Omni-channel is the only forward for travel retail.

While pretty much every sector and industry has been affected by the widespread consequences of the COVID-19 pandemic, travel retail has arguably felt the impact more dramatically than most. A lot of focus has been on the airlines suffering from reduced travel, but the story of the retail stores that drive much of an airport’s economy shows the effects go much deeper than that.Luckily, we are seeing some signs of improvement and similar to the wider retail industry, omni-channel strategies and experience building are becoming central building blocks to reviving sales.

Travel retail makes crash landing during pandemic

Airport retail has for a long time been a profitable by-product of our frequent travels. A steady stream of foot traffic, happy to pass the time waiting for their flight by browsing stores, kept the industry growing year on year. Before COVID-19 hit, global sales for travel retail were predicted to rise 6% in 2020 reaching US$48.2bn, making up a significant portion of the retail industry at large.

But with city lockdowns and border closures, air travel came to a screeching halt and with it the flow of potential customers for airport shops fell drastically. Heathrow Airport reported a 56% decline in retail sales in the 6-month period ending 30th June, Dufry reported a 61% drop in turnover and Lagardère Travel Retail saw a 55% decline.

Even now when some economies are showing early signs of improvements, there is no reason to believe things will get back to normal for the travel retail sector. Consumer attitudes and behaviours have changed.

According to an Alix Partners survey, 86% of respondents said they will travel less after restrictions are lifted, with 64% saying they will spend less time shopping at airports due to social distancing. People in general feel less comfortable walking in and out of stores, interacting with sales staff, touching items and tasting samples inside a busy airport. It’s not unlike the dynamics seen in the rest of the retail industry, and it requires retailers in airports to adjust accordingly.

‍Travel retail needs to make an omni-channel shift

Since the closure of retail stores globally, we have seen a massive uptick in online sales, with brands quickly developing their e-commerce capabilities in order to meet their customers online. The travel retail sector is in a slightly different situation when compared to ‘normal’ retail in that it relies mostly on foot traffic and spontaneous shopping. But now that consumers are more familiar with blended online to offline models such as ‘click & collect’, there is an opportunity for travel retail to get back in the game if they double down on their omni-channel strategies.

Back in 2017, Heathrow Airport launched an online marketplace that allowed consumers to reserve items before they go to the airport, ready for pick-up on their way to the gate. Some added value services included home deliveries for spending above a certain threshold. Models like this, blending online and offline, are the way forward for travel retail stores.

In the same Alix Partners survey, when asked what would increase their likelihood of shopping in airports, 52% said ‘click & collect’ points, 47% said virtual queuing apps, 46% said online pre-ordering, and 27% said home delivery services.

Digital experiences will help travel retail take-off again

However, refining the logistics of ordering and delivering is not enough. Research conducted by M1ind-Set found that over 90% of shoppers said touching products was an important part of the shopping experience at airports. Of course, that won’t work anymore during the pandemic, so retailers need to find new ways to deliver a similar immersive experience that is COVID compatible. That’s where experiential retail using digital technology comes into play.

Using digital channels, there are plenty of ways retailers can still deliver in-store experiences that are engaging while following ‘no touch’ demands due to safety concerns. Already beauty brands are using QR codes on products to provide shoppers with more information using rich media, to replace close interaction with staff. The further integration of QR codes linked to Instagram certainly makes this a convenient way of blending online with offline.

The closest thing to trying things on in the store, is seeing what it would look like using AR and VR technology. At select travel retail locations, SK-II is trialling ‘Magic Scan’ mirrors to offer personalised product recommendations from skin analysis using AR. Other cosmetic brands are doing similar things to let people virtually try on make-up and share their looks on social media. When 5G becomes widespread, the digital touchless experience can be taken to a whole new level with hyper-personalisation and seamless integration across channels.

The retail sector was already moving in this direction, but COVID-19 has kicked things into a higher gear, making omni-channel flexibility even more important and increasing the need for digital technology to replace many of the touch-based interactions.

It is unmistakably the direction for the future of retail, and brands can’t afford to be late to the game.

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