Last year saw the top performing airports introduce pop-ups and experiential stores to encourage passengers to interact more with their retail offer.
This has been supported by a big focus on making shopping as efficient and convenient as possible, with multi-channel propositions allowing passengers to pre-order their purchases and offering complimentary home-service delivery.
Hong Kong International Airport for instance, introduced a range of retail innovations, including pop-up stores to showcase new retail categories such as drones and aerial photography systems. Technology, too, helped to create new experiences at the airport, with its retail environment enlivened with virtual reality exhibitions, a 360-degree selfie experience and interactive screens.
Alongside e-commerce, experiments with virtual and augmented reality are demonstrating new ways in which technology can transform the passenger retail experience. Heinemann Duty Free, for example, launched an augmented reality shopping promotion at Berlin Schönefeld Airport in the run-up to Christmas.
Despite all the opportunities that new technology can provide, the only initiatives likely to deliver long-term appeal and economic success for the airport and retail partners as those that easily fit into the travelling customers’ repertoire and provide a genuine benefit to their journey and purchase process.
Connecting architectural innovation to the passenger experience
Innovations in airport architecture and design play an ever more significant role in enhancing the passenger experience and creating engaging commercial environments to capture consumer attention.
A great example of this is the newly opened Terminal 4 at Singapore Changi, which boasts many architectural, commercial and digital components that are specifically designed to create a compelling customer experience.
Key features include a heritage zone – inspired by Peranakan shop-houses nestled around Singapore – that combine a mix of familiar, traditional brands with a nostalgic interior of heritage themed facades to create an experience unique to Singapore.
The promotion of wellbeing
With the wellbeing trend here to stay, airports have had to embrace this. It’s no longer just about selling a product, but how consumers are seen to embrace the values of a brand into their lifestyles, with social media a key avenue to project a desired image to the world.
The trend encompasses the entire commercial spectrum: from services and leisure, to apparel, F&B, and travel. City and travel guides now detail the top ‘instagrammable’ spots, so shareable, photogenic adventures are now a travel essential.
Airport retailing’s historical duty free proposition, long associated with the ‘vice’ categories of cheap tobacco and alcohol, is now shifting more towards brands and products that support vitality and an aspirational lifestyle.
More health-conscious and provenance-focused consumers seek out opportunities for wellbeing and sustainable retail, impacting all aspects of the airport commercial offer, from retail, to catering and service provision.
Innovative high street brand partnerships demonstrate how wellbeing (fresh pressed juice), can combine with a ‘vice’ (eating confectionery). Juice cleanse brand, Pressed Juicery’s collaboration with luxury US candy maker, Sugafina, is one example; the series of green juice gummy bears that pack the flavour and nutrition of cold-pressed juice into candy are the first ‘healthy’ candy ‘cleanse’ of its kind.
As consumers increasingly seek higher quality propositions, ‘me-time’, and experiences to enhance productivity and wellbeing, airport retailers and service providers must pursue new ways to deliver wellbeing across the spectrum of products they sell, from everyday travel essentials to the occasional indulgent purchase for their travelling customers.
Crossing the threshold: from screen to store
Globally, high street footfall is declining at an inverse rate to online sales rising, as digital commerce gathers pace. Additionally, smartphone addiction is on the rise – be it for online banking, booking travel, social media, or online streaming via the likes of Netflix and Spotify.
Prior to the smartphone revolution, passengers had to seek out avenues to kill time whilst on the move or in airport lounges. Airport retail browsing was an efficient use of dwell time and opportunity to indulge in an impulse purchase before flight departure.
Today’s challenge is the demise of the ‘time killing browser’ in airport retail environments, as passengers stay glued to their smart phones instead.
This is compounded by the increasing volume of airport information delivered through smartphones. In 2018, many airports globally will be pushing tech-enabled interfaces through biometric scanning, artificial intelligence and communication channels with more sophisticated chatbots, translation technology, and augmented reality, all making passengers more phone-dependent.
Airport retailers need to work harder to capture consumer attention from screen to store windows. This means pushing the boundaries for store design, window displays, compelling merchandising, and delivering a service-led proposition for its customers, to encourage people to cross the threshold into their stores.
Nike’s recent announcements should be a wake-up call to the retail industry – travel included. The brand will rationalise its 30,000 retail partners to around 40 favoured ‘differentiated retailers’, each with a special branded space for Nike product and dedicated sales teams.
As president of Nike Brand, Trevor Edwards, predicted that “Undifferentiated, mediocre retail won’t survive”. This illustrates an increased focus on the direct-to-consumer push, as brands rely less on wholesale, and more on flagship stores and e-commerce. Nike has a target of 30% e-commerce revenue by 2022, up from 15% currently.
Its New York flagship planned for 2019 will be a multi-sport assortment of product innovation and services, with a fifth floor available exclusively to NikePlus members, offering unique products and customisation opportunities. Members can meet a Nike Expert to offer personal shopping advice.
Similarly, engaging and wide-ranging environments are being developed by brands ranging from Tesla automotive, to Lululemon athletica, Charlotte Tilbury beauty, and Lush cosmetics.
So, has airport retail’s service proposition and in-store experience failed to keep pace with the high-street? Possibly due to the typically higher sales densities, guaranteed passenger base, price advantage (albeit diminishing), and aggressive concession margin demands from airport landlords, airport retailers have had less incentive to innovate, particularly for non-specialists in travel, for whom one to five airport stores may represent a small fraction of a 200+ high-street portfolio.
High-street trends indicate the growing importance of a more engaging brand presence in airport retail. Already, major beauty and spirits brands in the duty free stores are responding with larger format and more eye-catching product displays, with more expansion across the full spectrum of the airport retail offer expected.
The future model is moving more to a hybrid of transactional retail and marketing brand presence, recognising the importance of physical design and environment in capturing audience attention.
A licence for local
Despite airports being increasingly dynamic environments, the commercial real estate has been relatively fixed and static – both in terms of contract length and brand ubiquity, as well as stock turn and dynamic programming.
Retailers need to work ever harder to adjust their product offer to fast changing demands, while airport operators need to respond with increased flexibility of their space and programming, to adjust to changing tastes and trends.
Looking ahead, we expect to see more dynamism in the airport proposition. Airports are facilitating travel, adventure, and new experiences through connecting people to new destinations, but for too long, retail has morphed into a global conglomerate of ubiquity.
Consumer surveys highlight that 78% of airline passengers see travel as an opportunity to explore the local culture; airport retail must respond to these customer-led requirements.
A successful sector has been the emergence of the delicatessen and souvenir food concept stores. Stores with a strong local influence, and unique proposition distinct to the destination attract customers of all demographics, incomes and nationalities.
As technology increasingly allows a greater understanding of customer profiles, habits, behaviours and taste, we expect to see airport retail embrace the opportunity to champion its unique qualities of regional distinction and culture.
Airport retail remains an environment rich with opportunity for innovation. Now’s the time for operators to step up and embrace new ways to connect with consumers to really enhance the customer experience.