Last week, Hylink Group participated in the TFWA World Exhibition & Conference held at the Palais des Festivals in Cannes. The event featured industry leaders and prominent global duty-free and travel retail figures. Our team attended panels and meetings with industry leaders across the travel retail sector.
Read ahead for our key takeaways!
Embracing a Digitized Customer-Centric Travel Retail Experience:
Foot traffic to airports directly impacts travel retail, as an increased volume of passengers often means increased sales opportunities for travel retailers. However, as foot traffic increases year-over-year, the conversions into travel retail purchases remain stagnant, if not decreased.
Airports are continually announcing digitalization measures to enhance the passenger experience, such as customer-centric approaches like contactless passenger flow processes from parking to boarding, powered by self-service and biometrics technology or the adoption of mobile technology like the HKG My Flight app; there remains a conspicuous gap in the integration of the retail experience within these systems.
Instead of drawing passengers toward duty-free shopping, this digitization seems to be pushing them away. Travelers now spend less time at the airport, treating their time there as a mere transaction before they board their flights. This is especially true for two groups of consumers that will only continue to become more prominent in the coming years: millennials and Gen Zers. As global passenger traffic is expected to reach 9.4 billion passengers, 94.2% of the 2019 levels, actors in the travel retail space must consider how to capitalize on this growing demand, understand these inherently digital generations, and cater to their preferences. We no longer talk about a trinity but a pentagon, where the consumer is not only considered but at the forefront of all marketing, placement, and logistics planning.
The opportunity also lies in how airport digitization can assist brands and retailers in operating within these airport spaces. In addition to providing support during travel, airports should consider the potential of providing data or platforms to brands and retailers, allowing them to connect with passengers before their actual travel day. Furthermore, access to digital shopping channels from the moment a ticket is purchased will generate more revenue opportunities as consumers are exposed to products and services before the day of their intended travel. Or why not implement straightforward digital solutions across the board, such as QR codes located at gates, integrating the solution with logistics systems for loading bridge delivery.
Data Privacy in an era of digital disruption:
In an era where the digitization of airport travel is proliferating, elements such as biometric data, facial recognition, digital boarding passes, and contactless systems have seamlessly woven into the fabric of the passenger experience.
This push to digitize travel processes not only makes the traveler’ journey far more seamless but also positively impacts the travel industry’s efforts to adopt responsible practices in relation to their CO2 emissions, of which they are responsible for 11% of the total global impact.
While airlines have been at the forefront of initiatives to mitigate their environmental footprint, with over 50 airlines successfully implementing offset programs seamlessly integrating them into their web-sales engines(IATA), it is necessary to focus on other areas relevant to implementing responsible practices.
The technological revolution in the industry has ushered in an era of data accumulation, where airports and their collaborative partners find themselves amassing an ever-expanding reservoir of information from diverse stakeholders, including passengers, employees, tenants, concessionaires, and airlines.
Yet, amid this data deluge that transcends industry boundaries, a pressing question requires our attention: What approach does the travel and travel retail sector employ to safeguard data privacy?
As the industry makes significant strides in sustainability initiatives, it is imperative to be proactive in addressing the crucial aspect of data privacy, which can impact consumer trust and the industry’s overall reputation in the future.
There are three key areas to consider:
Firstly, data collection practices often involve excessive information gathering, risking both misuse and data breaches. Additionally, reliance on data from third-party providers must be approached cautiously to prevent vulnerabilities in the data ecosystem.
Secondly, data storage and security are paramount. Inadequate security measures can lead to unauthorized access, jeopardizing the confidentiality of sensitive customer data. Establishing clear data retention policies is equally vital to ensure data is not stored longer than necessary, mitigating the risks associated with data storage. Moreover, data sharing, often necessary in vendor relationships, calls for meticulous contract agreements prioritizing data privacy and security.
Lastly, data anonymization, while critical for analytical purposes, remains a complex challenge in the sector. Striking the right balance between sharing anonymized data and safeguarding customer identities requires expertise and meticulous handling.
The Infrastructure Gap and The Chinese Consumer in the Current Travel Retail Landscape
Industry experts across TFWA panels shared their perspectives on the resurgence of travel demand in a post-COVID era.
However, as we delve into the intricacies of travel consumer behavior, it remains critical to question the readiness of airline infrastructure to accommodate the rising demand from returning travelers. The overarching concern in the industry is the delayed rehiring and staffing by airlines, which is critical to supporting the rapid recovery in demand.
Boeing’s CEO, Dave Calhoun, highlighted this issue on CNBC, emphasizing the need for the supply chain to regain its pre-Covid resilience to meet these escalating demands. The overarching concern in the industry is the delayed rehiring and staffing by airlines, which is critical to supporting the rapid recovery in demand.
What affects some regions, like Mainland China, is regarding price sensitivity. If infrastructure is not there yet and demand continues to grow, travel costs will rise above typical pre-pandemic levels. With the Chinese consumer, this poses a challenge, as the country’s economy is on the brink of a recession from low consumer trust after a prolonged isolation period. It is essential to factor this recovery into 2024 planning, which underscores the importance of the industry to shift focus to a consumer-first approach.