Food & Beverage

“We want to be the connector”

With its app, contactless order and payment, order-at-table and kiosk services and ambitions to develop digital marketplaces for travelling consumers, Grab is fast becoming a key player in the world of airport ecommerce. Chief Experience Officer Jeff Livney tells Dermot Davitt about the company’s evolution, business model and plans to develop its F&B expertise in shopping channels.

Airport ecommerce platform Grab has come a long way in a short time. Founded in 2014, the company’s mobile ordering and payment technology, self-service kiosks and order at table services have been adopted at a growing number of airports, led by those in North America but increasingly overseas, amid the broader digitalisation of the industry.

The company recently passed the five million order mark, fittingly with a sale through the American Airlines App at Dallas Fort Worth International Airport (DFW). American Airlines was Grab’s first airline partner, while DFW was an early adopter of the platform.

But this is only the beginning, says Grab Chief Experience Officer Jeff Livney. The evolution of the airport shopping experience to ecommerce opens up a world of opportunities, and here Grab is intent on playing a leading role. It is clear that the pandemic has accelerated demand for digital services, including at airports, and Grab has been able to tap into shifts in how travellers want to engage and transact.

Grab Chief Experience Officer Jeff Livney

“We have seen a lot of things change this year,” says Livney. “Some were pandemic-related. Take QR codes. They looked as if they were dying out a year ago. Now if you visit a restaurant you have to use a QR code to browse and menu so it has become a day to day thing. But others were macro changes that accelerated as a result, and allow the opportunity for new guest experiences.”

For Grab, mobile ordering, kiosks and order-at-table technology partnerships with airports and concessionaires is the gateway, but facilitating a wider marketplace for stakeholders across the travel chain represents the big opportunity for future expansion.

Livney says: “The key for us is the open marketplace. We have seen programmes come and go, and broadly, the failure of the proprietary model, where the airport seeks to drive everyone through its own channel, compared to seeing it as a network and distribution business. 80% of people travel once a year, and they are not going to download an app for ordering at the airport. So we have to start to reach people in all these different channels. We want to be the connector.

“So at DFW, for example, there’s an infrequent leisure traveller that will see signage in the airport or on its website and go to our web platform. That’s one segment of travellers. There’s another segment that is a frequent traveller, and they’re going to use the airline app. And then there’s another segment that uses a travel wallet or organiser, there’s crew and employees, and all these different segments are going to naturally gravitate to different channels. Our view is that we can be that platform in the middle, but it’s not proprietary.

Consumers must be able to choose the channel through which they transact, with Grab aiming to be the central point in the eco-system

“This means the traveller can order the DFW app or website, but they just as easily order through the American Airlines app, or the Priority Pass app or Grab app, or through other partners that are integrating now.

“Even in some cases where an airport may have its own proprietary system that they have built, we can still be the distribution channel,” adds Livney. “So you can own your proprietary web ordering platform, but then we can take all of your products and transactional capabilities and extend it into a much broader network through our airline or other partners.

“I think that is key. If Heathrow and British Airways were to do something together with their digital capabilities it would make a lot of sense strategically, but BA might say, well that’s great for Heathrow but I have a global network. I cannot create proprietary integrations to each airport or individual system. It’s just not a model that is scalable, and there’s not enough in it for me. But if we can build this connector, whether it is running on our rails or just our distribution, we can plug in all the platforms globally, and we really think that’s where it starts to become compelling.

Milestones on the Grab journey to date

2014 – Grab is founded by Mark Bergsrud, Jeff Livney and Michael Natale 2015 – Grab launches mobile ordering at Hartsfield-Jackson Atlanta Airport 2016 – Scaled mobile ordering introduced across Delaware North US airports 2017 – Integrated with American Airlines app in 22 airports and expands to UK with Heathrow partnership 2018 – Launches self-service kiosks and partnership with Collinson 2019 – Begins order at table, responsive web and airport gate delivery 2020 – Reaches 5 million orders through the Grab platform

“In some cases it will be Grab as the platform in the middle, creating the distribution, but everyone has to be on the same rails for it to work. If it’s too fragmented it will never take off.”

So where is Grab on this journey towards integrating the platforms of airports, airline and concessionaire partners today? Still at a very early stage, says Livney.

“The reason that we built out these other products, besides the marketplace, is that they create value for the restaurateurs immediately and it creates that stickiness. Some operators might have Grab for pre-ordering, another solution for kiosks, another for QR code menus to order at table. It becomes very hard to manage.

“So we have said, we will manage all of your guest-facing channels, so that you have one integration to your POS, one place to manage all of your menus and your promotions and, you can start to learn from the data too, importantly. It makes it easier for you operationally and is more cost-effective.

Contactless ordering and payment is now part of everyday life for the traveller, and the industry must adapt

“Then it is about how we create a model where there are incentives to taking part in these programmes. If we’re going into a restaurant, just to install the marketplace, my team has to build the venues and fund equipment, and it’s very high capex. But if you’re already paying for the products that have an immediate revenue impact, we can just flip on the switch for the online ordering and create that network effect more quickly. That’s what we have been working on.

