By: Peter Marshall • email: email@example.com
PM: Kian, would it be fair to say that the TR industry now fully understands what your omni-channel platform delivers? What they don’t necessarily know is the impact it has achieved at the three airports who have adopted it, Can you provide us with some hard data of the success stories to date?
KG: I am not sure that the industry has fully grasped what it means to do true omni-channel and how the actual site/portal/app of an airport or airline is no longer the core driver of sales, but that the sales are happening much more where the planning and booking of the journey happens. Most of the industry still tries to drive traffic to their own sites rather than becoming part of an ever-advancing ecosystem of digital travel retail.
Our customers all have the right to choose how much of their data they publish. What I can tell you is this: our e-commerce platforms currently ‘live’ at 3 airports and 1 airline are facilitating and directly influencing travel retail volumes approaching more than 300 million euros per year, with some of them growing at up to 90% year-on-year.
Yet, we are still at the beginning because for so many players digital readiness is just not there yet, and integrations into the wider ecosystem are time consuming and cumbersome. Additionally, many passengers are not yet aware, or used to, the ability to shop much more conveniently than before. So this is till a major concern.
PM: So what are the main barriers to more airports coming on board as adopters? ‘Not invented here’ syndrome, ‘you’re just too expensive’, ‘we’re going to watch and wait’ or ‘we’ve got our own team looking at developing it’? This might not be an exhaustive list. What would you say to this?
KG: I believe the reasons are many and varied. Many of the big airports tend to take 2-3 years from a decision maker in the organisation deciding to pursue a re-invention of travel retail strategy to an actual tender process. This, of course, is far from supportive of a swift-time to market. Some airports also appear not to see yet that investing in digital customer experience is not just an investment, but that it is an absolute necessity to concretely protect existing revenue streams and investments.
I gave a keynote speech recently at this year’s Macquarie infrastructure conference and I phrased it very clearly. Investors around the world are pouring billions of dollars into concrete structures to enable construction of retail shops at airports, while all the trends are showing that less and less people shop at those stores. Whereas an airport investing single digit millions into a sophisticated know-your-customer digital commerce and engagement infrastructure still gets heavily scrutinised. Something’s seriously wrong here, isn’t it?
Very few actually say ‘we have our own team developing this’ because most airports realise that e-commerce and running operational airport systems are as different from each other as rocket science is from pharmaceutical research. The reason that we encounter most often – whether uttered directly or assumed silently – is that many operators are still spoilt by the growth in passenger numbers, still have some growth in revenue (despite continuous decline in spend per pax), and don’t want to risk their position doing something new that requires them to change from a B2B organisation, simply tendering concessions, to a B2C organisation directly communicating people to people.
PM: So what will it take to rattle the cage for airports to better understand the need adopting an omni-channel route?
KG: I believe that in 5 years time at the latest the last non-digital airport will have stopped realising spend per pax growth and, at that point, many of them – especially is space restricted environments – will realise that there is no more growth potential until they remove the need to create the sale on the premises of the congested airport. Heathrow is one of the airports that has very impressively proven how customer focus, engagement, marketing and digital sales can become a major revenue stream for the airport that is much more resilient to disruption than any physical infrastructure.
PM: Are you expecting to announce another airport client soon?
KG: We are hoping to be able to announce 2 to 3 new clients before the end of the year.
PM: I’m aware that you have pitched to many airports over the last 2 years. What counsel would you give to airports looking at developing an omni-channel platform. Put another way, what pitfalls should they avoid?
KG: I am a big believer in continuous delivery and continuous innovation. So airports should not plan a huge one-time investment push into digital and expect it to be done with. Technology is a living and breathing organism that needs to be continuously advanced and improved to meet constantly changing customer expectations. So airports should not see this as a project but rather as a strategy that needs to be continuously pursued.
To help airports better facilitate this, we have been able to reduce the entry barriers significantly. We are now able to launch a first, basic multi-retailer marketplace solution in a completely customised ‘look and feel’ for under 2 million euros. This is helping mid-size airports to get a much easier entry point to the new world of omni-channel travel retail.
But, independent of investment ability, airports can avoid many pitfalls by not trying to run such a strategy cross-department or cross-siloed. It has proven best to go the route of Singapore Airlines and create a small subsidiary then act leaner, faster and in a more startup way to drive true innovation and not be bolted down by internal politics and silo thinking.
Lastly, I would say that airports need to not only think about how to build and launch a great customer platform, they also need to think about how to drive the most relevant traffic to their offerings. Of course that is where no one has more experience than us. Some airports might choose to have a classic Top 10 IT shop build a site for them. Yet these airports will and have already realised that without a network, understanding and deep travel retail knowledge, these pure IT companies will not be able to deliver the financial results expected.
PM: Your business has grown exponentially these past years. TR is a key focus and, as you have already stated, you have now moved into developing a platform in another sector – the inflight market – with Singapore Airlines as well as Avianca. I must admit I am not a firm believer in inflight and think it’s on a slippery slope. There has been much evidence in the last year of many carriers simply ditching the service.
Yet it is nonetheless welcome to see that two airlines and their retail partner are prepared to build a new model, with your support. When do the projects go fully ‘live’ and what are the expectations?
KG: I personally see the airlines as the biggest growth opportunity for us. The simple reason for that is data. With the right data and the right infrastructure you can realise extremely personalised shopping experiences for your passengers. What we are doing with SQ is at the heart of that and will – I am certain of that – change the ancillary game significantly.
We are now investing strongly in that area as well and are launching the OM3 Airline Edition soon. In my keynote at the IATA ‘Wings of Change’ conference, I said it very clearly. In 5 years time only two types of airlines will exist. Those that have ceased retailing/inflight completely and those that have become true e-commerce players with global seat delivery, home delivery, lounge delivery, belt delivery, personalised shopping, exclusive brand experience to top tier loyalty members. Effectively full ‘earn and burn’ capabilities and a massive product SKU base comparable much more to a 50m+ airport hub than the classic 300 SKU inflight programme that you currently see everywhere.
PM: Finally. Kian, in one sentence, what would you like to say to the industry?
KG: It’s time to wake up! Don’t become the Blockbusters or Nokias of the travel industry. Facing disruption takes bravery and vision. The ones that will continue to ‘play it safe’ will not have much to play for at some stage.