Peter Marshall (PM): Melvin, just how is Aircare doing now?
Melvin Broekaart (MB): Aircare is doing great. It’s obviously a tough time to introduce anything new, but our non-invasive, subscription-based solution to communicate directly with passengers on their mobile phones is so spot-on in these times that we are receiving many requests for trials. The latest seat set-up, as you can see, includes offering care and comfort to passengers by using the seats – left empty for COVID reasons – to reach out and offer personal contact. You can try it yourself by scanning the QR code with your phone’s camera. I expect industry wide adoption as of early 2021 and look forward to announcing something soon.
For those who may be unaware, Aircare is basically a digital passenger service tool, providing multi-language, in-depth information about flights, gates and commercial opportunities through scaleable, one-to-one traveller communication via artificial intelligence (AI)-based digital communication. Aircare does not require any downloads, but functions intelligently through Whatsapp, Facebook Messenger and WeChat instead.
PM: You are renowned for pushing the envelope when it comes to advancing digitalisation within the industry. When you appeared on the Future Airports: From Here to Where? webinar video series in September – and these video sessions are still on www.trunblocked.com – you were quite adamant that the industry was still on the slow coach to the necessary adoption required. Do you still think that way?
MB: Yes, unfortunately I do. Although I do think that the awareness about the need to embrace digitalisation has strongly risen within the industry over the past months. This awareness now needs to be translated into action and, frankly, this will be difficult for a large group of stakeholders.
COVID has forced consumers to live and consume more digitally. This behaviour will not disappear, and when consumers become passengers again, they will expect a fully digitally equipped communication and transaction environment at airports and in travel retail. When this is not easily accessible and intuitively present, passengers will simply drop out. The industry has to dramatically accelerate the pace of change to avoid the already low average penetration rate of 15% to dropping even more.
We have to realise that Duty Free for the younger generation under the age of 40 no longer has the natural attraction that it has always had on older generations. If we don’t make the necessary adjustments to our industry now to get younger generations excited about Duty Free shopping as a not-to-be-missed part of their journey, in 5 to 10 years time our industry will be among the list of companies and industries that will no longer exist. And that means that ‘Duty Free shopping’ at airports will be mentioned in the same breath as what video stores like Blockbuster once meant in the film industry or what Kodak was once in the world of photography.
If we consider our own daily purchasing behaviour as consumers, we all know immediately what digital resources and services we are still missing today in travel retail – let alone what digital services we would like to use in an ideal world when we are at the airport. Why is there not a much better understanding of which shops are available at airports, what the current and available range is in these shops, what special offers and promotions there are, and which of these perfectly match my personal preferences? Why, in most airports, am I supposed to take all my purchases with me on my trip and not have them delivered to my home – as I am used to when I make the majority of my purchases online?! Why can’t I make the most of my physical presence in the shop by having products prepared in advance that I want to try and test? And can give me in-store reviews and experiences when I ‘m in doubt about a purchase, or can’t choose between brands and products. All of these are just a preview of what I would like in terms of digitalisation when I go to an airport as a passenger.
PM: So what do you think the commercial airside experience will look like in 2021?
MB: I foresee that from the beginning of 2021 there will be strict requirements for airside presence. Only those who have been tested or who can provide proof of vaccination will have access.
Potentially this will make shopping at the airport the safest form of physical shopping. The airside environment at airports will be guaranteed COVID freedom, making it the location where shopping fun and catering experiences – just like the ‘good old days!’ – are possible. As a travel retail industry we have to make an effort to realise this test policy. Not only to get people to travel again, but also to realise this unique, safe shopping proposition. This is an important step to greatly increase penetration in 2021.
PM: On a more general level, what will be the key areas that will point towards industry growth next year? Which categories will do well and should there be a shift in the balance of categories?
MB: Impulse driven categories will strongly regain ground, while planned purchase categories will face difficulties due to a strong increase in consumer awareness of the opportunities offered by e-commerce for the purchase of products that would normally be purchased at the airport. In addition, I am not entirely convinced whether Chinese travellers will show the same purchasing pattern as before, or whether they will increasingly make their duty free purchases within China.
To this point, for many airports Chinese passengers have become the most important group of travellers when it comes to shopping in recent years. Searching for authenticity and price advantage, this group of travellers is responsible for more than 20% of total sales at some airports, while only representing 2% of the passenger population.
So the spending behaviour of this group of travellers is essential for the survival of many airport shops. However, in recent years, China seems to have been pursuing a policy of keeping foreign currency as much as possible within China’s borders. To this end, shopping at foreign airports is discouraged by the reduction of maximum import values and by increasingly stricter controls on arriving passengers. In addition, domestic Duty Free shopping areas, such as Hainan, as we know, are being developed at tremendous speed and the maximum purchase values allowed here are being increased on a regular basis. Current travel restrictions on Chinese travellers have only accelerated domestic developments, further increasing the risk of greatly reduced – or even the total disappearance of – Chinese purchases at non-Chinese airports.
PM: You have put your hat in the ring for the TFWA Presidency. You are an ‘outsider’ and you are facing two other candidates who are very strong. It could well be argued that TFWA have had a stuttering 2020, displaying little agility and that it needs a fundamental restructure to keep pace with what is happening in the sector. Its voting system is archaic and does not adequately represent the industry supplier/membership base. Can fatigued ideas, coupled with a degree of complacency and genuine lack of innovation, now genuinely give way to radical and fresh thinking?
So, two questions here. First, what are the key changes you would seek to immediately make to reform TFWA as well as show greater industry vision. And second, why you?
MB: Well, Peter, you will understand that I would not want to disclose too much of my pitch for the TFWA Presidency later this week. Yes, I recognise that I am an outsider, but genuinely feel that this is an important positive now as my broad 15+ years of travel retail industry experience over the years, including spells at Heineken International, Philips Global Travel Retail, the Aircommerce Group and a two year period as TFWA management committee member in 2008, provides a unique position where I have straddled many of the key sectors of the travel retail business as well as being exposed to many digital tools and initiatives. I bring a broadly based level of knowledge of our industry, combined with a refreshing vision of the future appropriate to our times and the energy and decisiveness to make it a reality.
It will come as no surprise to anyone when I say that Travel Retail is in need of change. Why? Because we need to prevent Travel Retail from suffering the same fate, as I mentioned earlier, of the example that video stores suffered – being overtaken by technology and changing consumer behaviour and then disappearing as a whole. A lot has changed since the origins if Duty Free and Travel Retail in 1947. In its early years, our industry was based on two critical success factors, which by now have both lost their strength: ‘Unique Products’ and ‘Unbeatable Prices’. Digitalisation and e-commerce have overtaken both and have radically changed the logic and rationale behind future airport retail stores.
If we, as an industry, want to avoid the ‘video store scenario’, then we will have to move along with the underlying consumer expectations that have made e-commerce grow so strongly in recent decades. Essentially, mixing the best of airport retail with digital technologies of today and tomorrow.
To do this, TFWA will also have to broaden its traditional role. A trade organisation of an industry undergoing strong change cannot suffice with just organising trade shows and facilitating retrospective market research. It must provide its members with vision and industry leadership and enable its members to successfully weather the changes. There will have to be more cooperation. Only through cooperation can we make Travel Retail flourish again.
”The best way to predict the future is to create it” (Abraham Lincoln). Let’s together create the future of our beautiful industry.
PM: A suitable quote on which to close this interview. Thank you, Melvin.