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Peter Marshall Send an email February 10, 2022
5 minutes read

Is Travel Retail Really Fit to Fly By: Stephen Sumner

Introduction: By Peter Marshall

At www.trunblocked.com we always try and provide content that delivers fresh and innovative thinking which can change and improve how travel retail does business. The following article by Stephen Sumner delivers exactly this. He writes: “The winner in the travel retail loyalty space, going forward, isn’t the business with the most data, but the brand that’s willing to leapfrog the current technological solutions because territorial currencies, associated transactions and outdated, silo-based delayed loyalty schemes are already 10 years too old.”

Read on and see how Stephen reaches this conclusion.

 

Sometimes game changing innovation isn’t always obvious.

As the world keeps its fingers and toes crossed, we are entering  a more settled phase of this pandemic. Is the travel retail sector hoping that things will go back to how they once were, or has the industry used this  breathing space to energise itself around tangible consumer experience innovation and a more efficient and cohesive operating model?

We’re about to enter a new phase of the internet, according to many tech entrepreneurs in Silicon Valley who are busy building it.

Web 1 – Internet

Web 2 – social media

Web 3 – Metaverse

It wasn’t until the innovation that was to become the world wide web (www) by Tim Berners Lee and others that catapulted it into the mainstream.

Why?

Because it allowed us to ‘visualise’ our interest along with making it seem accessible to everyone, and well, let’s be honest, less geeky!

Today’s internet experience is somewhat decentralised, which in plain language means a lot of our virtual experiences are funnelled through just a few institutions, like Google and Facebook.

This new version of the connected internet is being dubbed ‘Web3’ and is still being created so it’s hard to say exactly what it will look like or what it will do for us – even with or without ‘Zucks’ ‘Meta’.

However, there is one thing that nearly every tech entrepreneur agrees is a goal of Web 3.0: decentralisation.

Most people (apart from the rich) today gain exposure to ‘luxury’ brands via social media, or when they look to travel through airports globally.

The same people are often incentivised by the myriad of silo promotional ecosystems operated by travel partners operating in various parts of the connected world of travel.

Not only do customers still find it confusing and frustrating, the choice between value and ease/convenience (Covid aside) has become increasingly confusing which, in my opinion, has kicked the door wide open to opportunity, reinvention, and innovation.

From flights, currency exchange, shopping, eating to loyalty schemes, the onus is on the consumer to navigate the commercial landscape that is known on the inside as ‘travel retail’ and on the outside by the international traveller asking: ‘how can I get the best deal and most relevant incentives?

So, whilst Zuck is trying to figure out how to harness even more of your data with his new offspring ‘Meta’, is this a huge moment in time for luxury brands, retailers, food, and beverage, and especially the world of travel retail to innovate and excite with interoperable digital connections accessed in the real world. In other words a ‘unified retail experience’.

But what does all this mean to airports, airlines, and the associated travel retail industry?

Example: Brands like Subway, McDonalds and Burger King are showing that ‘loyalty programs’ can now be super cheap to run and that’s because Apps have slashed the operational costs significantly.

Currently all loyalty schemes are centralised e.g., they are being managed by several organisations on behalf of a variety of ‘partnerships’ within the travel ecosystem, it’s a delayed and fragmented reward system at best.

The future of Loyalty programs will be built on the Blockchain, something that gives decentralisation and the ability to port/exchange data across networks. Using the Blockchain Smart contracts will be used to execute marketing promotions/offers.

All these innovations will empower the consumer to take control of their data because they know it’s worth more than the value that they’re being offered today via outdated reward points.

In summary consumers will always want the value exchange upfront. Why should they wait on points being issued when they can just sign up to a subscription-based proposition instead?

So, if I have interoperability with my ‘loyalty’ points held via the blockchain which is now something that can also be added to my global digital currency called ‘crypto’ what does this do to further empower the customer and reduce operating costs for all merchants?

Example: As we all know, international travel today includes working out how to get the best currency exchange rate for the various countries I’m going to visit. We either take hard cash or some form of digital currency that’s currently known as a credit card, we then keep a careful eye on the retrospective credit card exchange rate and where applicable receive our delayed loyalty reward.

Costs for merchants in the current transactional chain include many factors such as the types of credit cards you accept, how you accept the credit cards from customers, and the credit card processing markup that a credit card processor will charge you. All of these, among others, play a vital role in the average credit card processing fees your business will be charged monthly.

With Visa at one end of the scale charging 1.29% of each transaction and AMEX at the other end charging up to 1.54% for the credit card companies around the world it’s proven to be an extremely lucrative business. But perhaps not so much for all those merchants involved in anything from flight tickets, airport parking, and every other stage of the travelling journey in/out of the airport.

We are now starting to see early innovations around blockchain, digital currencies (crypto), and the ‘Metaverse’.

For personal and research purposes in 2021 I got involved with a few of these pioneering projects and on January 27th, 2022, we collectively delivered a brand new global digital currency built on the blockchain called ‘VSolidus’, something that’s focused on speed of transaction, lower transaction cost for business, interoperability, and built on the blockchain for tighter security.

My focus was to see if this innovation could be moved from a speculative over hyped (almost cult) investment idea to something far more tangible for business and the consumer, all whilst providing agility, lower cost, and innovation for retailers of every sector for recruitment, retention, transaction, and greater supply chain security.

VSolidus can already process 65k+ transactions per second which compares favourably with most Credit/Debit Card transaction platforms.

However, the biggest rationale for business to adopt crypto currencies as a transaction method is the fact that costs per transaction are substantially lower than traditional payment methods and the funds can arrive instantly.

Which ultimately means merchants get to keep more of the transaction, which in turn boost margins for small and large businesses alike, especially those merchants operating around the world.

All without the consumer not having to think about exchange rates or who/where they earnt their loyalty points.

So, if the travel retail sector jumps straight to a Blockchain based loyalty program that auto executes via a smart contract with the consumer owning their own data, incumbent loyalty and transactional partnerships are not only going to become redundant they’re going to be on the back foot.

And the result? All travel retailers could automatically leap existing loyalty and expensive payment schemes by 10 years.

The winner in the travel retail loyalty space, going forward, isn’t the business with the most data but the brand that’s willing to leapfrog the current technological solutions because territorial currencies, associated transactions and outdated, silo-based delayed loyalty schemes are already 10 years too old.

About Stephen Sumner

Uncovering & Delivering Retail Business Transformation Growth Opportunities.

A powerful B2C & B2B C-Suite international retail leadership level executive and consulting practitioner. Built and sold my own data intelligence analytics and digital communications SaaS business (clients included Nectar, Debenhams, MFI, Habitat, Harrods, Argos, Gems TV, Ideal Shopping TV, Shop Direct, N Brown plc, MissGuided, Sporter UAE). Solid background in 25 years+ growing international multichannel retailers from sport, fashion, luxury, and leisure within plc’s & private businesses.

 

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Peter Marshall Send an email February 10, 2022
5 minutes read

Peter Marshall

Founder: trunblocked.com/Marshall Arts
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