“Similarly on the airport side, we have been thinking about how we create a model that works for them. Many programmes recently have been subscription-led at airports, which is new to us. Traditionally, it has been based on a commission on each transaction from the merchants. But we obviously know that the financial situation of the concessionaires is quite challenged right now so that is difficult.”

As a result, the model is being largely supported by airports currently. “We have probably 15 airports right now that are funding the platform, either through marketing fees or other types of funds. So there is not that same cost to the merchant besides credit card processing, and that has really helped to get more widespread adoption among the merchants. It creates buy-in when everybody has a stake in the game.

“LAX is a successful example. We went in there seeking to make the programme more turnkey. URW as the developer funded the upfront cost of the programme. The restaurants didn’t need to buy tablets and printers or have a capex involvement. And then we worked out a model where there is not a cost to the concessionaires on a transaction basis, either. It makes it a lot easier to get scale versus previously, when we might have worked with one or two of the concessionaires in an airport and had this very fragmented model that doesn’t work for anybody.”

With the capex involved, scale is needed to drive the wider business model but that has been aided by a move to a subscription fee model, as noted above.

“This has helped fund the day-to-day activity,” says Livney. “We have got this income from partners and those solutions are driving a commercial benefit on day one. We can prove the average ticket is up, we are driving more revenue, we are saving labour. So it’s a pretty easy decision for merchants.

“The longer term play is that this global marketplace grows, and we can start to charge fees to the guests and have that more transaction-oriented business. But it’s really the subscription side of the business that helps while that network builds. And that’s why we often bundle the products now as well. There are dozens of companies that have self-order kiosks. But if you use ours, you can easily layer off the marketplace solution at a much more economical rate. None of the kiosk vendors or order at table vendors also have the marketplace.”

Having hit the milestone of five million orders recently, Grab has its sights set on doubling that figure quickly, and on building its international network.

Livney says: “We must have a network to ensure enough airports and enough merchants use it so that airlines and other partners integrate and promote it. It’s about the network as opposed to the proprietary platform.

“So that network is the focus for 2021. Right now, about 40% of the network is outside the US. Obviously, the US is where we’re the strongest, but we have a presence in pretty much every airport in the UK, a significant amount of airports in the works across the Nordics. We have started launching in Australia over the last couple of months as well. There’s a very substantial airport in the Middle East at which we will be launching over the next couple of months and we’re in talks with quite a few APAC airports. We aim to plant a flag in the major airports by region and built out from there. So that is what you’ll see next year, for sure.”

In that expansion drive, if there are obstacles to expansion, they tend to be in lack of resource allocation at airport or retailer level.

Brand awareness: Travellers gravitate towards popular national brands when ordering online

“We have several partners that have put in resources dedicated specifically to Grab, and they see the benefits. Take Paradies Lagardère for example. There is a full-time person there whose job it is to roll out Grab across the network, working with the locations, helping build the menus, and organising promotions and so forth. It takes some level of commitment. Otherwise, it’s going to be a very slow process.

“And that’s the challenge. How do we create a model that is compelling and drives enough commercial benefit for the partners, to where they can dedicate the resources to it? That’s why the bundling of the marketplace along with the other products is so key, because they can see the commercial benefits on day one. They see the average ticket going up, they see reduction or reallocation of labour.

“On the airports side, it’s typically less about the cost, and it’s more about the bureaucracy. Some airports have been really effective and seeing there is a problem to be solved quickly and moving strategically. But many can’t do that, and even in difficult times like this cannot bypass the typical processes that exist from a procurement standpoint. So that can often be the challenge and demands some creative solutions.”

Mobile orders: Known brands outperform the rest

Advance orders among travellers for F&B goods via mobile vary widely depending on who they are and the platforms they use. Grab CXO Jeff Livney says that crew and airport employees gravitate more towards QSR, but consumer orders via third parties, such as the American Airlines app, often leads to a more substantial cook to order item or full-service offer.

“The bigger insight is that known brands always outperform,” says Livney. “In a pre-order environment, it just means less familiarity with proprietary local brands. You’re not walking up to the restaurant and seeing it. We need to do a better job of promoting local brands, not just saying here is the logo and name. We can show a bit more of the brand, display the layout and design.

“We need to tell that story better in a digital space for those proprietary bespoke concepts to work. The bigger brands, the likes of Chili’s, TGI Fridays, Chick Fil-A, McDonald’s and Shake Shack are always going to outperform.”

The rise of ecommerce in airport dining and retail opens up the question of how physical spaces, engagement and transactions will change in the new world. For Grab, that balance will be found as the industry evolves.

