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So Boring: Can Travel Retail Ever Change?
Marco Passoni of TW.O and Partners Interviewed

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Peter Marshall (PM): Marco, welcome to Trunblocked.com. As we move into 2024, can we start this interview by identifying the key trends for the global travel retail industry as you see them? 

Marco Passoni (MP): It’s a pleasure to be here, Peter, and thank you for having me. As 2024 begins, I firmly believe that travel retail has a bright and exciting future in this “evolved normality” which we are living in. But at the moment I fear too many of us are doing business in a safe, outdated way, which is out of touch with the needs and demands of the modern shopper.

The need to meet those demands in the right way is my biggest challenge for 2024 – delivering the perfect customer experience. This is a buzz term in the industry right now, but like so many of them, it is only being paid lip service. We must deliver an experience that is truly tailored for our consumers and, above all, unforgettable. This does not mean putting cookie-cutter domestic activations into a TR setting and calling them innovative. We must analyse the needs and demands of shoppers in every location and tailor everything to that –  from the brand format, retail offer and shop layout, to the staff training and digital engagement.

The next key thing for 2024 for me is to see the industry finally reconcile itself with its relationship with pricing. Travel retail and duty free sets itself apart with pricing. In fact, the market originated and thrived solely due to the price advantage. For some reason, many travel retail stakeholders seem to believe that we cannot deliver price advantages alongside experiences, either because they are in contrast or because margin constraints mean a lower quality of experience (this is the biggest lie fed to the industry as an excuse to remain stagnant). That is simply not the case.

The current challenges facing the UK following the ridiculous decision to scrap tax-free shopping show that price is a general issue for travelling shoppers, and your own recent TRUnblocked blog highlighted that it is something which truly matters to our shoppers.

Finally, for 2024, I think we must see an increase in the deployment of directly operated stores for brands. Brands are unbeatable when it comes to creating best-in-class sales ceremonies and providing compelling brand storytelling that, together, create a memorable retail experience.

Please note, I’m not saying that duty-free operators aren’t skilled. I have the utmost respect and admiration for the complexity of their activities. However, the world is increasingly moving away from generalisation in favour of greater specialisation. No matter how skilled an operator may be, they can never handle a bottle of whisky,  a piece of cheese,  a fashion store, or even a luxury one with the same level of expertise. Not even a Martian could manage that. Let’s leave the management of core categories within duty-free to them, but let’s give brands the desire and opportunity to excel at what they were born for.  Directly operated stores create excitement and variety, and open up opportunities for genuine innovation. And that is what we truly need to see this year.

PM: It seems quite extraordinary that the major challenges of travel retail always seem to remain the same: complacency, lack of imagination, lack of agility, too great a dependence on the Chinese, over-inflated pricing, indifferent staff, not learning from high street, not developing new categories, fake sustainability, the MAG model. This list is by no means exhaustive. However we dress it up, all roads lead to a lack of conversion. You have often covered these same points in your Linkedin posts. How much of a reset do you think this industry needs?

MP: You are completely right, and it all boils down to one thing: a lack of imagination. I often cite ACI figures which show that a 1% increase in shopper satisfaction leads to a 1.5% increase in revenue. But so many of us are too scared, or maybe short-sighted, to try something new. So we are delivering the same airports and experiences over and over again. As you said, there is so much talk. I remember during the pandemic we heard plenty about a new business model. Now, contracts are being written using the old model, which means that in 10 years there will be airports being run in a way which is already out of date and out of touch.

So, how much of a reset is needed?  I would say quite a big one. But it is not an impossible makeover, we just need people to stop talking about change and actually deliver it.

I’ll give you a concrete example; otherwise, we’re just engaging in philosophy. Master concessions. Why, in 2024, are we still talking about master concessions? While these may make sense for certain airports with limited size and traffic, where the economies of scale for the retailer are essential, what’s the point of this business model in tier 1 or 2 airports? In such airports, the participation of individual brands should be encouraged for all the reasons we mentioned earlier. This is a classic case of talking a lot but achieving little.

Anyway, I highlighted a moment ago the issue of directly-operated stores, and these are another good example. We all know that F&B is a vital part of travel retail and still remains untapped. Today, the wholesale model dominates in F&B to the point of a monopoly, but F&B has such potential to create genuine excitement and collaboration with non-F&B brands – but only if we allow the brands space, freedom and flexibility to act.

A lot of this comes down to the foundations our businesses are built on – it all starts with the contracts themselves. Bid documents are always the same, with questions about economics, financial stability, retail concept, etc., but airports are expecting innovation and enhanced  experiences. So why are staff training and ability to deliver that experience not evaluated better? Why is delivering the price benefit not being considered? If airports will only judge on basic numbers then we cannot create the space for innovation. It all starts there.

PM: So who do you think is actually getting it right? Abu Dhabi, for example, is an interesting case in point. It looks great, sure, and has been reported to be the latest icon in Travel Retail. But is it?

