Travel environments present the commercial advantage of having a captive audience for a period of time. Brands and retailers recognise that the Passenger Pound is a huge and growing retail market.
Recent published estimates indicate that the travel retail market (including spirits, cigarettes and electronics) has doubled in value in the past 10 years to $63 billion – impressive figures which reflect the success of new retail strategies adopted in the last 10 years particularly in Europe post abolition of ‘duty free’ for non-EU passengers in 1999[1]. Airport shopping accounts for approximately 60% of this $63 billion, with ferries and cruise ships, border shops and downtown duty and tax-free shops make the remaining contribution.
So what can Brands and Retailers do at a strategic level to drive more revenues and deepen the engagement with the traveller? Travellers have many engagement points during a typical travel experience - hence the power to engage and convert Passengers into Shoppers is a complex challenge. Those who succeed, leverage strong insight from Passenger and Shopper, married with a commitment to delivering consumer inspiration through innovation in the retail marketplace.
The Challenges in Travel Retail
Travel Retail presents many unique advantages but also considerable challenges which both marketers and researchers need to take into account:
Limited windows of opportunity: a short time frame in which to gain 'cut through' and generate purchase conversion. Travellers aren't passing through for long, are often time conscious, and may not intend to shop or visit catering outlets in the first place!
The savvy-ness of travelling shoppers: supermarkets, high street discount outlets, and E-commerce have become mainstream competition for Travel Retail brands.
The eclectic and disparate nature of Travel Retail shoppers: the behaviour influencing behaviour variables go way beyond differentiating between the budget-driven vs the luxury brand shopper.
Exchange rate variations: affect the value of the Passenger Pound and shift spend between international destinations and nationalities.
Political environment:can throw volatility into the retail challenge e.g. heightened security measures and potentially longer queues can undermine disposition and opportunity to shop.
Unique shopping propositions at the destinations:the retail ranges, brands and prices available at Travellers' destinations add a further layer of complication - albeit Dubai Airport's airside emporium, what's available in Manchester's high street, or shopping on-shore when cruise ships dock e.g. local jewellery, Gibraltar's duty free arcades.
Consumer perceptions of their journey and environment: the time available and inclination to shop is influenced greatly by the Traveller’s experience on their journey to and through a Travel hub. Difficulties en route to the station, ferry port or airport will limit the opportunity to shop, and tend to shift Travellers’ minds away from shopping – in all but the most committed shopping enthusiasts!
Digital marketing adds another dimension to consider in the Travel retail landscape
Going forward, we are likely to see more integration of digital marketing with the traditional ‘analogue’ shopping experience in the Travel Retail environment. This is a great opportunity to appeal to 'new' Shoppers and involve Travellers in Travel Retail earlier in their journey than previously was expected ie before they reach the travel hub. However, it also adds complexity to the Travel Retail landscape and this needs to be managed and understood.
For example, London’s St Pancras International (home of Eurostar, National Rail and high-speed rail services), became the first UK train station to launch a consumer focused free-to-download app, which is designed to drive business to the station’s retail outlets through targeted and customised promotional offers to visitors’ smartphones[2].
An imperative is to capture attention and engage with travellers at the right time and in the right way, playing to the different expectations and aspirations of the wide variety of shopper profiles. There is also a need to focus on what we know consumers find engaging, and to make those aspects of the Travel Retail experience really work well.
Drivers of Success in Travel Retail
From our extensive Shopper Research amongst travellers of all kinds, we have identified six key drivers of success in Travel Retail:
Creating Temptation:This goes way beyond offering bargains and discounts – so often synonymous with duty free retailing in the past. With limited time available in the travel hub, Shoppers fulfil their practical needs, and automatically filter out which retail outlets and brands do not merit a visit vs which are worthy of their consideration.
Generating the Temptation Factor is critical to winning their attention and engagement but is driven by a whole host of factors, as any marketeer would expect e.g. eye-catching displays, store presentation, novelty, sense of intrigue, the staff approach and sense of connection, the brand or product story, the retail ambience and location, as well as the price proposition.
In our experience, shoppers find Travel Retail particularly tempting when any/all of these elements are employed to make the Shopper feel special and/or quietly fortunate to be involved in this particular shopping opportunity – it’s not just about making the product or brand look special/different/new.
