Travel Retail’s Positive Disruptors and Innovators
“The biggest opportunity ever seen in inflight retail”
A White Paper from digital solutions specialist AOE says that airlines should urgently implement omnichannel platforms to engage with and sell to travellers.
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AOE, a pioneer of airport and airline ecommerce solutions and a disruptor in the channel over the past five years, has released a White Paper that examines how airlines can “seize the omnichannel opportunity” to drive greater ancillary revenue.
Strategies for the post-COVID-19 future of airline travel retail and F&B notes that the traditional inflight retail model has not evolved much since its introduction in the 1980s, with conversion rates lower than 1% in some cases.
AOE says: “The start of the COVID-19 crisis particularly highlighted the format’s weaknesses. With their planes grounded, the ancillary revenue stream for airlines using that model dried up too. Meanwhile, the handful of airlines that innovated with a digital omnichannel platform were still able to continue at least some degree of sales to their customers and, just as importantly, maintain their relationship with travellers. The COVID-19 crisis has accelerated the extinction path of the traditional model.”
A key reason for the traditional model’s declining value, said AOE, is that inflight retailers and concessionaires are often unwilling or unable to innovate with new offers, often due to commercial commitments in their contracts.
“They rely on the core product categories that have dominated the inflight catalogue for decades. This echoes a similar problem seen in airport retailing. Brands can only reach what is a hugely appealing audience of global travellers through the conduit of mass market sales across the world. Retailers have very limited opportunities to highlight a specific brand unless it pays a significant premium for that highlighted exposure, such as through animations and pop-up activations.
“In addition, the world’s top brands simply don’t see the lumbering inflight trolley as a suitable home for their sophisticated and expensively-maintained brand positioning. Similarly, the inflight sales brochure often does not adequately share the brands’ values or provide enough of the detail required by the customer to inform their selection. Without home delivery, the logistical limitations of the model break the link between engaging the customer’s interest in a brand and finalising a sale.”
The omnichannel model removes these barriers between the airline and the brands, says AOE. It enables “a cohesive experience” by connecting the consumer with the brand once they discover the offer. That engagement in turn is also more likely to result in a purchase, says the omnichannel specialist.
The old model, says AOE, is not economic nor efficient and even pre-order or on-the-ground collection points don’t offer a long-term or seamless solution.
Yet the prize remains vast, notes AOE, which calls digital “the biggest opportunity ever seen in the history of inflight retail”. It’s about better engagement, ease of use and efficiency.
KrisShop and AOE have reimagined the path to engagement and purchase for the Singapore Airlines inflight business
AOE says: “Everything the customer wants is placed on a single digital platform; from services such as parking, baggage, upgrades, food pre-order, car hire and hotels to luxury brands. Everything is optimised for easy discovery, and high engagement, with the aim of providing the customer with a seamless and personalised retail experience, right up to the point of instant payment and customised fulfilment options.”
“This is a cross-channel content strategy that radically enhances the user experience and supports the creation of a stronger relationship across all points of contact. A handful of pioneering airlines, including Singapore Airlines, AirAsia and Lufthansa, are ahead of the curve and have taken inflight retail into this digital age. In doing so, they have not only adopted leading-edge technology but have also aligned that with the brand-building strategies that have driven them as some of the world’s leading brands.”
Changing the traditional way of working can create improved interaction, deeper relationships with travellers and greater revenue opportunities for airlines.
“The flight booking becomes a gateway to an array of other ancillary revenue opportunities – including many that have no linkage to their travel schedule”
–AOE
The new model relies on the power of data – data that airlines own but rarely tap into. AOE says that this can help drive personalised offers, build loyalty and ensure differentiation and diversity in the programme.
The future of ancillary revenues for airlines lies in an omnichannel approach, says AOE.
“Airlines need to rethink their business models to account for the dramatic decline in global passenger numbers due to COVID-19 while also taking advantage of the flexibility and scalability of digital platforms. Only by implementing omnichannel solutions will airlines be able to offer their passengers the convenience and touchpoints they have become used to from global ecommerce players.
“By providing these channels, airlines take into account changing passenger buying behaviour. Key issues for them to consider when developing new business models and digital platforms are personalisation, premiumisation, planned purchasing, potential of the brand and the power of data.”
Delivering “a whole new ecosystem”
AOE is a Platinum Partner for the pioneering Moodie Davitt Virtual Travel Retail Expo, where CEO and Founder Kian Gould will also be making a keynote presentation on the subject of omnichannel in travel retail in the Expo Knowledge Hub.
Embracing the tagline “Passionate agile minds thinking digital”, AOE has become the leading developer of digital ecommerce platform solutions in the aviation and travel retail sphere. AOE’s OM³ digital marketplace has been the chosen platform for numerous successful airport and retailer forays into omnichannel retailing, including Heathrow Boutique, The Mall (Auckland Airport) and KrisShop.com, the Singapore Airlines, 3Sixty Duty Free and SATS joint venture.
The company serves as a global technology service provider and consultancy, supporting enterprises in their strategic decisions and digital transformation processes.
“AOE has made a name for building benchmark omnichannel ecommerce marketplaces for airports and airlines around the world,” says AOE Founder & CEO Kian Gould.
“At the Virtual Travel Retail Expo, we plan to expand that omnichannel platform to a new level. As such, AOE’s ground-breaking Virtual Expo showcase will not be limited to talking the future of digital travel retail. It will encompass – and unveil – a whole new ecosystem, featuring a range of fundamentally interlinked partners, brands, technologies and, of course, travelling consumers to transform the travel retail channel.”
AOE CEO and Founder Kian Gould: Leveraging the influence of the Virtual Travel Retail Expo in October
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The Moodie Davitt eZine
Issue 281 | 16 July 2020
The Moodie Davitt eZine is published 12 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail sinead@moodiedavittreport.com