Confluence of Retail, Shopping Centres and Airlines – Birth of new economic opportunity

Starbucks’s legendary CEO, Howard Schultz, once famously said, “We are not in the coffee business serving people, but in the people business serving coffeeTo us, validity of this statement is lifetime. Think of it, as a business, you are essentially placing customer at the centre of your core strategy, the product that you offer is just ‘means’ to meet the ‘end’ of serving your customers. When customers and their preferences do change then your strategy changes too and this makes your business to be relevant even after 100 years! We think this line holds true for any business for that matter. We are sure, had the likes of Kodak, Nokia, Blockbuster, Oldsmobile had this strategy, we would still be using their products/services.

In this article, we will try to brief the shift happening in Aviation industry and the need for every player to understand this change and align to stay relevant. Firstly, let us look at the key players in the Aviation eco-system.

First and foremostPassengers who are the very reason for the existence of the industry

SecondAirlines which connect passengers from one place to another

Third, Airports the place where Airlines and Passengers meet

Fourthconcessionaires/ retailers at Airport who fulfill the needs of travelers while they wait for the flight to board.

Now, let us revisit the personality traits (I will stick to top-3 to keep this article short) of passengers by looking at their day to day life. Remember, Passengers when not travelling are normal people who are exposed to the worlds of Amazon, Alibaba, Uber, Airbnb, Netflix, Google, Apple and so on so forth and addicted to the following by virtue of association with those brands.

1.      They (Brands) know them (Customers) better than themselves (Customers):When I visit Amazon, it tells me what products that I would be interested in, I get notifications from food ordering apps that I would be hungry right before lunch time and suggests best offers available. When I turn on YouTube, it shows the videos that are of my interest without the need to search! I can go on with this list! Point here is, Brands knows customers better than customers know about themselves.

2.      They are used to have lot of options: They make their choice by evaluating variety of options they have at their disposal. They read reviews, ask near and dear ones who already experienced, and make informed decisions. Having no option or few options doesn’t really cut ice with customers these days.

3.      Value for money: They get sense of satisfaction for having paid for a product/service and truly feel value for the money. This satisfaction comes in many ways, some to be noted are: By meeting the needs at right prices (Read it as non-inflated), offers, discounts, loyalty etc.

Now, the question for Airlines, Airports and Retailers is – Do you think passengers get the same feel, same experience when they are on flight? At Airport? At your store? While planning for their travel? Let me follow it up with some pointed questions.

  • Can passengers choose their food on flight from multiple options they have?
  • Can passenger be engaged at Airport instead of boringly waiting for delayed flight?
  • Can passenger order something at the Airport wrapped with a gift pack and readily available at the gate for pick up (Since the time for connecting flight is very less and he cannot afford to do shopping)?
  • Can passenger earn loyalty points for the shopping did at Airport?
  • Can those loyalty points be redeemed while booking next flight (In a way, can they be considered for FFP’s too?)
  • Can passenger get a notification from nearby food outlet with a personalized offer?

The list can go on. But, for how many questions above have answers as ‘Yes’ (In mainstream)? I would say ‘none’, as a passenger, I never had such experience nor heard of it. So, why do passengers not get the same experience while they get in their daily lives? I see a very simple reason – Currently, Airlines do not have a view on what their passengers are doing at airport and Airports/Retailers do no have a view on who are the upcoming visitors for the Airport/stores! And, what is the solution? They just have to talk to each other and share the data so that their guests will have memorable travel experience.

Let me know touch upon what’s in it for each player, if they share the data with each other.

Airlines – Airlines are undergoing seismic shift in terms of business models, how they operate. Just relying on ticket revenue is not enough, with input costs are going high, they must rely on alternate business models that bring revenues from other channels. Ancillary services is one such option, Airlines have to think, plan and act like a retailer. They need to have 360-degree view on their passenger journey across all customer touchpoints, for that, they have no other choice but to partner with Airports/Retailers to provide personalized experience and increase Total Trip Value.

Airports – If we have to give weightage between aviation revenue and non-aviation revenue that an airport should earn (Now and days to come), I would say, their non-aviation revenue pie should always be higher than aviation revenue. Airports need to think like a modern-day SHOPPING CENTRE! Guess what is the edge Airports have that shopping centres do not? They know exact number of FOOTFALL in a day and they also know DWELL TIME (Time spent by Passengers at airport). Now, sky is the limit what you can do with this. Shopping centres spend millions on marketing campaigns and still do not get the above advantage! Airports need to take the lead in enabling this new business approach as they are the right player to do so, because both Airlines and Retailers use the space provided by Airports hence natural player to play lead role in centralizing data collection & usage.

Retailers – Retailers at the Airport should act like Retailers outside by driving passengers to their stores. Store assortment, merchandise selection and availability, offers and promotions, loyalty have to be customized based on the passengers’ preferences. Again, this is possible only by collaborating with Airlines and Airports.

In nutshell, collaboration among Airlines, Airports and Retailers is a new economic opportunity where there will be only WINNERS but no losers. If they have to sustain and thrive in this new age economy, they have no choice but to come together. Remember the adage, ‘United we stand, divided we fall’? This one suits aptly here and this shift is mandated by the key player in this industry, none other than PASSENGERS!

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