Sensory Engagement: The Travel Retail environment tends to be cluttered – with brands, products, and sales staff all creating an onslaught on the Traveller’s mind and senses. We have noted that many retailers and brands gain cut-through because they create forums which engage through (a) evoking physical interaction (e.g. something shoppers can't resist touching/picking up) or (b) they evoke an appealing mood projected at a subliminal level (e.g. through colour, imagery, sound) - even before they have recognised what the brand is. We're not recommending that every retailer adopts an army of 'fragrance wafters' - quite the opposite - but stimulating the Shopper's senses in subtle or obvious ways, and tapping into aspirational moods, in promotions and merchandising can be very effective in prompting engagement.
Service Excellence: For the Traveller, visiting the shops in a Travel Retail environment is a different exercise to visiting their local high street – they are often outside their familiar environment, they are perhaps in a different time zone and culture, and they are faced with multiple retail opportunities in a busy environment. Additionally, they may not have come out with the intention of shopping. The way staff engage with travellers, the quality of that interaction, and the content of the staff’s conversations with Shoppers needs to be appropriate for the brand, the travel hub situation, and for the nationality of the passenger. Best Practice for Customer Service in the travel retail environment can be different to that in the high street. It is important to understand what works best for that brand or retailer in the Travel Retail situation in order to drive success.
Appeal of the Retail Environment: The architecture, the Traveller’s ability to become oriented, the sense of glamour, the sense of authenticity - these are all factors which influence the Passenger’s disposition to shop. They not only provide the appropriate back-drop of excitement, but convince the Traveller in just a moment that shopping will be easy and a delight.
The Value Proposition: Shoppers invariably seek value, and need to believe a product is both relevant to them and of the desired quality at the price point. Savings often lie at the centre of the Shopper’s decision to purchase, or to choose one brand versus another. However, with so many products and promotions in one area, the challenge for retailers and brands is ensuring that the Shopper feels that he/she is benefiting from wider benefits too – not just the transaction price. Jo Malone is a good example of a brand which is artful in steering the Shopper’s mind away from price to the consumer benefits - through delivering a special retail experience and superb customer service in its Travel Retail outlets, as well as unique products packaged up in wonderful gift bags with ribbons.
Journey Satisfaction: Needless to say, smooth operations (both en route and in the retail environment) together with a great travel experience underpin good retail performance, and cannot be underestimated.
Travel Retail operators and brands have an opportunity to leverage both the opportunities identified through of the Key Success Factors above in the physical arena and those presented by the newer routes of C and E commerce marketing.
Responding with Effective Consumer Strategies Built on Solid Consumer Insight
Effective strategies need to based on a blend of solid consumer understanding married with clear and directive insight, and a touch of inspiration – that glimpse of consumer behaviour which lifts the strategy to the next level; the power to engage and convert Passengers into Shoppers.
To gain depth of insight, researchers need to be innovative in developing the best research approach.
The Travel Retail Shopper’s journey is part of a bigger landscape, where the influences on their shopping mind can be more diverse than in the high street or even on the internet. The art is finding the best mix of research methods to deliver insight that drives innovative and winning strategies in Travel Retail.
We have found combinations of different research methodologies enable us to access to the full picture, for example:
- Video diaries may reveal the complexities of the consumer mind-set;
- On-line forums (and photographic galleries) can be a chance to share inspiration images of influences on behaviour as well as explore the build up to a journey or shopping trip;
- Focus groups can help develop new ideas for concepts that can delight the passenger and tempt them to buy; as well as shedding light on new ways Shoppers would like shop Travel Retail;
- Shopper interviews are invaluable for understanding the Shopper experience and the influences on purchase behaviour (e.g. customer service, merchandising, price points, promotions etc).
Consumer brands are adept at understanding the relationship between gaining innovative insight about their brand and how the consumer interacts with it, and the Travel Retail market should and is learning from their experiences.
The unique characteristics of the Travel Retail environment and the consumers operating within it, requires imagination and inspiration not only on the part of the Retail brands and Operators but also on the part of the researcher.
When Travel Retail brands get it right, consumers can’t help wanting to buy!
Of course, these are my views which come from personal experience and observations in this market of air, rail, and cruise passengers. I would love to hear your thoughts! Do let me know by posting a response below, or by contacting me on caroline@cthompson.co.uk
About the author: Caroline Thompson is the founder of Caroline Thompson Associates, a boutique Qualitative Research consultancy with a specialist focus on Travel, Retail and Consumer markets. She has been undertaking qualitative research amongst Passengers and Travellers for the last 20 years, and provides research and consulting services to many of the leading Airports, Retailers and Brands in the travel market.
[1] Source: The Business of Fashion, The Anatomy of Travel Retail Luxury Goods, 2016