MP: Who is getting it right in terms of taking a new approach and new way of thinking? No one, really, I’m afraid. Abu Dhabi you just mentioned before is a perfect example of a brand new Tier 1 airport where retail commercialisation has been managed through master concessions. It’s a real pity and a missed opportunity for great innovation.

We hear and see lots about new iconic spaces and there are some incredible airports out there delivering wonderful experiences for shoppers. Changi, Hong Kong and Heathrow all create stunning spaces with great offers which tap into what shoppers need. The Qatar Duty Free team at Doha have also delivered real excellence in the luxury sector, and Rome’s Fiumicino Airport is a great example of developing brand stores to create a holistic experience.

But when we look at who is taking a really innovative approach to how business is done, there is very little evidence of action I am afraid. We hear so much talk, and so many concepts are touted as ground-breaking, but saying something is disruptive does not make it so. In that regard, we have a long way to go.

PM: So, are there any solutions that you would recommend that are actionable now?

MP: I am aware that some of the changes I am calling for are easier to ask for than they are to deliver, but I think more must be done to actually bring about that delivery. We mentioned the number of speeches we hear about new ideas and I think the numerous conventions can be a good platform for this. Let’s see someone not just put their advertisers on stage for a 10 minute press release, but bring together real stakeholders to talk. Put members of the trinity on stage and ask real questions about the obstacles and how to overcome them. Perhaps we just need to put airports and brands together in a dyad and let them try and solve the issues between them.

PM: TW.O and Partners have been active for many years in the business, and you are experiencing good growth across the different services you provide. Can you briefly explain what you do and what aspects of the business are now being leveraged by the industry to effect?

MP: Of course, we are currently celebrating our tenth year and have been delighted to see it is in many ways our most successful yet. Our mission is to fast-track brands into airports and work with all stakeholders to create airside experiences which matter. A core part of our business today is our “Customer eXperience Management” service, which goes to the heart of delivering great in-store experiences. Created especially for the travel retail sector, it combines our “Strategic Mystery Shopping” (SMS) – the industry’s only bespoke travel retail mystery shopping service – and our “Retail Academy 2.0” service, which delivers staff training targeted to improve the service your team can deliver and reduce the gap in expertise which many airports are currently experiencing.

Over the past year, we have seen first-hand the importance of combining these two services. The SMS allows our team to walk in the shoes of travelling shoppers at our client airports and see first-hand what works and, importantly, what does not. With shopper profiles and needs changing so quickly, our team is matched to suit an airport’s shopper profile, so we get relevant and bespoke feedback. The resulting training then helps to create a service which is not one-size-fits-all, but specific to the needs of a specific space and shopper group.

Meanwhile, our “Location, Intelligence & Selection” (LIS) service works to put brands in the right spaces in airports, delivering their brand experience in the right way, and helping airports to deliver the retail experience which both they and their shoppers require.

Often today we are finding a disconnect between brands and airports, where airports and operators will believe they have reached out to a brand, but there is no opportunity there. Our role is not to just make introductions, but to facilitate a working relationship between two very specific ecosystems. The demands of the airport sector and brand experience are both very high. It is our role – and our expertise – to bring those two together in a way that  benefits both parties and, most importantly, the shopper.

PM: So what are the key learnings you can share with the global business. 

MP: One of the central tenets of our business is that our team is airside every day. This is our only market and walking among the shoppers, it is clear that there is a disconnect between what many in travel retail believe they are delivering, and what shoppers perceive on the shop floor.

Delivering a great customer experience requires excellence in every area, from providing the experience and price advantage – both are possible and must happen – which shoppers expect, to ensuring that staff are supported and empowered on how to engage the consumers in store. Our front-line staff are our most powerful asset, but their expertise must be as varied as the shoppers they serve.

Doing this properly requires up-to-the minute data and insights. Staff cannot help shoppers they do not know and airports and retailers cannot plan for travellers they do not understand. We see first-hand from the results our Strategic Mystery Shopping brings that data is one of our most powerful tools. Much has been spoken in the past about the issues with data silos, and we must find a way to end those.

Finally, I must highlight once more the vital importance of directly-operated stores. No operator, airport or retailer, no matter how good, can deliver an experience or memorable moment for a shopper like a brand can. Brand stores create little worlds which shoppers can lose themselves in. It is better for brands, it is better for the airports, and it is better for the business.

PM: One final question, Marco, and it is asked of everyone coming onto trunblocked.com. If there are three things you want to communicate to the industry, what would they be?

MP: Simply this. Put customer experience first, stop ignoring the importance of price and let brands operate their stores.

If I may cheat and sum them all up in one – stop talking about change and actually deliver it.

The driving forces behind TW.O and Partners. Marco Passoni, Senior VP, left and CEO Fabio Bernardini, right

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