Insights /
Debunking 5 Myths Holding Back Airport Digital Retail Innovation
April 08, 2024
In the realm of airport operations, digitalisation has emerged as a pivotal force for transformation. However, amidst the push towards digital retail innovation, misconceptions can often obstruct progress. In this blog, I address five common myths that hinder airports from fully embracing the journey of digitalisation.
One common misconception we hear a lot is the notion that digitalization can be deferred until a later date. The rationale often stems from the overwhelming prospect of implementing change and the operational upheaval it entails. However, postponing digitalisation poses a significant risk as customer expectations rapidly evolve in the digital age. Waiting too long may lead to the loss of customers to competitors offering more advanced digital services. The imperative question then becomes: if not now, when?
According to a study conducted by the Airports Council International (ACI) titled "The Economic and Social Benefits of Airport Digitalization", airports that embraced digitalization earlier experienced higher passenger satisfaction rates, increased non-aeronautical revenues, and greater operational efficiencies compared to their counterparts that delayed digital transformation.
This leads me to my second myth which is that airports feel they need an all or nothing approach to digitalisation. Contrary to this misconception, Omnevo’s solution is designed to facilitate a gradual approach. For instance, airports can initiate digitalisation by implementing a simple shop solution with a few key retailers and tailor offerings. Alternatively, they might commence with services like parking management or fast-track options including lounge access, gradually expanding their digital footprint.
We have evidence from clients such as Zurich Airport and Auckland Airport supporting a phased approach. Additionally, a study published in the Journal of Airport Management, titled "Incremental Digital Transformation in Airport Operations: A Case Study Analysis," examined the effectiveness of gradual digitalization strategies across five international airports.
Key findings from the study include:
The assumption that duty-free products perform equally well online as in physical airport stores warrants scrutiny. Recent trends in duty-free retailing indicate a shift away from conventional offerings like alcohol and cigarettes towards locally sourced goods or exclusive brand collaborations. This transition mirrors the success observed in e-commerce, where airports capitalizing on unique, high-end products for click-and-collect services experience the highest returns.
Although the traditional options can still be available in your online store, the airports we see making the most returns are those who are selling luxury goods for click and collect, things that they won’t be able to get at any other airport or online store as they travel. Items that promote FOMO (the fear of missing out) that if they don’t pre-order it, they might be gone. For example, this seasons Hermes scarf or the Gucci bag that is only available at your airport or the latest Apple products. If you focus on these types of offerings your e-commerce store will become very appealing to your online shopping passengers.
To put it simply, the future generation of passengers. Since the pandemic, the efficacy of physical retail stores has come under scrutiny. While some stores have adapted by integrating online platforms, others struggle to retain foot traffic to the same level pre-pandemic. The parallels extend to airport retail, where a robust online presence becomes increasingly vital to cater to evolving consumer preferences and the next generation of passengers.
A study by Deloitte highlights the evolving role of digital platforms in shaping retail experiences, particularly in the post-pandemic era. Consumers expect seamless omnichannel engagement, where physical and online channels integrate seamlessly to provide a cohesive shopping experience.
Social media platforms play a significant role in influencing consumer purchasing decisions, with Gen Z consumers relying heavily on these channels for product discovery and research. By leveraging targeted digital marketing strategies, airports can enhance brand visibility, engage with consumers effectively, and drive traffic to both physical and online retail outlets.
There are some cases where this is the best option and works very well for airports, for Heathrow Airport for example, this works incredibly well as they have the traffic numbers for this investment to be profitable in the long-term, they also use their loyalty for travel to and from London with Heathrow Express.
However, I would say that for 90% of airports it will not be necessary to have your own loyalty program. We suggest to team with your flagship carrier and utilise the existing passenger data from airline miles programs to complete the passenger journey. Fraport recently did this with the Miles & More loyalty program and this case study works very well.
These are just a few of the misconceptions that a lot of airports have about digitalisation in their airport retail programs. I am not saying it is by any means an easy feat, but we believe it is a worthwhile investment that can be started very small and scaled however and wherever you like it.
Feel free to visit us at the Passenger Terminal Expo in Frankfurt on 15th-18th April to find out more about the airport customers we currently work with and how they have successfully begun on their airport digitalisation journeys.
