Travel Retail: TIME TO CHANGE

By: Peter Marshall   •   email: info@trunblocked.com

1. Trapped in Turkey?

As many of you know, I have been living and working in Turkey for over 5 years now, with bases in Istanbul and Kas, an idyllic resort in Antalya. It is an extraordinary country, with a fascinating history and culture. It’s also a country which is thoroughly divided, and one where politics is best not discussed.

For some reason Turks still seem to generally believe that anyone over 50 is old! So when the President ruled two weeks ago that those of a certain age had to be exclusively confined to their homes (and last Friday it was also anyone under 20, too) I thought I was utterly trapped. Like many in the business, I am used to travelling on a regular basis, filming at global locations, eating out, going to the cinema, theatre, art galleries and walking. There was golf, too, only it gave me up 6 years ago!

Everything now is hanging in limbo. But it’s extraordinary how you can adapt. For me 2020 will restart around May/June, like many others, and the following six months will be devoted to playing catch up.

Yet this vacuum has also provided the opportunity to find the time to do a lot more reading and to speak at length with family, friends and many business contacts across the world. Skype, zoom, whatsapp – my computer and mobile have been overheating.

And I’ve been eating. The problem remains I can’t go out until further notice, so managing some exercise in-home has become a bit of an art form. I got up to 10,000 steps a day, but then pulled a calf muscle, so am now doing a combination of press ups and sit ups. They are helping. But the fridge is tantalisingly close to the space where I work.

And am also learning the Turkish language properly for the first time. Discovered Duolingo and working on it for two hours a day. It’s very repetitive in the way it’s formatted, but it works.

Another surprise this past week, which barely enhanced my well-being, was the 24/7 wailing noises coming from the cat, Genie. Yes, she was on heat for the first time and it’s only just got better. Actually thought I was going to be reported for noise pollution!

Anyway, back to the blog.

2. Post Covid-19

If there is one thing we can all reasonably predict, it is that the industry will change. But by how much is open to question. There has been understandable noise from all sectors as to how they have been haemorrhaging money – and it’s true – and their respective associations have made their cases heard with some fairly dramatic language.

It will be interesting to see how some governments respond. We already know the US will bail out its major airlines and airports. How much of the airport funding stabilisation funds will cascade down to their retail partners is still uncertain, though. On the other hand, the UK government has indicated that airports will need to look to some of their shareholders first before any funds may become available. The emphasis is on the word ‘may’. My view is that there may be an equity stake required as part of any bail out. And, in certain cases, there may also be some form of stress test introduced, similar but necessarily different in framework from the bank stress tests introduced after the 2008 recession.

Covid-19 will definitely take out some airlines. If it goes on past June, it may also push some airports to bankruptcy, certainly some travel retailers and many of the medium to smaller-sized suppliers. Cash remains king and there may well be some interesting mergers and/or acquisitions across all sectors taking place later this year.

Even when a degree of normality returns – as it will – every projection I have read from the ACI to other industry bodies, banks and commentators, is that it will take some time to get back to pre Covid-19 days. And they are all indicating that this period could extend up to 18 months.

Perhaps the bigger long term casualty will be the cruise line market. The Economist wrote a fairly damaging editorial last week:
‘Holed under the Waterline’. The coronavirus may sink the cruise-ship business.

And, of course, all the while, everyone’s life habits have changed. Work from home numbers will only increase and businesses will all be looking differently at how they managed through this crisis and what key learnings they can adapt.

Online growth has also dramatically increased, and this will surely continue. It is time for travel retailers to better understand what it takes to move seriously into this market, creating new platforms that better cater to the new world. Adoption has been far too slow to date and there is now an urgent need for airports and retailers to make the investment that will keep them in the game. If they think the status quo will return, they better think again.

And the Trinity? We have all heard the stories of behaviours from some airports and a few retailers, offering very low rental relief or arbitrarily extending payment terms respectively. Yet, as one retailer said to me last week ‘it’s a dog’s choice that we are presented with, or no choice at all’. The industry needs to be sanguine, take a deep breath and get over the emotion of the moment. Still, a lot of damage to relationships has been done and, regrettably, some businesses will fail in the coming months. ‘Partnership’ has been largely re-defined as a word these past weeks.

Bottom line, this all harks back to the aged MAG model. Joint venture models remain the way forward between airports and retailers – especially for the airports where the pax numbers exceed 10 million.

3. Cannes-do?

And what of Cannes this year? Well, my sources say that TFWA will be making a decision shortly – end April likely, but may move later. If so, that will be too late. If Covid-19 is not totally clear by at least three months across the world, I simply cannot envisage anything like the same volume of attendees. It would neither be responsible, nor safe nor commercially prudent for people to attend.

Everyone recognises the importance of Cannes. TFWA know that planning logistics and timing are key to all who attend, so the sooner a decision is taken, the better. They are in constant dialogue with their base, so everyone will expect a clear and unequivocal plan from them.

Many hope that it will go forward, of course, and there may be an expectation that because of IAADFS and TFAP necessarily removing themselves from the calendar, Cannes this year takes on a disproportionate importance.

So, if it does, let me give my two pennies worth of thinking. The proposals that follow are for 2020 only, though perhaps they may have ‘legs’ for future years:-

* Move the event if possible to the end of October/early November.

* Make the Sunday a full conference day, replacing the sports and other activities. But maintain the cocktail event.

* Make Friday a full day.

* Ditch the paid-for guest conference speakers. Devote the time instead to keynote industry speakers.

* Drop the gala dinner and donate the guest speaker’s fee and cost of the gala dinner to an industry charity or educational project.

* Combine the event with MEADFA.

4. Media Budgets

Inevitably one of the casualties of any major international crisis is that all advertising, PR and social media budgets get slashed or cut altogether.

Covid-19 now provides brands the opportunity to reassess their investment across the board. So it is important that all publishers and agencies are totally transparent about the actual data of views or readership that applies to their respective media. This applies to all formats – print, digital, business and social media, virtual conferences, webinars etc. Supplier trade media and marketing managers really need to ask the right questions and demand to see independent, audited reporting.

The days of ”we did this for the trade and for you last year, so this year your budget has been inflation-indexed and is X” must disappear from supplier language and use. So must the ‘old pals’ act. There should be genuine, quantitative analysis made available that justifies any investment. Publishers should be quantifying their web traffic claims, for example, by quoting reputable outside agencies like Google Analytics. In-house claims should not be accepted. This is really no more than applying the same sort of decision-making discipline used every day in a brand or media manager’s life. Just ask the direct question. Of course there is also qualitative analysis – less tangible, of course, but an assessment of quality, genuinely insightful editorial does not go amiss when reaching decisions on budget allocation. What is needed is more than just simple reportage or mere duplication of supplier PR releases – the industry’s needs are changing.

So, it is incumbent on any publisher to provide you with the answers. From now on, where every penny spent will count, it is important to make the right decision based on accurate information.

The game has changed.