Livney says: “Consumers and even hospitality companies have been worried that if you move too much into technology, it becomes a cost-cutting, labour-reductive exercise. Or in other words, how can I become cheaper but place more of the burden on my consumer? Self-checkout at the grocery store is an example. There has been resistance to this from consumers. But if it is positioned as being for the safety and hygiene of employees and of customers – removing touch, social distancing – then it changes the mindset.

“Most people understand it and we have seen the adoption of some pre-COVID products in a new way. Order at Table is one. 20-30% of people might have used that versus ordering through a server in a restaurant before the pandemic, but now it’s at 95% or even higher. It’s just how people transact now.”

Whether that move towards less human engagement will in turn affect the appetite of travellers to sit down and dine will be a question facing the industry in the future. It could even change the way spaces are planned and designed.

There is a big opportunity to better tailor the online offer to the individual consumer using data

Livney says: “The difficulty is that there are no build-outs that are going to be changing over the next few years. If we had money to redesign whole terminal spaces, the industry would change quite fast. Today some of the restaurants that have closed are probably not coming back. You could redraw them and create new virtual concepts but that is capex that nobody has right now.

“I don't see big change unless we start looking at new build-outs. But here, every airport is different, certainly on the US side. There will be less advancement and rethinking how the space is used, just given the municipality model. If you’re going to RFP now it is very hard to turn around and introduce a whole new way of thinking when you had a sit-down Mexican restaurant in mind. But there will be some opportunities, potentially more at privately-run airports.”

Some airports already build in ecommerce elements to their RFPs, so digital thinking is becoming an established factor in commercial planning.

DFW, one of the most progressive airport companies in the US, requires bidders to commit to a full part in its digital programmes. As a retail developer, URW Airports asks its partners to take part in its digital initiatives to help future-proof its commercial activities. Livney says: “Airports will start to drive participation in their new models over time. It is happening but it takes time for some to sign up. Digital should be something that everyone plays their part in, just as airports insist their partners do with their green initiatives.”

Then there’s the personalisation of the sale, leveraging the improved data that comes from months and years of transactions through a network operated by Grab.

“We can improve the whole user experience with the network. We have probably 20 Coffee Bean and Tea Leaf outlets from ten different concessionaires now but the guest doesn’t care who the operator is. As a traveller ordering through the American Airlines app I want to be able to set my favourite purchases or I want you to know that a week ago, I ordered an Americano in Dallas but now that I’m in Atlanta, show me the Americano.

“The challenge here is a lot more complicated. Item number 1234 through Delaware North’s POS in LAX is not the same as another player’s Americano in Atlanta. We need to be able to move that to the top of your order list wherever you are. So how can we become more intelligent, upsell more and personalise more?”

Ordering and paying online or via a kiosk is now the norm, with food counters for delivery only

One element in that is marketing, to ensure that partners and consumers recognise the brand. Here, Grab plans a major announcement in early 2021 on its plans to build brand awareness.

Ultimately it’s about creating the eco-system that allows airports and their partners to understand and better serve the traveller.

Livney says: “If you can connect all of your systems you can learn about behaviour, incentivise, add value and reward. That’s the long-term opportunity.”

Taking digital shopping forward

Grab ventured into airport retail for the first time through a recent partnership with 3Sixty Duty Free at Dallas Fort Worth International Airport. The new service enables travellers to pre-order from 3Sixty’s range of travel retail products (duty paid to date), either for collection in-store or to be delivered at the gate.

Of the opportunity, Grab CXO Jeff Livney says: “When you think about retail, you’re looking for more product imagery, 360-degree views, videos, reviews, so how do we bring all of that experience together and make it intuitive?

“We might have 100 SKUs at a restaurant but with 3Sixty it’s far wider. No-one is going to scroll through a long list by brand and category; we need to search, sort and filter and include promotions. Also, there are never discounts on food but that is part of the retail proposition. So we are trying to learn together.

“That means deciding whether you’re going for pick-up or for delivery before you fly. How do we create this experience that serves you depending on where you are located and where you are flying from? Depending on your terminal, there might be 500 offerings nearby that you could order for pickup. And there are 30 that we could have delivered to you. And that’s a whole new experience.

“Now we’re working with 3Sixty but also with the brands to expand this with a retail mindset. For example we are doing some work with L’Oréal Travel Retail Americas about categorising SKUs. If you have the same SKU with 20 retailers I shouldn’t have to build that into the system 20 times.

“We should easily be able to offer that item through any merchant whether they are in Boston or DFW. You just pick that item in the database, link it to their POS, and they don’t need to go out and find the product images and the ratings and the reviews via each merchant.

“Over time, we need to integrate with the inventory management systems to be able to offer the right thing or have it for you when you land, or ship it to your house. That means real-time access to inventory and digital transformation to upgrade retailers’ legacy systems.”

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The Moodie Davitt eZine Issue 289 | 21 December 2020

The Moodie Davitt eZine is published 15 times per year by The Moodie Davitt Report (Moodie International Ltd).

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