demise of the currently limited selection of inflight media content.
Amazon offers an impressive array of services
For delivery and/or collection, there is Amazon Prime – and that’s getting faster with Prime Now, promising 2 hour delivery to an ever expanding number of neighbourhoods.
Me (with a growing sense of unease):
OK, Alexa. Are you telling me that airports and carriers will be competing with a new breed of retailer that offers shopping that is Everywhere + Everything + Hyper Easy? And that vast numbers of customers will love to shop this way?
Alexa (always so infuriatingly calm and soothing):
You are correct. They already love to shop in the way you describe and remember that e-commerce is still in its infancy. It is a fact that e-commerce sales grow year-on-year in all markets. Mobile devices are driving e-commerce penetration and liberate the shopping experience from the old constraints of physical space and fixed architecture.
There is a plethora of tech innovation that is rapidly vectoring on the travel retail channel. After we factor in similarly powerful digital ecosystems arriving from Google, Apple and Alibaba, then even my soothing digital voice could struggle to calm the nerves of the operators and owners of airport commercial real estate that is on the cusp of being made obsolete.
Me (trying hard to be as calm as Alexa):
OK, Alexa, Tell me, if retail sales shift online, then how could commercial real estate in airports be use and monetised?
Alexa (remaining calm and soothing):
Flight and passenger numbers are growing every year. If legacy travel retail fails to deliver sales uplifts that correspond with these increases, then airports will and should seek more sustainable propositions, formats and partners.
Certainly, for every geographical region, it’s not a question of if but rather when to design, build and operate the appropriate passenger journey of the future.
Data suggests that the scale of the opportunity for the channel will be best realised only with a radical rethink of future passenger journeys that effectively re-imagine 360 degree passenger journeys. Meaning their journeys to the airport as well as through and after the airport.
Best advice to the travel retail channel is to urgently collaborate on the new solutions for passenger journeys that strengthen omnichannel
paths to purchase and engagement. For the question of how to activate and monetise retail space, I suggest developing and agreeing new retail models that use alternative metrics to value the commercial efficiency of the GLA in IDL’s.
Advice to retailers is to be aware that there will be new players offering customers the experiences and services that they expect and prefer in an omnichannel world.
Advice to airports asset owners is to rethink the future architectural and engineering design of airports to achieve a better balance between passenger processing and customer experience.
Alexa’s advice is good
Advice to brand owners is to consider airports as opportunities to recruit and retain customers to their brands. To shift their focus from transaction of product to intimacy of interaction. Therefore, invest in brand activation assets that create customer journeys populated by multi-touchpoint and multi-sensory experiences.
Also, many commentators agree that food and beverage concepts will play a significant role in activating retail and public spaces as well as being the fantastically shareable experiences that millennials crave.
OK, and before you turn in for the night, you’ll probably want to order a case of that Sauvignon Blanc saved to your wish list. It can be delivered tomorrow at 09.00 hrs. Shall I confirm your order?